Developing the Business Model

NEW VENTURE PLANNING AND CREATION

• Unit 1 Module 1

• Prepared by Lystra Stephens-James, MBA

• Objectives 10,11 and 12

OBJECTIVES

• Explain the components of a business model

• Develop a business model for a business plan

• Identify the components of a business plan

CLASS ACTIVITY

• Discover the components of Google’s Business model• Divide the class in groups of two or three for the activity

listed below• Instructions:

– Each group are to examine slide five– Read the questions on slides six and seven and collaborate with

each other on their findings (allotted time 10 minutes)• Re-arrange the groups of two or three and let them share their

discovery with each other (allotted time 10 minutes)Teachers can use the students findings to explain the components of

a business model (including its role in developing a business plan)

Value Proposition Components

1. The product offering: What will make the product offered different from those of competitors?

2. Type of product: Will the product be standardized or

customized?

3. Distribution method: Will direct or indirect distribution be

used?

4. Manufacturing process: Internal manufacturing or

outsourcing?

(Google) Beneficiaries

1. Business to Business (B2B), Business to Consumer (B2C) or both?

2. Local, regional or international?

3. General or niche-market?

Considerations for Operations

• Internal capabilities of a business arising out of organizational structure

and/or culture

• Unique skills derived from previous experience, training or strategic hiring

• Technologies which allow the firm to be more efficient or effective

• Benefits from existing patents and developing products which can be

patented

• Resources which the firm might be able to acquire to its advantage.

Product Differentiation Strategies

1. Operational excellence2. Product quality3. Innovative leadership4. Cost Leadership5. Networks

Google Differentiation Strategy: Quality and Innovative Leadership

Growth Strategies1. Subsistence model: The entrepreneur’s focus is on

personal survival2. Income model: The entrepreneur’s focus is on enjoying

a lifestyle.3. Growth model: The entrepreneur’s focus is on a long-

term vision.4. Speculative model: This is a business where the

entrepreneur does not necessarily have a long-term plan.

Google: Greiner Growth Model

http://www.startup-book.com/2011/05/18/the-challenge-of-growth-23-google/

Business Plan

• Student Activity:• This exercise will give the student the opportunity to

listen to the views on (1) The importance of a business plan (2) Business Model Canvas Explained

• Students can view these as homework and teachers can develop questions for discussion in the classroom

• The links for students to download are– (a)www.youtube.com/watch?v+CBYFYh6AZw– (b)www.youtube.com/watch?=AO2MTLP5s