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Chapter 6

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  • 1. CHAPTER 6
    A TAXONOMY /CLASSIFICATION OF BUSINESS MODELS
    Explore 7 major business models
    Analyse the components to know which business model will succeed
    what about open source?
  • 2. Summary of Business Model Taxonomy
    Commission
    Advertising
    Mark-up
    Production
    Referral
    Subscription
    Fee-for-service
  • 3. 1. COMMISSION-BASED
    Fee that is levied/charged on a transaction by third party
    Rely on commissions as a basis of business
    E.g. buying land through a broker. E*Trade
    eBay, company receive commission based on amount of sale
  • 4.
  • 5.
  • 6. 2. ADVERTISING-BASED
    The owner of website provides to end users subsidized or free content, services or even product that attract end-user visitors
    Refers to advertising as a source of revenue for itself, charging advertisers fees for banners, permanent buttons, & pop-up windows
    Yahoo!, Excite@Home & AltaVista
    Yahoo! Starts as search engine became personalized portal. Hence attract large volume of visitors & user which will be charge to the advertiser premium price.
  • 7.
  • 8.
  • 9.
  • 10. Top 5 search engine
  • 11. 3. MARKUP-BASED
    Refers to value added in sales than production
    Used by wholesalers & retailers
    Company bought finished goods from manufacturer & sold them to the public or to other firm
    Amazon. COM
    Key here is distribution efficiency/marketing muscle
  • 12. Markup-model example
    Markup Profit
    RM50
    Sold product
    To customer
    Price RM100
    PRODUCT X
    Bought from
    Manufacture
    Price RM50
  • 13. Amazon comes in.
  • 14. 4. PRODUCTION-BASED
    Manufacturer tries to reach customers or end user through the Internet
    This can save cost, & serve the customer better
    Hardware & software supplier uses this model
  • 15. Variant of the model
    Manufacturer-direct- manufacturer sells directly to end user- DELL
    Content producer- firms produce entertainment, information, art & sell to customer-SONY
    E-Procurement-companies tender & procure goods & services over the Web-FORD
  • 16. 5. REFERRAL-BASED
    Firms rely on fees steering visitors to another company
    A percentage of revenue of the eventual sale but can also be a flat fee, fees collected if order been made- ‘PORN’ sites
    ‘Affiliate model’
    Lead-generator-company collect data about customers & uses the data to steer business towards customers
  • 17.
  • 18.
  • 19.
  • 20. 6. SUBSCRIPTION-BASED
    Company charges a flat rate on a periodic basis that qualifies user service
    User pays subscription fee whether or not service is actually used
    ISP-provides internet access
    Last-Mile Operator-local loop, local phone company
    Content operator-info & entertainment offered to user-CNN
  • 21.
  • 22. 7. FEE-FOR-SERVICE-BASED
    Firms pay as the service goes, fees charge as the user used their service
    Pay only for service used
    Customers paying ASP for renting application
  • 23.
  • 24. Variants/alternatives
    Service provider-makes money by selling services than products
    B2B service provider-support business by selling service to other business
    Value chain service provider-FEDEX
    Value chain integrator-exploiting integration create value chain-EDS
    Collaboration platform provider
    ASP
    Audience broker- collect information on consumers & uses info to help advertisers (double-click)
  • 25. Which model to use?
    Firm should try to understand the strength of its componentsof the business model against its competitors to determine which business model is viable. (table 6.2 pg 113)
    CHAPTER 4
    PROFIT SITE
    CUSTOMER VALUE
    SCOPE
    PRICE
    REVENUE SOURCES
    CONNECTED ACTIVITIES
    IMPLEMENTATION
    CAPABILITIES
    SUSTAINABILITY
    COST STRUCTURE