Components of the Business Model

1. BUSINESS MODEL
Components of a Business Model
Prepared by: M. Jackson

2. Components of the Business Model Listing(based
on cxc syllabus outline for Entrepreneurship)
1. Value Proposition
2. Beneficiary
3. Operations
4. Product Differentiation
5. Income Generation
6. Growth
Prepared by: M. Jackson

3. Value Proposition
• What exactly is the customer getting
• GOODS/SERVICE
• Product made to order (Custom Built)
• Product made on a wide scale offered
to all (Standardized)
• Walk In Purchase (Direct distribution)
• Indirect Distribution
• Made by the business internally
• Made elsewhere and shipped to the
business storage facility.
Prepared by: M. Jackson

4. Prepared by: M. Jackson

5. ConsumerManufacturer/
Producer
Wholesaler
RetailerManufacturer/
Producer
Direct Distribution
Consumer
ConsumerRetailer
Manufacturer/
Producer
Prepared by: M. Jackson
INDIRECT DISTRIBUTION

6. Beneficiary
• To whom the product/service is offered to.
• Look at your main target customers.
• Is it business to business only
• Business to consumers
• Both businesses & consumers
• Will the product/service be local (Your own country. Eg. Jamaica,
St. Lucia, Barbados, Grenada etc.).
• Regional: Outside your country (Other Caribbean countries)
Prepared by: M. Jackson

7. Beneficiary continued
• International : Outside the Caribbean eg. United States, Europe, Asia,
Australia, India etc.
• Is it catered to a small specific group (Niche Market)
• General Market/Wider market
Prepared by: M. Jackson

8. Prepared by: M. Jackson

9. your country and indicate whether each item
below will be classified as value proposition or
beneficiary.
Leather material
Sold to males who does carpentry
Can be bought in the Caribbean only
Colour – black/dark brown
Worn tied to the waist preferably
Can only be purchased in retail outlets
Can be made to customer’s desire if needed
Plan to expand product to Europe and India
Manufacturing is done in China for the business.
Main compartments for (screws, nails, water bottle, eye glass holder)
Prepared by: M. Jackson

10. Operations
• Consider the Organizational structure of the firm (traditional/less
traditional)
• Is it a system where more technology is used.
• A firm that is more technology inclined will definitely has a more
competitive advantage.
• Who are your workers and what special skills or experience do they
possess.
• When hiring choose workers who has the set skills or the potential.
Prepared by: M. Jackson

11. Operations continued
• Is the product/service be protected by Intellectual Property Rights
• What are the resources (physical, human and financial ) acquired to
be at an advantage over other businesses.
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12. Prepared by: M. Jackson

13. Examples of Resources
Prepared by: M. Jackson

14. Product Differentiation
• Focus on what makes your product stand out. Think of your
competitive advantage.
• Operational Excellence - pleasant workers, good customer service,
after service checks etc.
• Product quality – durability, comfort, efficiency, reliability.
• Innovative leadership – leader in product innovation, your business is
always offering something new/different.
• Cost- Affordable products, within market price or reasonably priced.
• Networks – be able collaborate with businesses (suppliers) and
brands, customers and prospective customers can share information.
Prepared by: M. Jackson

15. Prepared by: M. Jackson

16. Income Generation
• How does the firm intends to make money. This should be from the main
product/service as well as other means.
Eg. A hairdresser creams, shampoo and cut hair. In addition she sells hair
products from popular brands. Her main source of revenue is made from her
skills.
Consider:
Sales volume – a high volume is dependent on what sells most. Ensure
that fast moving stocks are always available so as not to be stock-out.
Other goods will sell but they will carry low or medium sales revenue.
Profit margin will increase with high sales volume if expenses are minimal.
Prepared by: M. Jackson

17. Income Generation (2)
• Pricing – Determine if the product will be fixed or variable. A stable
price list is more appreciated by customers; unless you are offering a
discount.
Eg. A hairdresser may have prices as follows:
Cut $ 1000; Perm $2500 ; shampoo $1200. ($JA)
• Revenue Sources – This will state where the main source of revenue
will come from or whether there is an alternative source. The
example used on the previous explains just that.
Prepared by: M. Jackson

18. Income Generation (3)
• Operating Leverage - This is caused from an increase in operating
income due to the growth of revenue.
Increased sales which has high gross margin and variable cost lowered
will increase the operating leverage.
For operating income to remain high the expenses to operate the
business must remain low. This will automatically translate into the
dollar figure made by the business as profit.
Prepared by: M. Jackson

19. Growth
• This focuses on future plans - medium term/long term
• Subsistence Model – selling enough to cover operating expenses with
small profit for personal survival.
• Income Model – selling enough not for long term growth but to make
enough to promote a certain lifestyle.
Prepared by: M. Jackson

20. Growth (2)
• Growth Model – thinking of expansion, staying in business for a long
time. Setting goals that are short, medium and long term.
• Speculative Model – What if a business opportunity is created?
The entrepreneur sees an opportunity and capitalize on it. No long
term plans are made. If the business does well, then it continues and if
it does not it moves on.
Prepared by: M. Jackson

21. Credited Sources
• https://previews.123rf.com/images/ideyweb/ideyweb1703/ideyweb1
70300162/74269787-people-between-ages-walk-through-the-mall-
make-a-purchase-.jpg
• https://cdn.education.com/worksheet-image/127554/goods-
services-2-community-cultures.png
• http://www.energygroupconsultants.com/wp-
content/uploads/2017/02/B2B-Sales-Tips.jpg
• https://i.pinimg.com/736x/3c/f3/e9/3cf3e9a8f775ed328285d9f007e
beb7b--niche-marketing.jpg
Prepared by: M. Jackson

22. Credited Sources(continued)
• http://elmar-ip.com/wp-content/uploads/2011/03/ip-954x1024.jpg
• http://www.chakandassociates.com/images/IP_overview.jpg
• https://cdn.zephyrcms.com/e050e8a5-317f-4466-b1b5-
aba52dbe63ae/-/progressive/yes/human-resources.jpg
• http://images.slideplayer.com/26/8558339/slides/slide_18.jpg
• https://sites.google.com/a/wcastl.org/the-westminster-school-of-
business-and-
communication/_/rsrc/1488854990127/introductiontobusiness/keyr
esources/IP.png?height=214&width=400
Prepared by: M. Jackson

23. Credited Sources (Continued)
• https://encrypted-
tbn0.gstatic.com/images?q=tbn:ANd9GcSTw6ofJcSzBgB4x76he300jC_Mu
WIZppT0LsuM-HscI_uHYwxN
• https://www.prestogeo.com/wp-content/uploads/2016/02/1.jpg
• https://www.providesupport.com/blog/wp-
content/uploads/2014/05/Customer-Service-Challenges.jpg
• https://comps.canstockphoto.com/retail-pricing-tag-set-eps-
vector_csp2633588.jpg
• Stephen-James, L. B. (2014). Entrepreneurship for Caribbean Students.
Jamaica: Ian Randle Publishers.
Prepared by: M. Jackson