BUSINESS MODEL

"A business model is nothing else than a representation of how an organization makes (or intends to make) money.“

The essence of a business model is that it defines the manner by which the business enterprise delivers value to customers, entices customers to pay for value, and converts those payments to profit. what customers want how they want it how an enterprise can organize to best meet those needs, get paid for

doing so, and make a profit

Definition of a Business Model

Business Model vs Business Plan

Business Model vs. Business Strategy Creating value vs. capturing value Business value vs. shareholder value Assumed knowledge levels

Definition of a Business Model

An important tool that can be used to augment product and service innovations, to link innovation to strategy, to co-ordinate activities within an organization

A helpful unit of strategic analysis tailored to today’s competitive business environment; to manage continuous change and constantly adapt to rapidly changing business environments

Importance of a Business Model

See link: http://www.youtube.com/watch?v=QoAOzMTLP5s

VIDEO

Business Model Canvas Explained.webm

Value Proposition – perceived value your products provide as a solution to the consumer’s problem

Market Segment – target market

Distribution or Movement Channel - Getting your product to its target market, from advertising to retail outlet, is the distribution, or movement, channel. This establishes the means by which your business relates to your customers.

Components of a Business Model

Consumer Relationship - How you establish relationships with your various customer segments is your consumer relationship. It defines how you gain their trust and deliver your product.

Value and Resource Configuration - How you utilize the activities, personnel, and resources necessary to produce your product are your value and resource configuration or value chain.

Core Competency – the basic knowledge, skill set, abilities and expertise required to produce your product.

Components of a Business Model

Network or Affiliation Partners – represents agreements between your business and other companies necessary to produce and market your product

Cost Structure - expense required to manufacture a product or provide a service is the cost structure.

Revenue Streams – the ways a company makes income

Components of a Business Model

Generic Business Model

BUSINESS MODEL FRAMEWORK

Four-Box Business Model

Why would someone want to buy something from you? Customer Value Proposition

How will you make money selling it? Profit Formula

What, exactly, are the important things you need to do to pull off the plan? Key Processes Key Resources

* Four- Box Business Model

Business Model Canvas

Franchise Model Opening a franchise is essentially buying a working business

model in a particular industry. Recurring Revenue Model

The aim is to secure the customer on a long term contract so that they are consuming your product or service well into the future.

Freemium Model Where the business gives away something for free in return

for your personal details so they can then market to you and hope to build up a relationship so that you buy from them in the future

Some Examples

GROUPON.COM Exclusive deals limited in time made GROUPON the fastest

growing company in 2010, leading to hundreds of copy-cats worldwide

GAP made $11M within 1 day

BUSINESS MODEL: A broker platform with exclusive discounts. They use a no cure no pay strategy wherein they guarantee that a minimum number of clients will take the discount that is communicated. When enough people take the discount, the deal goes on. Groupon takes a certain percentage of the revenue resulting from this promotion

Some Examples

Walmart Founded by Sam Walton BUSINESS MODEL: Low Cost Model “Always Low Prices” tagline Their stores include discount stores, super

centers and neighborhood markets

Amazon.com BUSINESS MODEL: Growth First Sold a wider collection of books than stores

could carry. Bezos bought warehouses to hold a vast inventory so Amazon could offer direct-to-consumer service.

He and his investors had to postpone seeing profits instead created a business that sought customer convenience first and foremost

http://www.quickmba.com/entre/business-model/

http://www.businessmodelalchemist.com/category/business-model-concept

imkastelle.org/blog/2012/01/eight-models-of-business-models-why-theyre-important/

http://www.youtube.com/watch?v=QoAOzMTLP5s

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