• Components and
Determinants of performance
Sources of revenue
Successful Business Model
Question for all business models
Is the firm offering its customers
something distinctive or lower cost than
2. Scope To which customers (demographic and
geographic) is the firm offering this
value? What is the range of
products/services offered that embody
3. Pricing How does the firm price the value?
Where do the dollars come from? Who
pays for what value and when? What
are the margins in each market and
what drives them? What drives value in
Critical Business Model Questions
Which set of activities does the firm
have to perform to offer this value and
when? How connected (in cross
section and time) are these activities?
6. Implementation What organizational structure,
systems, people and environment does
the firm need to carry out these
activities? What is the fit between
7. Capabilities What are the firm's capabilities and
capabilities gaps that need to be
filled? How does a firm fill these
capabilities gaps? Is there something
distinctive about these capabilities that
allows the firm to offer the value
better than other firms and that makes
them difficult to imitate? What are the
sources of these capabilities?
8. Sustainability What is it about the firm that makes it
difficult for other firms to imitate it?
How does the firm sustain its
Critical questions for a business model
Business Model Dynamics
barriers to entry
changing the playing field
Generic strategies and complementary
• Internal development
Who Profits from Innovation
Party with both
technology and assets
or with bargaining
power makes money
Benchmark questions Rank
Extent to which activities:
Are consistent with customer value and scope?
Re-enforce each other?
Take advantage of industry success drivers?
Are consistent with firm's distinctive capabilities.
Make the industry more attractive for the firm?
6. Implementation Is the quality of the team high? H/L
7. Capabilities Extent to which firm's capabilities:
Are extendible to other product markets
8. Sustainability Has the firm been able to maintain or extend its lead in its
Appraising a Business Model (cont)