Business Models

Complete Courseware
Win 2025-26
Review of Concepts – Table of Contents
• COs, Grading Policy
• Module 0 Art and Science of Business Models
• Module 1.1 - ECONOMICS AND STRATEGY OF BUSINESS MODELS
• Module 1.1 - STRATEGY OF BUSINESS MODELS
• Module 1.2 – Customer side ECONOMICS OF BUSINESS MODELS
• Module 2. Value Proposition, Business Model Canvas, Value Architecture and Pipelines to
Platforms
• 2.1. Value Proposition to Market, Problem, Business Model Fit.
• Module 3: Platforms
• Module 3.3. Case Studies
• Module 4: Inclusive Business Models

• Course Project
Course Outcomes:
• CO1: Identify the economic structure of a business enterprise.
• CO2: Analyse the design elements of a business model.
• CO3: Evaluate the approaches to business modelling.
• CO4: Develop empirical models for understanding and evaluating the
real-life business models.
Grading Policy
• Grading Policy
• Relative Grading Policy
• Marks Assignment
• Midsem – 30 Marks
• Project - 30 marks
• End Semester Exam – 40 marks
Course Content- By Modules
Module 0 Art and Science of Business Models
Module 1.1 - ECONOMICS AND STRATEGY OF BUSINESS MODELS
Module 1.1 - STRATEGY OF BUSINESS MODELS
Module 1.2 – Customer side ECONOMICS OF BUSINESS MODELS
Module 2. Value Proposition, Business Model Canvas, Value Architecture and
Pipelines to Platforms
Module 3: Platforms
Module 4: Inclusive Business Models
0. Art and Science of Business Models
• 0. Art and Science of Business Models
• Models and Business models
• Value Architecture
• Business Model Canvas
• Art and science of business models
• Towards Inclusive Business Models
• Pipeline vs Platforms
• Business Model Analogies
• Business Model Analogies- Affinity Club, Automation enabled services, Brokerage, Bundling, Crowdsourcing,
Data-into-assets, Digital Platforms, Disintermediation, Fractionalization, Freemium, Leasing, Low-touch,
Negative Operating Cycle, Pay-as-you-go, Razor blades and reverse razor blades, product to service and
standardization, subscription club and user communities

• Towards Networks
Module 1.1 - STRATEGY OF BUSINESS
MODELS
• Art and Science of Business Models
• ECONOMICS AND STRATEGY OF BUSINESS MODELS –
• What is Strategy
• Building your Company’s Vision
• Blue Ocean Strategy
• Five Competitive Forces that Shape Strategy
• Porter’s Five Forces Framework
(Key reading - Michael Porter, Retailerpower, manufacturer strategy and performance in
consumer goods industries, Harvard University, 1973)
Module 1.2 - ECONOMICS OF BUSINESS
MODELS
• Value Stick- Price, Cost, Customer Delight, Profit, Supplier Surplus,
WTP and WTA
Module 2. Value Proposition, Business Model
Canvas, Value Architecture and Pipelines to
Platforms
• Value proposition
• Problem Fit
• Business Models and, Business Model Canvas and tools, Value Architecture when one Business Model is not enough, Business Model Failure:
Reasons and Remedies

• 1. What is a Business Model, Why Business Models matter, Re-inventing your Business Models , When your business model is in trouble

• 2. Diffusion of Innovations (S-Curve)

• Key Readings
• Everett Rogers, A conceptual variable analysis of technological change, Iowa State University, 1957.
• The Transformative Business Model, Competing against Free, Lean Startup, Disruptive Innovation
• Clayton Christensen, The innovator’s challenge: Understanding the influence of market environment on processes of technology development in the rigid disk drive industry, Harvard
University, 1992.

• 3. BM- Business Models – Finding the Platform for your Product,

• Business Models and value proposition, Business Model Canvas and tools, Value Architecture when one Business Model is not enough, Business
Model Failure: Reasons and Remedies
• 4. Pipelines, Platforms and the New Rules of Strategy, Focus on Digital Platforms
Module 3. Platforms
• FOCUS ON DIGITAL PLATFORMS; PLATFORMS – HEALTH PLATFORMS-
• HBR CASE ON PRACTO-Making Practice Management Easy: About Practo
Ray, Helping Patients Find Doctors: Practo Search Through Practo.com.
Practo Ads .
• Case of Tarnea Technology Solutions: Competing in a Winner-Takes-All
Market- Pharmaceutical Retail in India, Retail Pharmaceutical Value Chain-
Creating the Product - The Pilot - Product Development at Tarnea -
Requirements Phase - Prototyping. Development - Tarnea as the Platform
Tarnea’s Ecosystem - Ecosystem View- Pharmaceutical Retail as A Winner–
Takes-All Market and A Density Business- Multi-homing Costs - Network
Effects- Opportunities for Differentiation- Pharmaceutical Retail—COVID-19
Acceleration and Challenges- Digital On boarding
Module 3. Platforms
• TRANSACTION PLATFORMS – DELIVERY PLATFORMS; CASE ON Delhivery:
Leveraging the Platform, Initial Thoughts of the Idea ,
• Enterprise Story, Growth Over the Years, Current Status, Delhivery Businesses . . .
.....
• Express Services,. Customer Segments , C2C Logistics Services, Hyperlocal
Services . Delhivery’s Services, Pricing, Pricing of Bundles, Fulfilment Services
• Case of Qwikcilver Business Model- Types of Gift Cards and Gift Card Life Cycle
and Critical Success Factors-The Gift Cards Industry -Market Size—India and the
USA. - Competition and Envelopment Threats Foray into Distribution Business—
GiftBig Portal- Evolution of Pricing Model - Woohoo—Qwikcilver’s Multi-Sided
Platform- Sustaining Growth- Technology Choices- Integrating with PoS Working
with Card Manufacturers- Influencing the Regulatory Framework - Issues with
Traditional Gift Cards - Opportunities in International Markets in 2017
Module 3. Platforms
• FOCUS ON DIGITAL PLATFORMS; TRANSACTION PLATFORMS –
DELIVERY PLATFORMS; CASE ON GRAB-GRAB.in™: Enabling
Hyperlocal
• Swiggy™, Foodora™, and Yelp™: Hyperlocal Platforms .
• Zomato™ Gold: Platform Overreach - Hyperlocal Food Delivery
Business- Zomato’s Gold Program - Zomato Gold Design: A Unique
“Loyalty” Program -Positive Network Effects for Restaurants -Negative
Network Effects -Restaurants’ Reactions.
Module 3. Platforms -Value Creation in Platforms

