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Prof	
  Shivananda	
  R	
  Koteshwar	
  
Director,	
  The	
  Amaatra	
  Academy	
  
shivoo@pes.edu	
  /	
  Facebook:	
  sh...
  A	
  business	
  model	
  describes	
  the	
  rationale	
  of	
  
how	
   an	
   organization	
   creates,	
   delivers...
  Strategy	
   has	
   been	
   the	
   primary	
   building	
   block	
   of	
  
competitiveness	
   over	
   the	
   pa...
  FROM	
   Product/Market	
   Segment	
   Oriented	
  
Approach	
  
▪  Product	
   and/or	
   service	
   at	
   its	
   ...
Customer
SegmentationValue
Proposition
Channels
Customer Relationship
Cost Structure
Revenue
Key Resources
Key Activities
Key Partners
Cost Structure
Revenue
Key Resources
Key Activities
Key Partners
Customer
Segmentation
Value
Proposition
Channels
Customer...
 The	
  story	
  that	
  explains	
  how	
  an	
  
enterprise	
  works	
  
	
  -­‐-­‐Joan	
  Magretta	
  
  The	
   success	
   or	
   failure	
   of	
   a	
   company’s	
   business	
  
model	
  depends	
  largely	
  on	
  how...
1.  How	
   much	
   do	
   switching	
   costs	
   prevent	
   your	
  
customers	
  from	
  churning?	
  
2.  How	
  sca...
1.  How	
  much	
  do	
  switching	
  costs	
  prevent	
  your	
  
customers	
  from	
  churning?	
  
“Thousand songs in a...
2.  How	
  scalable	
  is	
  your	
  business	
  model?	
  
How	
   easy	
   it	
   is	
   to	
   expand	
   a	
   busines...
3.  Does	
   your	
   business	
   model	
   produce	
   recurring	
  
revenues?	
  
4.  Do	
  you	
  earn	
  before	
  you	
  spend?	
  
By	
  assembling	
  on	
  order	
  after	
  selling	
  directly	
  
t...
5.  How	
  much	
  do	
  you	
  get	
  others	
  to	
  do	
  the	
  work?	
  
In	
  the	
  bricks	
  and	
  mortar	
  worl...
6.  Does	
   your	
   business	
   model	
   provide	
   built-­‐in	
  
protection	
  from	
  competition?	
  
Apple’s	
  ...
7.  Is	
   your	
   business	
   model	
   based	
   on	
   a	
   game	
  
changing	
  cost	
  structure?	
  
Bharti	
  Ai...
Prof	
  Shivananda	
  R	
  Koteshwar	
  
Director,	
  The	
  Amaatra	
  Academy	
  
shivoo@pes.edu	
  /	
  Facebook:	
  sh...
How to strengthen your business model?
How to strengthen your business model?
How to strengthen your business model?
How to strengthen your business model?
How to strengthen your business model?
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How to strengthen your business model?

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How to strengthen your business model
WOMEN ENTREPRENEURS’ WORKSHOP
Organized by Mount Carmel College
(in Association with National Entrepreneurship Network)
“ BUILDING A BETTER MARKET AND MANAGING FINANCE”
A One Day Workshop For Women Entrepreneurs


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Transcript of "How to strengthen your business model?"

