Lesson 5 Flashcards
What are the 4 big questions in business?
What do we offer?
How do we make it?
How do we sell it?
How do we make money?
Describe the Business Model Canvas
A business model describes the rationale behind how a company creates, delivers, and retains value
A business model can best be described through nine basic building blocks that show the logic of how a company intends to make money and is a blueprint for a strategy to be implemented through organizational structures, processes, and systems
Explain the building block: Customer Segments (Who are your customers?)
An organization serves one or several Customer Segments.
Defines the different groups of people or organizations a company aims to reach and serve.
Types of customer segments:
Mass Market: Undifferentiated segments (e.g., consumer electronics).
Niche Market: Specialized segments (e.g., specific car parts manufacturers).
Segmented: Different groups with varying needs (e.g., retail banking).
Diversified: Unrelated segments with different needs (e.g., Amazon’s retail vs. cloud services).
Multi-sided Platforms: Serve interdependent segments (e.g., credit card companies serving both cardholders and merchants)
Explain the building block: Value Propositions (Why should customers choose you?)
It seeks to solve customer problems and satisfy customer needs with value propositions.
This explains what value your product or service provides to the customer. It’s why customers would pick your product over someone else’s.
Examples of value propositions:
Newness: Offering something completely new (like the first iPhone).
Performance: A product that works better than the competition (like faster computers).
Customization: Personalizing a product for a specific customer (like custom-made shoes).
Cost reduction: Helping customers save money (like software that automates tasks).
Convenience: Making life easier for customers (like online shopping with home delivery).
Explain the building block: Channels (How do you reach your customers?)
Value propositions are delivered to customers through communication, distribution, and sales Channels
This is about how you deliver your product or service to customers:
Direct: Selling through your own stores or website.
Indirect: Selling through partners or other stores.
Explain the building block: Customer Relationships (How do you interact with customers?)
Customer relationships are established and maintained with each Customer Segment.
The types of relationships you build with your customers can vary, like:
Personal assistance: Having real people help the customers (like customer support).
Self-service: Customers handle everything themselves (like using a vending machine).
Communities: Letting customers help each other (like online forums).
Co-creation: Involving customers in creating your product (like customers reviewing products on Amazon).
Explain the building block: Revenue Streams (How do you make money?)
Revenue streams result from value propositions successfully offered to customers.
This block shows how the business actually earns money. Different ways to make money include:
Selling products (like selling a car).
Charging for usage (like paying for how much you use a mobile plan).
Subscriptions (like Netflix, where you pay monthly).
Leasing (renting something instead of buying it, like renting a car).
Explain the building block: Key Resources (What do you need to do to run your business?)
Key resources are the assets required to offer and deliver the previously described elements
These are the most important things a business needs to work. They can be:
Physical resources: Things like factories, machines, or delivery trucks.
Human resources: like talented employees.
Intellectual resources: Things like patents, brands, or important knowledge.
Explain the building block: Key Activities (What do you need to do to run your business?)
The key activities are the most important tasks a company needs to do to make its product work. For example:
Manufacturing: If you make cars, building them is a key activity.
Problem-solving: If you’re a consultant, helping clients solve problems is key.
Platform management: If you run an app or website (like eBay), maintaining the platform is a key activity.
Explain the building block: Key Partnerships (Who helps you run your business?)
Some activities are outsourced and some resources are acquired outside the enterprise.
Partners are people or businesses you work with to make things easier or cheaper. Types of partnerships include:
Strategic alliances: Partnering with other companies that are not competitors.
Suppliers: Working with suppliers to make sure you have the materials you need.
Explain the building block: Cost Structures (What does it cost to run your business?)
The business model elements result in the cost structure.
This block explains the costs involved in running your business. Businesses can be:
Cost-driven: Focused on minimizing costs (like budget airlines).
Value-driven: Focused on providing high value, even if it costs more (like luxury hotels).