• Value Architecture 71
• Discovery . . . . . . 72
• Matching . . . . . . 74
• Transaction . . . . . 75
• Evaluation . . . . . 78
• DMTE as a Cycle 80
Module 3. Platforms
• FOCUS ON DIGITAL PLATFORMS; PLATFORMS – MATCHING
• PLATFORMS; HBR CASE on Bharat Matrimony.
• FOCUS ON INFO-MEDIATIONAL PLATFORMS- HBR CASE ON JUSTDIAL-
Evolution of Just Dial, The (Traditional) Just Dial Business ModeL, The
JD Search Plus Business Model, The “JD Shop Online”
Module 4: Inclusive Business Models
• Particular Case instances- Inclusiveness/equity and viability versus
efficiency and profitability. Affordable Healthcare (Narayana Hrudayala
Hospitals Case), Accessible Healthcare (Vatsalya) and Available Healthcare
(Aravind Eye Care), Providing Inclusive Education (Gyanshala),
• Inclusive Model for Energy Access(Selco), Improving Lives of Waste Pickers
(Hasiru Dala), Creating Inclusive Supply Chain (Reliance Retail), ), Social
Business (Gujarat Narmada Fertilizer Company’s Neem Initiative)
• Creating a Platform for Social Investing (Rang De), Empowering Informal
Sector Labourers (Labournet), Developing Smallholder
Ecosystem(International Development Enterprise (IDE) Nepal), Delivering
Inclusive Service (Ruralshores
Overview
• 0. Art and Science of Business Models
• 0.1 Models, Business models, Value Architecture, Business Model
Canvas
• 0.1. Value Architecture
• 0.1. Business Model Canvas
• Towards Inclusive Business Models
• 0.2. Pipeline vs Platforms and Platform Business Models
• 0.3. Business Model Analogies
• Towards Networks
0.1 Models, Business models, Value Architecture, Business Model
Canvas
What is a model ?

A model is replica of reality, a miniature, a life-like definition [abstract of how

something works]
It is common to use models to refer to an abstraction (summary) of something that
exists in reality.

Such models could take shape of prototypes that are used as a base for replication
into life-size; an abstract representation of various scenarios and
interdependencies like financial models; a description of personality as in role
models; or even fashion models that are used for demonstration purposes.
Models abstract from the original

Some models help predict the future by connecting the dots

Models help in replications, visualizing connections and relationships,

and for projections of the future.

Models help in reducing the risk of failure and contribute to reduction

in costs and/or elimination of rework
Value Architecture
- Who is your customer
- What does the customer value, and
- How do you deliver value at an appropriate cost

0.1 Models, Business models, Value Architecture, Business Model Canvas

Value
0.1 Models, Business models, Value Architecture, Business
Model Canvas

Architecture

1.Value Creation
2.Value Delivery
3.Value Capture
Value Architecture 0.1 Models, Business models, Value Architecture, Business
Model Canvas

• In a simple sense, a business model is a description of a business in terms

of –
• Value Creation [What is value proposed/Promised based on
understanding customer need]
• Value Delivery [How the promised value is delivered/assured]
• Value Capture [How business takes out economic return out of the
value delivered]

• Promise > Assurance > Gain

Value architecture
• A firms value architecture can be defined as how the organization creates,
delivers and captures value.
• Lets look at Value Architecture of OTT platforms
• Cr: Producing original content exclusively for their subscribers can be characterized as
creation of value.
• De: Providing personalized content recommendations based on subscriber’s. viewing
preferences constitutes delivering value.
• Cap: OTT platforms monetize their services. This can be through subscription fees, ads, or
partnerships, this can be characterized under value capturing.
 DMTE Cycle
Most of the two sided platform utilities can
be conceptualized as a concentric cycle called
DMTE cycle
Business model canvas. Adapted from: Osterwalder and Pigneur (2010)
What is a business model ?

Business model is a representation of the business

It diagrammatically represents

- Who the primary customers are

- What are their needs
- What is the business’ value proposition
- How does the business interact with the customers
- How does the business organize its operations
- What are the specific resources required for these operations, and
- The costs and revenue structures of the business
A business model represents the various choices the firm has
made, including its decision on specific customer segments,
value offerings, and partnership arrangements; and the resultant
resource requirements, value flows, and cash flows.
Organized as a chart, the business model canvas, proposed by Alex Osterwalder, provides a
template for representing the business model in a logical way
Business Model Canvas
Business Model Canvas is a strategic management template used for developing new business models
and documenting existing ones.

The very first recognized canvas was proposed by Alexander Osterwalder in 2005. Then various researchers
have come up with different versions of canvas suiting different industries.

The Canvas covers Value Creation, Delivery and Capture attributes in 9 building blocks –

1. Key Partners [Third Parties associated with in value creation and delivery]
2. Key Activities [Activities critical for value delivery]
3. Key Resources [In-house resources for creating and delivering value]
4. Value Proposition [Value Created] [the distinguishing offers of the company]
5. Customer Relationship [Value Creation] [understanding customer taste/preference/feedbacks]
6. Channels [Value Delivery] [Medium through which value is delivered]
7. Customer Segments [Target user groups] [Value Creation]
8. Cost Structure [Value creation/delivery] [cost associated with creating and delivering value]
9. Revenue Streams [Value Capture] [means for economic benefits return to the company]
 Key Aspects of Business Model Canvas

• Unique story of the idea

• Customer Value Proposition/ Unique Selling Proposition
• Profit Formula- Margins, Revenue Model, Cost Structure
• Key Resources and Possibilities
Business Model Innovation
Business model innovation is the art of enhancing advantage and value creation by making
simultaneous— and mutually supportive—changes both to an organization's value proposition to
customers and to its underlying operating model.

Simply, making some positive changes/improvements to the existing business model. [e.g. adding a
new revenue stream]
Business Model Innovation
Business model innovation is the art of enhancing advantage and value creation by making
simultaneous— and mutually supportive—changes both to an organization's value proposition to
customers and to its underlying operating model.

