BUSINESS MODEL
BUSINESS MODEL
- describes the rationale of how an organization
creates, delivers, and captures value(economic,
social, cultural, or other forms of value).The process
of business model construction is part of business
strategy. It’s a way to represent core aspects of a
business, including purpose, offerings, strategies,
infrastructure, organizational structures, trading
practices, and operational processes and policies.
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: it thus
reflects management’s hypothesis about
what customers want, how they want it,
and how an enterprise can organize to
best meet those needs, get paid for doing
so, and make a profit.
EXAMPLE OF BUSINESS
MODEL
VALUE PROPOSITION
The collection of products and services a
business offers to meet the needs of its
customers. It’s what distinguishes itself from its
competitors. It provides value through various
elements:
a.) newness b.) getting the job done
c.) price d.) performance
e.) design f. ) cost /risk reduction
g.) customization h.) brand/status
CUSTOMER SEGMENTS
A company must identify which customers it tries to serve.
Various set of customers can be segmented based on the
different needs and attributes to ensure appropriate
implementation of corporate strategy meets the
characteristics of selected group of clients. The different
types of customer segments include:
a.) Mass Market
b.) Segmented
c.) Niche Market
d.) Diversify (multiple customer segments with different
needs and characteristics)
CHANNELS
A company can deliver its value
proposition to its targeted customers
through different channels. Effective
channels will distribute a company’s
value proposition in ways that are fast,
efficient and cost effective.
CUSTOMER RELATIONSHIP
To ensure the survival and success of any
businesses, companies must identify the type
of relationship they want to create with their
customer segments:
a.) Personal Assistance
b.) Self Service
c.) Dedicated Personal Assistance
d.) Automated Services
REVENUE STREAMS
The way a company makes income from each
customer segment.
a.) Asset Sale
b.) Lending/Leasing/Renting
c.) Usage Fee
d.) Licensing
e.) Subscription Fees
f.) Advertising
KEY RESOURCES
Are the assets required to offer and
deliver value proposition to the
customer.
a.) Physical
b.) Human
c.) Intellectual
d.) Financial
KEY PARTNERS
To optimize operations and reduce risks
of a business model, organization usually
cultivate buyer-supplier relationships so
they can focus on their core activity.
Complementary business alliances also
can be considered through joint ventures,
strategic alliances between competitors or
non-competitors.
KEY ACTIVITIES
The most important
activities in executing a
company’s value
proposition.
COST STRUCTURE
This describes the most important monetary
consequences while operating under
different business models.
a.) Fixed Costs
b.) Economies of Scale
c.) Variable Costs
d.) Economies of Scope