  1. 1. Prof  Shivananda  R  Koteshwar   Director,  The  Amaatra  Academy   shivoo@pes.edu  /  Facebook:  shivoo.koteshwar   BUILDING A BETTER MARKET AND MANAGING FINANCE A One Day Workshop For Women Entrepreneurs Mount Carmel College, Bangalore
  2. 2.   A  business  model  describes  the  rationale  of   how   an   organization   creates,   delivers,   and   captures  value     Canvas   is   a   shared   language   for   describing,   visualizing,  assessing,  and  changing  business   models   References from the book: Business Model Generation ISBN: 978-0470-87641-1
  3. 3.   Strategy   has   been   the   primary   building   block   of   competitiveness   over   the   past   three   decades,   but   in   the  future,  the  quest  for  sustainable  advantage  may   well  begin  with  the  companies  creating  and  capturing   value  through  their  Business  models     Need     The   pressure   to   crack   open   markets   in   developing   countries     The  economic  slowdown  in  the  developed  world       The   rise   of   new   technology-­‐based   and   low-­‐cost   rivals   is   threatening   incumbents,   reshaping   industries,   and   redistributing  profits  
  4. 4.   FROM   Product/Market   Segment   Oriented   Approach   ▪  Product   and/or   service   at   its   center   that   focuses   on   a   customer’s  job-­‐to-­‐be-­‐done  –  Value  Proposition     TO   a   Holistic   Business   Model   Approach   to   achieve  long  term  competitive  advantage  
  5. 5. Customer SegmentationValue Proposition Channels Customer Relationship
  6. 6. Cost Structure Revenue Key Resources Key Activities Key Partners
  7. 7. Cost Structure Revenue Key Resources Key Activities Key Partners Customer Segmentation Value Proposition Channels Customer Relationship
  8. 8.  The  story  that  explains  how  an   enterprise  works    -­‐-­‐Joan  Magretta  
  9. 9.   The   success   or   failure   of   a   company’s   business   model  depends  largely  on  how  it  interacts  with   models  of  other  players  in  the  industry       One   business   model   may   appear   superior   to   others  when  analyzed  in  isolation  but  create  less   value   than   the   others   when   interactions   are   considered   Or   rivals   may   end   up   becoming   partners  in  value  creation     Appraising  models  in  a  stand-­‐alone  fashion  leads   to   faulty   assessments   of   their   strengths   and   weaknesses  and  bad  decision  making  
  10. 10. 1.  How   much   do   switching   costs   prevent   your   customers  from  churning?   2.  How  scalable  is  your  business  model?   3.  Does   your   business   model   produce   recurring   revenues?   4.  Do  you  earn  before  you  spend?   5.  How  much  do  you  get  others  to  do  the  work?   6.  Does   your   business   model   provide   built-­‐in   protection  from  competition?   7.  Is   your   business   model   based   on   a   game   changing  cost  structure?  
  11. 11. 1.  How  much  do  switching  costs  prevent  your   customers  from  churning?   “Thousand songs in a pocket” That   was   more   than   a   product   innovation   focusing   on   storage.   It   was   a   business   model   strategy   to   get   customers   to   copy   all   their   music  into  iTunes  and  their  iPod,  which  would   make   it   more   difficult   for   them   to   switch   to   competing  digital  music  players.  
  12. 12. 2.  How  scalable  is  your  business  model?   How   easy   it   is   to   expand   a   business   model   without   equally  increasing  its  cost  base  ?  Of  course  software-­‐   and  Web-­‐based   business   models   are   naturally   more   scalable  than  those  based  on  bricks  and  mortar   By  building  games  like  Farmville   or   Cityville   on   Facebook,   the   world’s   largest   social   network,   they   could   benefit   from   Facebook’s   reach   (&   scale)   without   having   to   build   it   themselves  
  13. 13. 3.  Does   your   business   model   produce   recurring   revenues?  
  14. 14. 4.  Do  you  earn  before  you  spend?   By  assembling  on  order  after  selling  directly   they   managed   to   escape   the   terrible   inventory  depreciation  costs  of  the  hardware   industry  
  15. 15. 5.  How  much  do  you  get  others  to  do  the  work?   In  the  bricks  and  mortar  world  IKEA  gets  us   to  assemble  the  furniture  we  buy  from  them.   We  do  the  work.  They  save  money.   Facebook  gets  us  to  post  photos,  create  and  participate  in   conversations,   and   “like”   stuff.   That’s   the   real   value   of   Facebook,   entirely   created   by   users,   while   they   simply   provide  the  platform.  We  do  the  work.  They  earn  the  sky-­‐ high  valuations  of  their  shares.  
  16. 16. 6.  Does   your   business   model   provide   built-­‐in   protection  from  competition?   Apple’s   main   competitive   advantage   arises   more   from  its  powerful  business  model  than  purely  from   its  innovative  products.  It’s  easier  for  Samsung,  for   instance,   to   copy   the   iPhone   than   to   build   an   ecosystem   like   Apple’s   appstore,   which   caters   to   developers   and   users   alike   and   hosts   hundred   thousands  of  applications  
  17. 17. 7.  Is   your   business   model   based   on   a   game   changing  cost  structure?   Bharti  Airtel  has  modified  its  cost  structure  by  getting  rid  of  their   entire  network  and  IT.  By  buying  in  network  capacity  on  a  variable   cost   basis   from   network   equipment   manufacturer   Ericsson   and   IBM,   they   can   now   offer   among   the   lowest   prices   for   mobile   telephony  globally.   Skype     provides   calls   and   communication   almost   like   a   conventional  telecom  company,  but  for  free  or  for  a  very  low  cost.   They  can  do  this  because  their  model  is  based  on  the  economics  of   a  software  company,  while  a  telecom  provider’s  model  is  based  on   the  economics  of  a  network  company  
  18. 18. Prof  Shivananda  R  Koteshwar   Director,  The  Amaatra  Academy   shivoo@pes.edu  /  Facebook:  shivoo.koteshwar   BLOG:  http://shivookoteshwar.wordpress.com   SLIDESHARE:  www.slideshare.net/shivoo.koteshwar   Good business models create virtuous cycles that, over time, result in competitive advantage. Smart companies know how to strengthen their virtuous cycles, weaken those of rivals, and even use their virtuous cycles to turn competitors’ strengths into weaknesses.

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