Simply, making some positive changes/improvements to the existing business model. [e.g. adding a
new revenue stream]
Disruptive Innovations
• Introducing a better business model into an existing market is the
definition of a disruptive innovation.
• Clay Christensen -“In Reinventing Your Business Model”
• work out how a new entrant’s business model might disrupt yours.
• This approach begins by focusing on the customer value proposition
— what Christensen calls the customer’s “job-to-be-done.”
Business Model Analogies
Taxonomy and Typology-Types of Business Models

Academic world use the term to describe –

(1) a business as a whole [e.g. Business Model of Restaurant]

(2) a specific firm [e.g. Amazon Model, Uber Model]
(3) a part of a business model [mainly revenue part]

some of these types are explained below -

Affinity Clubs
• Pay Royalties to some large organization for the
right to sell your product exclusively to third
customers
• By buying or using your products, customers
also get special access to other perks, giving
them extra incentive and
• provide an incentive to those partners to get
them on board.
• best used in competitive fields where products
are all similar.
• A MBNA: Mastercard and VISA-Different cards
come with different perks, so they can target a
wide audience.
Brokerage Model
• A broker connects buyers to sellers and gets a
small fee for each transaction.
• Any marketplace that allows others to sell on
it, and
• focuses on bringing in customers for those
sellers is using a brokerage model
• Fiverr, Udemy
 • A bundling business
model packages related goods and
services together to make a more
convenient and enjoyable
experience for customers.
• fast-food value meal
• but that can be replicated fairly easily.

• iPod + iTunes.
• You can’t use an iPod without
iTunes,?
• so each new iPod customer
results in a new iTunes user
(and potential customer).

Bundling
 • The idea behind a data-into-assets is to
obtain valuable data that can be sold to
willing buyers.
• This is one of the few that can run into real
ethical dilemmas.
• For example, this is the business model that
Facebook uses. The site is free for users, but
in return, Facebook collects massive
amounts of data about users and uses that
to generate revenue through advertisers.
• The Dangers of Data
• They are facing large privacy lawsuits that
could set a precedent for other businesses.
• It’s hard to know where to draw the line, as
Google is another data-into-assets business
that most have no big issues with. They
scrape data from just about all sites and
transform that into search results that users
desire.
• Then they sell ads to advertisers on the
search results.

DATA-INTO-ASSETS
Crowdsourcing
• Get a large group of people to contribute content for
free in exchange for access
• NOT crowdsourcing funding from sites like Kickstarter.
• A crowdsourcing business model relies on user-
generated content.
• The business focuses on making contributions easy and
providing an incentive for users to contribute (usually
money or a charitable goal).
• YouTube - users upload videos, and most hope to
generate revenue from those videos.
• Wikipedia is another great example, where all the
content on the site has been created for free by willing
users who want to spread knowledge.
Disintermediation

• Sell direct, sidestepping traditional

middlemen
• Directly delivering a service or product
instead of through a middleman.
• Tesla.
• Instead of selling cars through a
dealership, you buy online and skip
the salesman.
• Not only is it more convenient, but
it reduces costs for consumers.
e.g. Dell, WebMD
Freemium
• Freemium is a modern business model that is often used by
software companies.
• Because there’s very little overhead in serving data,
businesses can choose to provide a portion of their service
or product for free, but requiring payment for full access.
• Dropbox gives you a small amount of free cloud storage and asks you
to upgrade to a paid plan if you need more space.
• Spotify offers free music but has ads. If a user buys a paid plan, they
get rid of the ads.
• Freemium lets you reach a wider audience, and often get
more referrals, which can lead to a steady stream of
customers.
Fractionalization
• Sell partial use of something and letting customers buy a portion of a product or
service.
• It’s a great model when your target customers only want your product or service part
of the time. They get the full benefits but don’t have to pay full price.
• a timeshare is a property – typically a hotel or a luxury resort in which multiple
parties hold rights to use the property, and each sharer/ member is allotted a period
of time (about one week, almost the same time every year in a fixed package and one
week of their choice in floater package) in which they may use the property.
• A membership costs about Rs 1 lakh upwards and the annual maintenance
costs about Rs 10,000 upwards depending on which package you are with the
timeshare company.
• One can also sell the share to others if they are not keen on holding it.
• The member, however, holds no claim to ownership of the property.
• Sterling Holiday Resorts, Club Mahindra, Country Club , . NetJets, Time-shares
Leasing
• Rent, rather than sell, high-margin, high-
priced products
• Leasing is nothing new and has been
used by car dealerships for many years.
It works best for expensive products.
• When a customer often can’t afford to
pay cash or only needs a product one
time, you offer them use of the product
for a rental fee.

e.g. Cars, MachineryLink

Low-touch
• Lower prices by decreasing service
• A low-touch model takes a high-end
offering and reduces the cost (and quality)
of that product or service.
• Competing on cost is a difficult business
model to succeed with, but can work if you
get enough customer volume.
• Walmart - sell lower-quality products than
most competitors, but at a better price.
e.g. Walmart, IKEA
 Negative Operating Cycle
•Business
How Doesmodel
It popularized
Work? by
Amazon
• By maintaining a low inventory and
getting payment upfront.
• you need a reliable and fast fulfillment
• Lower prices by receiving payment process for this to work effectively.
before delivering the offering • The profits then come from the volume of
sales that are attracted through low
• popular with online retail prices, or by utilizing the money sitting
around before having to pay suppliers.
businesses and allows businesses
• That money generates interest or can be
to sell products at a low-profit- used to fund long-term investments or
margin (or even at cost), and still research and development.
be highly profitable.
RAZORS AND BLADES
• Razors and blades can be interpreted literally or symbolically.
• Offer the high-margin razor below cost to increase volume sales
of the low margin razor blades
• This business model consists of bundling 2 products together
that require each other.
• Then, you sell the main component (razor) at no profit or even a
loss but recoup that because the complementary product has
high margins (blades).
• Personal printer. They’re cheap to buy, but the ink is very
expensive and high margin.
 • Offer the low-margin item below
cost to encourage sales of the
high margin companion product
• Same as Razors and Blades, but
the two products are split.
• You offer the “blades” at a very
low cost in order to get people to
buy the expensive and high
margin “razor.”
• Kindle and iPod/iTunes
• Amazon Kindle books, which are
very cheap, and may tempt
consumers into purchasing an
expensive Kindle to read the
books on.

