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Start-up companies > Unit 3 - Business model > Flashcards

Unit 3 - Business model Flashcards

1
Q

business model definition

A

“A business model describes of the rationale of how an organization creates, delivers and captures value”.

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2
Q

Business model - Is useful for:

A
  • Analyzing competitors
  • Defining the connection with the market
  • Designing business
  • Analyzing economic viability
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3
Q

Business model - Main component parts

A
  1. MARKET
  2. COMPANY
  3. FINANCIAL ACTIVITY
  4. OPERATIONS
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4
Q

Business model - CUSTOMER SEGMENTS

A

Different groups of people or organizations an enterprise aims to reach and serve

Customer groups represent separate segment if:
• Their needs require a distinct offer
• They are reached through a different distribution channel
• They require different types of relationships
• They are willing to pay for different aspects of the offer

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5
Q

CUSTOMER SEGMENTS - For whom are we creating value ?

A
  1. Mass Market
  2. Niche Market
  3. Segmented
  4. Diversified
  5. Multisided platforms (or multisided markets)
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6
Q

VALUE PROPOSITION - What solution are we offering?

A
  1. Newness
  2. Brand/Status
  3. Customization
  4. Convenience
  5. Design
  6. Performance
  7. Pricing / Costs
  8. Risk reduction
  9. Accessibility
  10. “Getting the job done”
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7
Q

Business model - Channels:

A

COMMUNICATION, DISTRIBUTION and SALES channels comprise a company’s interface with clients

Customer touch points play an important role in customer experience. Functions:
• Raising awareness about companies products
• Helping customer evaluate VP
• Allowing customers to purchase
• Delivering a VP to customers
• Providing post- purchase support

The challenge related to channels is to find the right mix of channels that contribute to create a great customer experience and maximize revenues

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8
Q

How do we communicate our proposition and reach customer segments?

A

Types. Phases.

Sales force         ➡    Awareness
Web sales           ➡    Evaluation
Own stores         ➡    Purchase
Partners stores   ➡    Delivery
Wholesalers.       ➡    Post sale
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9
Q

Business model - Customer relationships:

A

How do we attract, retain and develop our customers?

Several categories (Can coexist):
•Personal Assintance (standard/dedicated)
•Self Service
•Automated Services (simulation)
•Communities
•Collective co-creation
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10
Q

Business model - Revenue streams:

A

For what value are our customers truly willing to pay? How?

Asset sale
Usage fee
Subscription
Lending/Leasing/Licesing/
Brokerage fees
Advertising
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11
Q

REVENUE STREAMS - Pricing mechanisms (FIXED)

A

Price lists
Product features
Per segments
Per volume

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12
Q

REVENUE STREAMS - Pricing mechanisms (DYNAMICS)

A

Negotiation
Yield management
Real time
Auctions

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13
Q

Business model - key resources

A

What resources do we need for our value proposition, our channels, relationships and revenue streams?

TANGIBLE:

  • physical
  • financial
  • people related

INTANGIBLE:

  • intellectual (brands, partners)
  • customer databases, patents
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14
Q

Business model - key activities

A

What key activities do we need for our value proposition, our channels, relationships and revenue streams?

Depend on business model type:

  • Production (Dominates in manufacturing firms: design, manufacturing and delivery. )
  • Problem solving (Typical in consultancies, hospitals: Coming up with new solutions.)
  • Platform/network (Typical in platform based business models e.g. Alibaba, Ebay: management, expansion and maintenance.)
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15
Q

Business model - key partnerships

A
  • Network of suppliers and partners that make the business model work
  • foundation of many business models

Types of partnerships:
• Strategic alliances between non competitors
• Joint ventures to develop new business
• Buyer-supplier to assure reliable supplies

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16
Q

Business model - key partnerships

Which suppliers and partners do we choose?
Three motivations to create partnerships:

A
  • Optimization & Economy of scale
  • Reduction of risk & uncertainty
  • Acquisition of resources and activities
17
Q

Business model - cost structure

Costs driven by our business model?

A
  • Cost VS Value driven business models
  • Fixed and variable costs
  • Economies of scale and scope
18
Q

Business model - TYPES

A
  1. UNBUNDLING
  2. LONG TAIL
  3. MULTISIDED PLATFORMS
  4. FREE
  5. OPEN
19
Q

UNBUNDLING - Customer Relationships, Innovation or Infrastructures?

A
  • Classical business models combine: Customer relationship, Product innovation and Infrastructure management
  • Costs are too high: each type of business is driven by different factors conflicts may arise resulting in undesirable trade offs within the company
  • IT & management tool improvements allow separating and coordinating business models at lower cost, companies focus on ONE of the three business disciplines: Customer intimacy, product leadership or operational excellence
  • Telecom industry and private banking have started unbundling their industries
20
Q

LONG TAIL - To sell “less of more”

A

• Shift in some businesses from selling a small number of “hit” items in large volume to selling a very large number of niche items in relatively small quantities.

Triggers:
✔️ Democratization of tools of production (falling technology costs)
✔️ Democratization of distribution (through internet)
✔️ Falling search costs to match supply and demand (powerful search & recommendation engines, user ratings, communities)

• Specially relevant in multimedia content industries such as Netflix, publishing industry, (LEGO)

21
Q

MULTISIDED PLATFORMS - Distinct but interdependent groups of customers

A
  • This business phenomenon has increased rapidly with IT development
  • The value of a platform for a given customer group depends on the presence of another customer group
  • The platform creates value by facilitating interactions between groups
  • Key: “Network effect”: The more users the more value generated
  • Challenge: How to attract both types of customers?
  • Air BnB, Visa, Wii game console, Apple
22
Q

FREE - Some segments don’t pay

A

• At least one segment is able to continuously benefit from a free of charge model.
• This segment is subsidized by paying customers in order to attract maximum number of users
• Three patterns:
✔️ Free offer based on multi sided platforms
✔️ Freemium model: free basic services and Premium version
✔️ “Bait and hook”: free or inexpensive initial offer captures customers Free newspapers, Skype, Spotify, Nesspresso

23
Q

OPEN - Profitability through cooperation

A
  • Refers to companies that create value by collaborating with outside partners. Two ways:
  • Outside/in: Bringing external ideas, technology and intellectual property into its development and commercialization processes.
  • Inside/out: Licensing or selling intellectual property, technologies outside the company
  • GSK patent pool and Procter & Gamble

Start-up companies (6 decks)

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