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Design. What is Business Model?. The content, structure, and governance of transactions designed so as to create value through the exploitation of business opportunities ( Amit & Zott , 2001).
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What is Business Model? The content, structure, and governance of transactions designed so as to create value through the exploitation of business opportunities (Amit & Zott, 2001) A system of interdependent activities that transcends the focal firm and spans its boundaries (Amit & Zott, 2010) A bit confused, right…..
It is the difference between the value perceived by the customer and the cost to produce it. Perceived value can take form as following: - The product or service itself - The speed of delivery - The brand or reputation - Convenience and easiness of use of a service - Variety of choice, etc,.. VALUE
What is Business Model? A Business Model describes the rationale of how an organization CREATES DELIVERS CAPTURES VALUE
Five Elements of Business Model* Gross Margin Model Operating Model Investment Model Working Capital Model Revenue Model Based on a framework developed by John Mullins
Five Elements of Business Model* Revenue Model • Who? Howmany? Howoften? Howsoon? Where?Why? • What is the cost to acquire them? • How much money will you receive each time a customer buys? GrossMargin Model • Howmuch of yourrevenue will beleftoverafterpayingthedirectcosts of whatyouhavesold? Based on a framework developed by John Mullins
Operating Model • On whatelse–otherthanthecost of thegoodsorservicesyouhavesold–mustmoneybespent to supportsale? Working Capital Model • Howlong will youhave to waitforcustomers to pay? • Do youhave to tie up money in inventorywaitingforcustomers to buy? • Canyoupayyoursuppliersbefore/aftercustomershavepaid? Investment Model • Howmuch cash mustyou spend up front beforeenoughcustomersdiscoveryou and giveyouenoughbusiness to coveryouroperatingcosts?
Nine Building Blocks of Business Model* Mass Market Niche Market Segmented Diversified Platform Why customer choose you? Newness Performance Customization Design/Brand Price Cost/Risk Reduction Convenience Communication Distribution Sales Channels Awareness Evaluation Purchase Delivery After sales Customer acquisition Customer retention Boosting sales Personal assistant Dedicated personal assistant Self-service Automated services Communities Co-creation Based on a framework developed by Alexander Osterwalder & Yves Pigneur
Nine Building Blocks of Business Model* Physical Intellectual Human Financial Production Problem solving Platform Network Strategic alliances Coopetition Joint ventures Buy-supplier Optimization & Economy of scale Reduction of Risk &uncertainty Acquisition of particular resources Cost-driven Value-driven Fixed costs Variable costs Economies of scale Economies of scope Asset sale Usage sale Subscription Fee Lending/Leasing Licensing Brokerage Fee Advertising Price Mechanism Fixed Dynamics
Don’t forget Your executive summary, conclusion & appendix Business Plan Overview The Team The Business Model Financial Analysis External Environment Implementation Roadmap Risk Analysis • • Management Profile • • Why We Are a Winning Team • • Vision, Mission, Values • • How Our Business Model Works • • Value Proposition • • Target Markets • • Marketing Plan (4P or 4C) • • Key Resources & Activities • Breakeven Analysis • Sales Scenarios and Projections • Capital Spending • Operating Costs • Funding Requirements Financial Spreadsheets • • The Economy • • Market Analysis & Key Trends • • Competitor Analysis • • Competitive Advantages of Our Business Model SWOT & uncertainty analysis • Limiting Factors and Obstacles • Critical Success Factors • Specific Risks and Countermeasures • Projects • Milestones • Roadmap