REVERSE RAZORS AND BLADES

 • Rather than sell a
product, sell the service
the product performs
• There are many times that
people want to use a product,
without buying it.
• A product-to-service model
lets people pay a service fee
to have access to a product.
• It’s similar to leasing and
fractionalization.
• Zipcar, which is a car-sharing
company. Members pay a
monthly or annual fee to have
access to car reservations as
needed.
PRODUCT-TO-SERVICE
Standardizations

• Standardize a previously
personalized service to
lower costs
• If you can take something that
has a lot of variabilities and
create a consistent, standardized
product, you stand out from
competitors.
• Dominos did this with their “30
minutes or it’s free” offer for
pizza delivery, which at the time
was unheard of.

• e.g. MinuteClinic
Subscription Club

• Charge a subscription fee to gain access to

a service
• A subscription club lets customers buy a
product on a regular basis.
• This is a popular model for software
businesses that most SAAS (Software As A
Service) platforms fall under.
• Netflix and Dollar Shave Club also would
be subscription clubs.
User Communities

• Grant members access to a network,

• Charging both membership fees and for advertising
• Finally, some businesses create paid user communities that generate
revenue from fees and possibly advertising.
• The most famous example of this is Angie’s List, a home services review
community that required payment until a little while ago.
• It’s a tough model because most people prefer free forums and other
types of communities, but good if people will pay for higher quality
information.

• e.g. Angie’s List, Yelp, Lego and Lego community

 • Since the beginning of the Internet,
creating a digital platform has been a
viable business model for some
companies.
• For example, OpenTable started in 1998,
which is a site that provides an online
restaurant-reservation service.
• There are still opportunities to be
innovative in an industry simply by
providing a useful product online.
• To use this, you can apply modern
technology to outdated industries, or
apply new technology to any industries
ready for it.
• We’re also seeing new digital platforms
innovate upon old ones by leveraging
new technology like machine learning
and blockchain technology. These could
almost be considered business models of
their own.

DIGITAL PLATFORMS
Module 1 – Economics and
Strategy of Business Models
1.1. Strategy of Business Models
Porter’s five forces- Competitive Rivalry (CR)
• Industry competition
• A higher degree of competition means
the power of competing companies
decreases.
• When competition is low, companies
can do whatever they need to in order
to increase their profits.
Porter’s five forces - Threat of Entry (ToE)
• New players in the industry
• New (and more) entrants into the
market mean a company's power also
decreases.
• Most companies prefer to operate in a
market or industry where there are
fewer players.
Porter’s five forces – Bargaining Power of
Suppliers (BPS)
• Supplier (seller) power
• how suppliers can use their power to
increase the price of goods and
services.
• The fewer suppliers there are in the
market means they have more power.
Porter’s five forces –Bargaining Power of
Customers (BPC)
• Buyer (customer) power
• When consumers have more
bargaining power, they may be able to
affect the price of goods and services,
driving them down.
Porter’s five forces- Threat of Substitutes
(ToS)
• The threat of substitutes
• Products and services by a rival that
can easily be substituted
• Threat to a business's profitability.
Porter’s five forces
•Industry competition
•New players in the
industry.
•Supplier (seller) power
•Buyer (customer) power
•The threat of substitutes
Resource Base View (RBV)
Resource Base View (RBV)
Resource Base View (RBV)
Module 1.2 Customer-side
Economics of Business Models
 1.2 Customer-side Economics of Business Models

How is Willingness to Pay of a Buyer concept related to Demand and How is

Willingness to Sell (WTS or WTA-Willingness to Accept) of the seller related to
Supply

Value Stick- Price, Cost, Customer

Delight, Profit, Supplier Surplus, WTP
and WTA
 1.2 Customer-side Economics of Business Models

Ideas of Utility, Value and Price

Value from Customer’s perspective
Value Proposition USP
• Value Proposition is a broad
umbrella term which
accommodates concepts like • USP focuses only on one aspect
USP. which is often tangible benefit or
addition done to the product
• Value proposition 
• It is a way companies position
- both tangible and intangible their product taking into
benefits consideration both the added
- your product/service is feature (tangible benefit) and
positioned to the customers. solving problems/needs
(intangible benefit).
USP : Case of i-phones
• Like lets say Phones.
• Every time a new version of the phone comes into market it includes
some additional feature or revolutionary feature which was not there
in their previous versions basically adding a differentiation to your
product.
• USP of the product is that differentiating feature
• Whereas, the same phone creates a value proposition when you
focus on how this product can be used to solve the problems of the
customers or is fitting into fulfilling the needs of the customers.
A strong value proposition usually attempts to
attract customers, while a compelling USP helps to
differentiate your product.
Value from Customers and Firms Perspective

Value from Customer’s perspective Value from Firm’s Perspective

• Value is the satisfaction or happiness customers associate

with the product in comparison to the cost they are paying to
consume the product.
• For firms, value is only
• This can come through both the functional benefit that the associated with the monetary
product offers or the emotional benefit the consumer feels.
• It is more of subjective in nature. (However, We measure it
returns or profits they can have
also in economics through the marginal utility concept).
from the product. It is mostly in
• Sometimes customers associate value based on the brand
name also. like for example when you say its a starbucks
coffee so consumers are willing to pay 200 for the same
quantitative terms only.
coffee which they could have had at 20 rps only. So
considering the value the customers associate to the brand,
value-based pricing is also adopted by bigger
renowned brands.
WTP or WTS
• At the heart of any business’s strategy is the question, “How does it
create value?”
Three sub-questions for this?
• How can my business best create value for customers?
• How can my business create value for employees?
• And how can my business create value by collaborating with suppliers?

• Think of a company's strategy as an answer to these three questions

(Oberholzer-Gee, Business Strategy, Harvard Business School )

Value Stick Framework
• Simplifying strategy by breaking
down the components of value
creation.
• The value stick comprises four
components, two of which are

• Willingness to pay (WTP) and

• Willingness to sell (WTS).

