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PART THREE
INTRODUCTION TO BUSINESS
MODELING
WHAT DOES “VALUE PROPOSITION” MEAN TO YOU?
ASPECT DESCRIPTION
VALUED Customer will pay money to buy what you are selling b...
BUSINESS MODELS CAN BE EXPRESSED AS A FORMULA
$= REVENUE – COST
implementability,
sustainability, & exit
&
$ > $ from othe...
COSTS BOIL DOWN TO 4Ps
COST = PEOPLE
+ PRODUCTION
+ PROMOTION
+ PLACE
PROFIT = (REVENUE – COST) I, S,E
COSTS TREES HELP FOCUS VARIABLES AND LEVERS
PROFIT = (REVENUE – COST) I, S,E
PEOPLE
COST
# OF
PEOPLE
COST PER
PERSON
REDUC...
REVENUE IS MORE COMPLEX, BUT STILL DIVISIBLE
PROFIT = (REVENUE – COST) I, S, E
REVENUE =
Rev stream 1
All revenue streams
...
PRICE IS A BALANCING ACT
PROFIT = (REVENUE – COST) I, S, E
& REVENUE = PRICE x VOLUME
Customer
Perceived
Value
Cost to
Pro...
VOLUME STARTS WITH SEGMENTATION STRATEGY
PROFIT = (REVENUE – COST) I, S, E
& REVENUE = PRICE x VOLUME
Q: Why are whole mar...
SEGMENTATION STRATEGY SHOULD BE PHASED
PROFIT = (REVENUE – COST) I, S, E
& REVENUE = PRICE x VOLUME
• Choose a “beach head...
VOLUME CAN BE EXPRESSED AS A FORMULA
PROFIT = (REVENUE – COST) I, S, E
& REVENUE = PRICE x VOLUME
VOLUME = BeachHeadMarket...
SUSTAINABILITY & IMPLEMENTABILITY
PROFIT = (REVENUE – COST) I, S, E
IMPLEMENTABILITY = PEOPLE (EXP & SKILLS)
+ PRODUCT
+ P...
SUSTAINABILITY & IMPLEMENTABILITY
PROFIT = (REVENUE – COST) I, S, E
SUSTAINABILITY = MARKET LIFE SPAN
+ COMPETITIVE DEFENC...
EXIT
PROFIT = (REVENUE – COST) I, S, E
• Spin Out (Promise)
• Trade Sale (Synergy)
• Dividends (Sustainability)
• Liquidat...
WHAT WAS VAGUE, IS NOW CALCULATABLE
$ = (REVENUE – COST) ISE
= REVENUE – (P4) ISE
= ∑(PRICE x VOLUME) - (P4) ISE
= ∑(PRICE...
WHAT WAS VAGUE, IS NOW A CONVINCING ARGUMENT THAT CAN BE
SUMMARIZED IN 1 PAGE
∑(C<P<PV & P=f(CP, SP, BP) x [BHM + BPMs] - ...
NPV KEEPS MGMT FOCUSED ON PROFITABILITY
t - the time of the cash flow
N - the total time of the project
r - the discount r...
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SUSTAINABILITY & IMPLEMENTABILITY PROFIT = 7Vs and Business Model Validation

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SUSTAINABILITY & IMPLEMENTABILITY
PROFIT = (REVENUE – COST) I, S, E
IMPLEMENTABILITY = PEOPLE (EXP & SKILLS)
+ PRODUCT
+ PROCESSES
+ PRODUCTION CAPABILITY
+ PARTNERS (SUPPLY & DISTRIBUTION)
+ PROMOTION PLAN
+ PESTs

Published in: Business

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