Pros and Cons of Business Models - Part One

PART ONE (The Boring Part)

Business Model Definition, Components and Types

Definition
The term BUSINESS MODEL describes a broad range of informal and formal models that are used by enterprises to represent various aspects of business, including its purpose, offerings, strategies, infrastructure, organizational structures, trading practices and operational processes and policies.
- Wikipedia, Online Encyclopedia

Explanation
BUSINESS MODEL: a conceptual tool that contains a big set of elements and their relationships and allows expressing the business logic of a specific firm.
BUSINESS MODEL: a description of the value a company offers to one or several segments of customers and of the architecture of the firm and its network of partners for creating, marketing, and delivering this value and relationship capital, to generate profitable and sustainable revenue streams.

Business as a Model VALUE PROPOSITION COST STRUCTURE CUSTOMER RELATIONSHIP TARGET CUSTOMER DISTRIBUTION CHANNEL VALUE CONFIGURATION CORE CAPABILITIES PARTNER NETWORK REVENUE STREAMS INFRASTRUCTURE CUSTOMER OFFER FINANCE Business Model Design Template by Dr. Alex Osterwalder, PhD.

Business as a System FINANCE Business Flowchart by Rich Schefren Input Output Suppliers & Vendors Customers & Affiliates Your Business Systems Tasks Processes

Functions
“ A business model performs two important functions:
CREATES VALUE
by defining a series of activities from raw materials through to the final consumer that will yield a new product or service with value being added through the various activities.
CAPTURES VALUE
by establishing a unique resource, asset or position within that series of activities where the firm enjoys a competitive advantage.”
- Henry Chesbrough, “Open Business Models”

“ Founder” Business Model
As per Rich Schefren, a true “Founder” business model must also perform two more functions:
CREATE PROFIT FOR THE BUSINESS FOUNDER(S)
So that eventually business start growing without the Founder(s)’ participation
CREATE BENEFITS FOR THE WHOLE PARTNER NETWORK
This includes all participants, such as partners,
employees, outsourcers, affiliates and customers
of the business

Quote
“ VALUE is a combination of price, service, quality and, most importantly, the relationship that you have with your customers.”
- Chris Malta, Worldwide Brands

The Offer
VALUE PROPOSITION: The products and services a business offers
VALUE PROPOSITION value proposition 1 value proposition 2 … OFFER “ THE WHAT”

The Customer
TARGET MARKET: Who is the Offer Targeted at?
value proposition 1 value proposition 2 … “ THE WHO” value proposition 1 value proposition 2 … target customer 1 target customer 2 … OFFER TARGET CUSTOMER DISTRIBUTION CHANNEL distribution channel 1 distribution channel 2 … target customer 1 target customer 2 … CUSTOMER CUSTOMER RELATIONSHIP relationship type 1 relationship type 2 …

The Target Market
TARGET CUSTOMER: The target audience for a business' products and services.
DISTRIBUTION CHANNEL: The means by which a company delivers products and services to customers. This includes the company's marketing and distribution strategy.
CUSTOMER RELATIONSHIP: The links a company establishes between itself and its different customer segments. The process of managing customer relationships is referred to as CRM (Customer Relationship Management).

The Infrastructure
DELIVERY MECHANISM: How is the Offer delivered to the Customer?
value proposition 1 value proposition 2 … “ THE HOW” value proposition 1 value proposition 2 … target customer 1 target customer 2 … OFFER value proposition 1 value proposition 2 … distribution channel 1 distribution channel 2 … target customer 1 target customer 2 … OFFER VALUE CONFIGURATION CORE CAPABILITIES core capability 1 core capability 2 … activity 1 activity 2 … INFRASTRUCTURE PARTNER NETWORK partner 1 partner 2 …

The Delivery Mechanism
CORE CAPABILITIES: The capabilities and competencies necessary to execute a company's business model.
PARTNER NETWORK: The business alliances which complement other aspects of the business model.
VALUE CONFIGURATION: The rationale which makes a business mutually beneficial for a business and its customers.

The Finance
EXPENSES AND REVENUE STREAMS: The Cost of running business and the way Profit is made
“ THE MONEY”
value proposition 1 value proposition 2 … value proposition 1 value proposition 2 … target customer 1 target customer 2 … OFFER value proposition 1 value proposition 2 … distribution channel 1 distribution channel 2 … target customer 1 target customer 2 … OFFER COST STRUCTURE Cost account 1 Cost account 2 … FINANCE REVENUE STREAM Revenue Stream 1 Revenue Stream 2 …

VALUE PROPOSITION COST STRUCTURE CUSTOMER RELATIONSHIP TARGET CUSTOMER DISTRIBUTION CHANNEL VALUE CONFIGURATION CORE CAPABILITIES PARTNER NETWORK REVENUE STREAMS gives an overall view of a company's bundle of products and services portrays the network of cooperative agreements with other companies describes the channels to communicate and get in touch with customers describes the arrangement of activities and resources explains the relationships a company establishes with its customers sums up the monetary consequences to run a business model describes the revenue streams through which money is earned describes the customers a company wants to offer value to outlines the capabilities required to run a company's business model INFRASTRUCTURE CUSTOMER OFFER FINANCE Business Model Summary by Dr. Alex Osterwalder, PhD.

Where do YOU stand right now? Retire Biz Work Study ???

Where do you go from here?

CLICK HERE TO GO TO
PART TWO

Pros and Cons of Business Models - Part One

by Val Slastnikov on Mar 02, 2009

Accessibility

Categories

Tags

Upload Details

Usage Rights

3 Embeds 9

Statistics

Pros and Cons of Business Models - Part One — Presentation Transcript

http://www.slideshare.net	7
http://wildfire.gigya.com	1
http://strategicprofitsvideos.blogspot.com	1