(Oberholzer-Gee, Business Strategy, Harvard Business School )

Value stick’s four levers

• Willingness to pay (WTP): The highest price a customer is willing to

pay for your product or service
• Price: The amount customers must pay for goods or services
• Cost: The amount a company spends on producing goods or services
• Willingness to sell (WTS): The lowest amount suppliers are willing to
accept for the materials required to produce goods or services
Value Stick
• These four levers can be moved up and down.
• You can increase the price of your product or decrease its cost of
production.
• Moving each lever impacts the value created for each stakeholder.
Consumer Surplus or Customer Delight

Customer delight represents the value

captured by the customer and is influenced
by WTP and price.
Firm margin or Profits

Firm margin represents the value captured

by the business and is influenced by price
and cost.
Producer Surplus or Supplier Surplus
•Supplier surplus represents the value captured
by the firm’s suppliers and employees and is
influenced by cost and WTS.
Value-Stick: Raised Prices
Imagine you own a company that makes cookies.
• Your cookies are made with premium ingredients, including chocolate
sourced from Switzerland.
• You have a small but mighty team of employees who bake, package, and
market the cookies.
How can you create value for your customers, your suppliers, and
yourself?
Price or Cost?
• Price and cost are relatively straightforward levers;
• you can lower or raise the cost of producing and selling your cookies, and
• lower or raise the price you sell them for.
• Raising the cookies’ price increases your firm’s margin but decreases
customer delight.
Cutting costs increases your firm’s margin but decreases supplier
surplus.
Two levers- WTP and WTS
• Remaining two levers are a bit more complex.
• It is crucial to understand the complex levers- WTP and WTS
• and the factors that influence each
• to help you create value for all stakeholders.
WHAT IS WTP-WILLINGNESS TO PAY?
• Willingness to pay is the highest price a customer is willing to pay for
your product.
• Although people may prefer a lower price, this is the cost they would
pay if they had to.
• If you raised the cost even one cent higher than a customer’s WTP,
they would opt out of the purchase.
WTP is influenced by countless forces, many of
which are intangible. These factors can include:
• Income
• Geography
• Weather
• Age
• Gender
• Brand loyalty
• Service levels
• Advertising
• Competing products
• Expectations
• Legality
• Packaging
• Environmental or social impact
• Necessity
WTP of cookie company
• In the case of your fictional cookie company, here are some factors
that can raise customers’ WTP:
• The cookies’ taste
• Added nutritional value
• High-quality ingredients
• Ethically sourced ingredients
• Beautiful packaging with a note from the baker
• Sponsorship of local events that shows you’re involved in the community
WTP of cookie company
• Sometimes, people may not be able to articulate the reasoning
behind their WTP.
• For instance, maybe they subconsciously associate your cookies with
a sense of comfort or luxury, or the taste of your cookies reminds
them of the ones they used to eat as a child.
• Factors like this aren’t within your control, but others are, like using
high-quality, ethically sourced ingredients.
 WTP and
Elasticity of Demand
WHAT IS WILLINGNESS TO SELL(WTS) ?

• Willingness to sell (ALTERNATIVELY CALLED WILLINGNESS TO

ACCEPT(WTA)) is the lowest amount of money a business’s supplier is
willing to accept for materials, or its employees are willing to accept
in exchange for labor.
• While suppliers want to receive the highest amount possible for their
goods and services, and employees want the highest compensation
possible, their WTS can be lowered when value is provided in other
ways.
WTS of Cookie Company
In the case of the cookie company example, one supplier is the Swiss
chocolate company that supplies you with the luxury chocolate your
customers love.
Levers that influence suppliers’ WTS include:
• Respectful and timely turnarounds from your team
• Pleasant working relationships
• Discount codes for your cookies
• A feature on your website promoting their high-quality chocolate
WTS of Cookie Company
As for your cookie company’s employees, levers that influence their
WTS include:
• Safe and fair working conditions
• Benefits such as health care, sick time, and paid vacation
• Level of risk associated with the job (e.g., Are safety measures
enforced in the kitchen? Are appliances up to code?)
WILLINGNESS TO PAY VS. WILLINGNESS TO SELL
• The key difference between willingness to pay and willingness to sell
is who or what they apply to:
• WTP pertains to customers
• WTS pertains to employees and suppliers.
• WTP and WTS are similar
• both levers on the value stick and can increase or decrease, creating and
reducing value for various parties.
• Raising WTP and lowering WTS are the only two ways to create value
for all parties represented on the value stick.
Revisit Nidal-Bharath’s iphone bargain ?
Now answer the questions?

• What is Nidal’s WTP?

• What is Bharath’s WTS?
• What is Nidal’s Consumer Delight ot Consumer Surplus?
• What is Bharath’s profit and Producer Surplus?
Module 2.Value Proposition, Business
Model Canvas, Value Architecture,
Customer Profile, Business Model Fit
Module 2. 1. Value Proposition,
Business Model Canvas, Customer
profile, Value Architecture and
Business Model Fit
Business Model Canvas Value Proposition  Value Map Job, Pain, Gain-->
Customer Profile  Problem Solution Fit Product Market Fit- Business Model
Fit
• Business Model Canvas
•  Value Proposition
•  Value Map
• Job, Pain, Gain
• --> Customer Profile
•  Problem Solution Fit
•  Product Market Fit-
•  Business Model Fit
 Value Capture

Value Delivery

Value Creation
Pipeline business model =A linear value chain
“Pipeline” businesses
• Traditional Model in Industry
• Create value by controlling a linear series of activities—the classic
value-chain model
• Inputs at one end of the chain (say, materials from suppliers) undergo
a series of steps that transform them into an output that’s worth
more: the finished product.
Apple : Pipeline Platform
• Apple’s handset business is essentially a pipeline.
• But combine it with the App Store, the marketplace that connects app
developers and iPhone owners, and you’ve got a platform
Pipeline Platform
• Pipeline giants scrambling to incorporate platforms into their models.
• Walmart, Nike, John Deere, and GE
• Firms needn’t be only a pipeline or a platform; they can be both.
• While plenty of pure pipeline businesses are still highly competitive
• When platforms enter the same marketplace, the platforms virtually
always win.
Pipeline Platform
1. From resource control to
resource orchestration
Resource-based view of competition
• Firms gain advantage by
controlling scarce and
valuable—ideally,
inimitable—assets.
RBV

