02 What Is A Business Model


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02 What Is A Business Model

  1. 1. What is a Business Model?<br />1<br />
  2. 2.
  3. 3. Definition of Business Model<br />A business model is a conceptual tool containing a set of objects,concepts and their relationships with the objective to express thebusiness logic of a specific firm. <br />Osterwalder, A., Pigneur, Y., and Tucci, C. L., “CLARIFYING BUSINESS MODELS: ORIGINS,PRESENT, AND FUTURE OF THE CONCEPT,” Communications of the Association for Information Systems, 15, May 2005.<br />3<br />
  4. 4. What a Business Model Describe<br />A business model describes the rationale of how an organization creates, delivers, and captures value - economic, social, or other forms of value. <br />4<br />http://en.wikipedia.org/wiki/Business_model<br />
  5. 5. Definition of Business Model<br />The term business model is thus used for a broad range of informal and formal descriptions to represent core aspects of a business, including purpose, offerings, strategies, infrastructure, organizational structures, trading practices, and operational processes and policies.<br />5<br />http://en.wikipedia.org/wiki/Business_model<br />
  6. 6. Nine Business Model Building Blocks<br />6<br />
  7. 7. Nine Business Model Building Blocks<br />7<br />
  8. 8. Nine Business Model Building Blocks<br />8<br />
  9. 9. A Model (Value Chain) in 80s<br />9<br />
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  11. 11. Today’s Business Model <br />11<br />
  12. 12. 12<br />
  13. 13. Summary of “what is a business model”<br />13<br />
  14. 14. More on “What Is a Business Model”<br />
  15. 15. Value Proposition<br />
  16. 16. Value proposition<br />The proposed value bundled and then offered to potential value recipients.<br />Sometimes hard to tell. <br />16<br />Alma-Tadema: Courtship the Proposal<br />
  17. 17. Value proposition<br />Is Google’s value proposition its search? And its recipients customers?<br />Only its products and services? <br />
  18. 18. Google’s Value <br />No! It provides user data to &quot;upstream&quot; application developers<br />18<br />
  19. 19. Google’s Value Recipients<br />Only its customers? <br />No! users (a very large number of value propositions, often provided for free)<br />network partners (revenues in return for relevant ads on their sites)<br />Developers<br />Employees, Google owners, etc.<br />Other business, libraries, authors – the world!<br />19<br />
  20. 20. Google’s Value Source<br />Only its revenue? <br />No! create momentum for a new technology – cloud computing<br />20<br />
  21. 21. The functions of a business model<br />Identify a market segment<br />The entire world as a segment? <br />Define the structure of the value chain (or canvas)<br />21<br />
  22. 22. Sample Business Models<br />22<br />
  23. 23. 23<br />
  24. 24. Long Tail Business Model<br />24<br />Click Me!<br />The Long Tail Eats the Head<br />
  25. 25. Business Model Example – Xerox Rental<br />Market segment – corporate and government<br />Value proposition – high quality copies at a low monthly lease rate<br />Value chain elements – entire copier system including supplies<br />Cost & margin – modest profit on equipment, high on supplies<br />Value network position – first mover, not require or pursue partners<br />Competitive strategy – technical product quality and capability<br />25<br />
  26. 26. Business Model Example – 3Com<br />Market segment – corporate PC<br />Value proposition – file and printer sharing between PCs<br />Value chain elements – focus on Ethernet protocol and add-on boards<br />Cost & margin – high volume low cost<br />Value network position – set IEEE 802 (LAN/MAN) standard<br />Competitive strategy – compete on standard and new channels<br />26<br />