Pipelines Platforms
• Tangible assets such as mines • Assets that are hard to copy
and real estate • Community and
• Intangible assets like intellectual • Resources its members own and
property. contribute (aggregate)
• Rooms or Cars or ideas and
information.
• Network of producers and
consumers is the chief asset.
Pipeline Platform
2.From internal optimization to
external interaction.
2 .From internal optimization to external
interaction
Pipelines Platforms
• organize their internal labor and • Platforms create value by
resources to create value facilitating interactions between
• by optimizing an entire chain of external producers and
product activities consumers.
• from materials sourcing to sales
and service.
• external orientation they
often shed even variable costs of
production.
From internal optimization to external
interaction 
•Platforms do not dictating
processes, but rather
persuading participants
•Ecosystem governance is a
key skill
Pipeline Platform
3. From a focus on customer value
to a focus on ecosystem value
Focus

Pipelines Platforms
• seek to maximize the lifetime • seek to maximize the total value
value of individual customers of of an expanding ecosystem in a
products and services, circular, iterative, feedback-
• Customers sit at the end of a driven process
linear process. • Sometimes that requires
subsidizing one type of
consumer in order to attract
another type
When a platform enters a
pipeline firm’s market, the
platform almost always wins.
Pipeline Vs Platform Models: Case of OTTs

Pipeline business is a traditional

business structure in which, the
value flows linearly in one
direction from the producers to
the consumers and the money
flows in the opposite direction.

OTT business industry is a platform

model industry, where the value
and money flow is not always
linear and there are multiple sides
to the industry
Pipeline Vs Platform Models : Case of OTTs
Single and multisided platforms:OTT
Single platforms are those that cater to one
set of users only. There is only a single set of
users who gain value/money from the
business.
Whereas OTT is a multisided platform, which
involve multiple groups of participants who
interact with each other through the
platform. These platforms create value by
connecting different sides of the ecosystem.
All of the sides are interdependent on each
other in terms of value flow and money flow.
What is a platform business model ?

Drawing from the common analogy (of seeing railway station as a platform), a
platform is a business model that brings together multiple set of
users (like trains and passengers).

Three values – information (announcements, signage, etc in a railway station),

infrastructure (infrastructure for passengers to wait train, alight from or board the train),
and rules (specified terms of usages or rules) – define how platforms operate.
In contrast to traditional businesses that Van Alstyne, Parker, and Chaudary
(2016) refer to as pipelines, platforms add value in a different form.

In pipeline businesses like say, when a consumer buys bread, value flows
from one direction to the other in the value chain – from the farmer who
produced the wheat; to the small businessman that made the flour out of
that wheat; to the baker that baked the bread; to the distributor and retailers
that sold the bread; finally to the consumer. And the money flows the
reverse direction – from the consumer to the retailer/distributor to the baker
to the flour-maker to the farmer.
These characterize pipeline businesses as money and value flow as fluids
flow through a pipeline.
Platforms are typically asset light (Airbnb does not own a single
hotel, nor does Uber a taxi) but have enough market power to
lead their respective industries

Typically, such platform business firms intermediate between

different sets of users, leveraging network effects to grow the
market, and in some markets dominate industries leveraging
winner-takes-all economies.
Platform businesses have different value flows.

The transition from pipelines to platforms as business involves three

key shifts:
Resource control to resource orchestration
Internal organization to external interaction
Focus on customer value to ecosystem value

(Van Alstyne et al. 2016)

Single – and Multi-sided platforms

Simple platforms are those that cater to one set of users only, as
in the case of automotive platforms or technology platforms. In
these contexts, a platform refers to a base model or
technological core that can be leveraged to produce multiple
products and services.
For instance, an automotive company may use an engine across multiple
vehicle models.
Single – and Multi-sided platforms

Multi-sided platforms caters to multiple set of users.

Newspaper adding value to readers and advertisers; or an airport providing
services to passengers and airlines; or a marketplace that brings together
buyers and sellers
Towards Platform Business
Models, Digital Platforms and
Network Effects
A concept relevant with rise of multisided platforms
Module 3: Platforms
Digital Platforms
 • Since the beginning of the Internet,
creating a digital platform has been a
viable business model for some
companies.
• For example, OpenTable started in 1998,
which is a site that provides an online
restaurant-reservation service.
• There are still opportunities to be
innovative in an industry simply by
providing a useful product online.
• To use this, you can apply modern
technology to outdated industries, or
apply new technology to any industries
ready for it.
• We’re also seeing new digital platforms
innovate upon old ones by leveraging
new technology like machine learning
and blockchain technology. These could
almost be considered business models of
their own.

DIGITAL PLATFORMS
OYO Rooms
Oyo rooms is a Room Booking Digital Platform that connects
hotel/home owners (the host)(Supply side) and people who
search for rooms (the visitors)(Demand side).

It is founded by Ritesh Agarwal in 2012.

Oyo is a transaction platform. They add value to its

both sides of users by facilitating a transaction (buy/sale).
They help hosts to sell their vacant rooms and visitors to
easily book standard rooms at
Reasonable price.

Oyo doesn’t own any hotels/rooms

 SWIGGY
Swiggy is a Food Delivery Digital Platform that connects
restaurants (Supply side) and people who search for food
(demand side)

It is founded by Sriharsha Majety and Nandan Reddy in 2013.

Swiggy is a transaction platform. They add value to its

both sides of users by facilitating a transaction (buy/sale).
They help restaurants to offer delivery service and hungry
ones to get quality food of reasonable price delivered at their
premises

Swiggy doesn’t own any restaurants !

 Bharat Matrimony
Bharat Matrimony is a Match Making Digital Platform that
connects People (both sides) who searches for a life partner
(Marriage)

It is founded by Murugavel Janakiraman in 2000.

Bharat Matrimony is a Matching platform. They add value to its

both sides of users by helping them to find a right match of their
Interest. They help brides and grooms to find profiles that suits
their criterion, but basically do not organize the Marriage !

Bharat Matrimony doesn’t own any profiles !

 OYE Rickshaw
Oye Rickshaw is Mobility Digital Platform that connects
Rickshaw drivers (Supply side) and riders (demand side)

It is founded by Mohit Sharma & Akashdeep Singh in 2017.

Oye Rickshaw is a transaction platform. They add value to its

both sides of users by facilitating a transaction (buy/sale).
They help rickshaw drivers to find nearby riders and riders to
find nearby rickshaws and book the trip.

OYE Rickshaw basically doesn’t own any rickshaws !

Justdial.com
Justdial is a hyperlocal service search Digital Platform that connects
Local service providers (Local Businesses) (Supply side) and people
who looks for a service locally (demand side).

It is founded by VSS Mani in 1996.

Justdial is an Info-mediation platform. They add value to its

both sides of users by sharing authentic information.
They help local people to find details of multiple local service
providers based on their search query. By listing in Justdial the
local service providers gets an online presence and improved visibility.
However the transaction doesn’t happen within Justdial.

Justdial doesn’t own any local businesses !

YouTube
YouTube is a Broadcasting Digital Platform that connects
Content Creators (Supply side) and Viewers (Demand side).

It is founded by Steve Chen, Chad Hurley, and Jawed Karim in

2005. Currently owned by Google.

YouTube is more likely to be a transaction platform. They

add value to its both sides of users by streaming contents.
They help content creators to broadcast their contents and
Viewers to view contents of their interest. The broadcasting
Involves a money making for the content creator.

YouTube doesn’t own any contents !

Tinder
Tinder is a Dating Digital Platform that connects people who
looks for intimate relationships.

It is founded by Sean Rad in 2012.

Tinder is more likely to be a matching platform. They

add value to its both sides of users by helping them to
find a right match of their interest. They help people to
find, understand and build up a relationship with another
one who suits to their interests.

Tinder doesn’t own any profiles !

Uber Cab
Uber is a Taxi-hailing Digital Platform that connects
Taxi drivers (Supply side) and riders (Demand side).

It is founded by Garrett Camp in 2009.

Uber is a transaction platform. They add value to its

both sides of users by facilitating a transaction (buy/sale).
They help Taxi Drivers to find nearby riders and riders to find
Nearby Taxi. They also create a shared economy by transacting
vacant seats.

Uber doesn’t own any Cars

Flyzy
Flyzy is a Travel Tech Digital Platform that connects
Airport Service Providers (Supply side) and Airline
Travelers (Demand side).

It is founded by Hansraj Patel, Arjit Singh and Deepak

Meena in 2020.

Flyzy is a transaction platform. They add value to its

both sides of users by facilitating a transaction (buy/sale).
They help Airline travelers to check-in and avail various services
at airport before physically reporting. They help airports in
managing the queue and enhancing traveller experience

Flyzy doesn’t own any Airport or Airport Services

Hmade.online
Hmade.online is a Shopping Digital Platform that connects
Homemade Packed Food Manufacturers (Supply side) and Health
Conscious Customers (Demand side)

It is founded by Rijas B.M (NIT C – SOMS, Research Scholar) in

2021.

Hmade.online is a transaction platform. They add value to its

both sides of users by facilitating a transaction (buy/sale).
They help home based packed food producers to sell directly to
Customers and Customers to buy healthy food products at a
reasonable rate. They deliver products at customer’s premises.

Hmade doesn’t own any homemade products

Other top examples include -
3.1. Network
3.1.1. Network Effects
A concept relevant with rise of multisided platforms
Review of concepts
• Business Model
• Platform vs Pipeline
 Timeline of ED project

First Presentation
Create a Showing the first hand
group of 3 transcript + Profiles in
members Week of Sep 10
each Repeated
Groups

Interviews
Enterprise

Contact an Incubator

conversation
Audio-record the

conversations
Transcribe the
July 26th- last interviews
date- Group
List Choose an Start-up
Second
(Deadline) Presentation +
Reflection
Get consent of the
entrepreneur to study Week of Nov 10
Entrepreneur Chosen
and Their Profiles
uploaded by Aug 10
 WHO: Groups

• Choose your group

• 2 members ..
WHOM : Choosing enterprise
• Identify an Entrepreneur
• Running a start-up-
• Should have started up and been registered.
• Ideally a Digital Platform, worst case, a pipeline business
 Suggested Examples

Students can look for similar firms in their locality like food delivery
apps, grocery delivery apps, regional social medias, job search apps,
tourism support apps, infomediational apps etc.

Slide Courtesy Fawaz Kareem

Example
Hmade.online
Hmade.online is a Shopping Digital Platform that connects
Homemade Packed Food Manufacturers (Supply side) and Health
Conscious Customers (Demand side)

It is founded by Rijas B.M (NIT C – SOMS, Research Scholar) in

2021.

Hmade.online is a transaction platform. They add value to its

both sides of users by facilitating a transaction (buy/sale).
They help home based packed food producers to sell directly to
Customers and Customers to buy healthy food products at a
reasonable rate. They deliver products at customer’s premises.

Slide Courtesy Fawaz Kareem

Hmade doesn’t own any homemade products

Flyzy
Flyzy is a Travel Tech Digital Platform that connects
Airport Service Providers (Supply side) and Airline
Travelers (Demand side).

It is founded by Hansraj Patel, Arjit Singh and Deepak

Meena in 2020.

Flyzy is a transaction platform. They add value to its

both sides of users by facilitating a transaction (buy/sale).
They help Airline travelers to check-in and avail various services
at airport before physically reporting. They help airports in
managing the queue and enhancing traveller experience

Slide Courtesy Fawaz Kareem

Flyzy doesn’t own any Airport or Airport Services
Bharat Matrimony
Bharat Matrimony is a Match Making Digital Platform that
connects People (both sides) who searches for a life partner
(Marriage)

It is founded by Murugavel Janakiraman in 2000.

Bharat Matrimony is a Matching platform. They add value to its

both sides of users by helping them to find a right match of their
Interest. They help brides and grooms to find profiles that suits
their criterion, but basically do not organize the Marriage !
OYE Rickshaw
Oye Rickshaw is Mobility Digital Platform that connects
Rickshaw drivers (Supply side) and riders (demand side)

It is founded by Mohit Sharma & Akashdeep Singh in 2017.

Oye Rickshaw is a transaction platform. They add value to its

both sides of users by facilitating a transaction (buy/sale).
They help rickshaw drivers to find nearby riders and riders to
find nearby rickshaws and book the trip.
Only platform businesses? Pipeline too
Only young entrepreneurs? ? Seniors too
What are the sources of innovation in Sweet
Karam Coffee https://sweetkaramcoffee.in/
Business Model Innovation Technological innovation
• A story to connect with the entrepreneur- Nostalgia,
Craving of NRI
• Innovative Food packaging technology to keep
the crispiness intact
•
Locally sourced product/ • ‘Millet’ Murukku sticks- with the goodness of
Geographically tagged/indicator sorghum millet
• She tells 'Grandma Approved'... good branding • Super cunchability
strategy... invokes nostalgia and trust without a doubt.
States the main ingredients that are used or not used... • No Maida/ No Vanaspati
ingredients that health conscious dont want
authenticity& tradition • Heart healthy Oil
The business model is reaching customers through social
media and browsers- Does this make a platform? • Zero Transfat Cholesterol
• In an era of increasing popularity of fast food and invasion of • Tecnology innovation -filling the packet with
international cusines available at finger tips , a different
approach in seeding a crave for traditional savouries hydrogen gas so that food doesn't get
• business model can be reaching customer directly without
oxidised. Not hydrogen may be nitrogen
intermediates millets are considered more healthy
Business Model asValue Architecture

In Concept Sweet Karam Coffee

• Value Creation [What is value • Value Creation - 1. Proposes to give a taste of your land in
the most authentic way
proposed/Promised based on • millets are used to go healthy
understanding customer need] • Value Delivery –good package and in time delivery.
• Value Delivery [How the promised • delivered to all parts of the world

value is delivered/assured] • Value Capture

• Creating a repeat customer-if the products are just as
• Value Capture [How business takes •
advertised, the customer will want to buy again
By bulk shipping to reduce shipping cost
out economic return out of the value • Making profits from creating a higher value
• subscription model
delivered] • Making profits from creating a higher value --They are selling
products at very high cost just because they are giving home
delivery .... but the same thing can be prepared at home at very
low cost

• Promise > Assurance > Gain

Zeuger
• https://zeugar.com/
• Value Creation
• Zeugar provides 100% sugar free, lower calorie Sweets and Desserts that are Diet
and Diabetic friendly.
• Our product are made from natural / naturally derived low calorie Sugar Substitutes.
• Our effort has always been to provide sweet delicacies of superior taste and
freshness for everyone, irrespective of their dietary restrictions.
• With a chain of 20+ kitchens across South India, our products are prepared fresh
without any preservatives and delivered within 2 hours of ordering

• Value Capture
• Price of I kg laddoo-150-250/ production cost of laddoo- 80
• Price of I kg Zeuger laddoo-600-700 / production cost of zeuger laddoo- 200
HOW: interview
• The mode of interview could
• Direct person-person interview
• Skype /Zoom interview
• Or a Whatsapp type cross-platform messaging/ VOIP

• Make sure that you keep some proof- Audio file-compulsory/Video

file/

• FAQ: How would a transcript look like. Refer attachment.

Transcript
WHAT? Questions to be asked
• The Economics around the Entrepreneur
• The questions should be structured around the
following core

Business/ Policy Events

Revenue Model
Competition

Demand Side
Supply Side

Costs

The questions would broadly look like:

Business / revenue model
• Business model and Revenue Model
• When would she/he or the firm break even?
• Pricing model- Factors influencing the Price setting process
• Who are your consumers?
• Major segments?
• Do you target any particular segment?
• Do (customers) wield substantial bargaining power?
• Do your product or service have substitutes in the market?
• How severe is the competition from substitutes?
Supply-side
• Cost structure-
• Nature of fixed costs, variable costs, opportunity and sunk costs
• Major influences on costs
• Which components varied in the last few years?

How is your supply chain?

• Do your suppliers have significant bargaining power?
• If yes, what are the sources of their bargaining power?
• Is their middle man problem?
Competition and markets
• How do your perceive your competition to be?
• Is their intense rivalry among the competitors in the market?
• Do you expect new entrants in the market?
• How do you perceive the threat of the potential entrants?
Government and Macro-economics
• Do your observe a cyclical / seasonal pattern in your output?
• How is recession affecting you?
• How is inflation affecting?
• How is Government’s tax regimes affecting you ? Avoid this question
if you are interviewing an informal producer ?
• Which are the government polices affecting you?
• How did Demonetization and GST rollout affect you?
• Are their specific events which brought out marked effects on you?
Focus Question:- 1
In the face of non-existent or not-yet-existent markets, what
are the assumptions about future made by entrepreneurs
while they build a new venture?
● When does entrepreneurs identify the existence of a business
problem and what factors qualify its worth enough for
creating a business around it?
● How does an entrepreneur creating new markets for their
startup ?
● How does the entrepreneur map a business idea onto testable
business model assumptions and build a minimum viable
product (MVP) that allows for collecting feedback? When
does an entrepreneur force to think beyond the MVP?
Focus QUESTIONS 2
Did they create a new market for the entrepreneur's new product/services paying off?
● Did digital presence help in this market creation and boost the lead generation to
conversions
Did their assumptions about the market align with industry expectations
● Does prior market research helped the firm in achieving product validation?

● Are these entrepreneurs finding investors after product/market validation?

● Is there a relationship between industry expertise and the entrepreneur aligning with
market expectations?
Focus QUESTIONS 3
Have they chosen the right business model to generate or create value
or imitating other business model? Did they innovate in business model
innovations?
Are they following the lean approach-problem/solution fit-
product/market fit-scale up?
● What led them to use Minimum Viable Product model or not?
● What sort of market testing, validation and feedback mechanisms
are available for an average Indian entrepreneur outside
incubated systems?
Ideal Framework for a story
• Strategic Dilemma/Problem /Threat/ Disaster to the Business
• Short-term SURVIVAL strategy?
• Long-term ADAPTATION strategy?
Differentiators
• How unique is your chosen firm/entrepreneurship?
• How good is her or hi(s)-’story’?

• The STORY of the guy setting up and running the businesses and how
he manage his struggles
Interim Presentation (Week of Sep15)
• Please present
• Transcripts of the first conversations with Entrepreneur
• Profile of Entrepreneur
• In the Week of Sep 15
Final Presentation +Reflection
• After you are done with the transcripts ,
• Present the transcripts + a reflection (1 slide) (
Concrete outcomes
• Your Transcripts written and presented as Word Documents
• Interim
• Final-
• Your Entrepreneur Profile
• Your ‘Reflection’-single pager
• Your Joint Undertaking that your transcripts transcribes a genuine
interview/conversation undertaken with an Individual + Consent
Email from Entrepreneur
Evaluation rubric
• Choice of Enterprise &
• Quality of Questions of the Transcript
• Insightful answers