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Business Model Canvas
The document discusses the Business Model Canvas, a tool developed by Alexander Osterwalder to help categorize the key components of a business model. The Business Model Canvas consists of 9 categories: value propositions, customer segments, channels, customer relationships, revenue streams, key resources, key activities, key partnerships, and cost structure. These categories represent the four main aspects of a business: customers, offer, infrastructure, and financial viability. The Business Model Canvas provides a simple and flexible way to visualize a business model, evaluate different strategic options, and communicate the model to others. It has helped many companies, like Apple, develop successful business strategies.
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Business Model Canvas
- 1. Business Model Canvas KavitaJoshi Khushali Shah Dharmesh Thakor
- 2. Business Model • Businessmodel can make the huge difference between world-leading success and dismal failure. • Example: Xerox 914, had a drastic fall as their first dry-process, plain-paper copier was six times costly than price of alternatives. • This had them big failure. • With their existing speed and convenience and developing a new business model (they leased it for $95 a month and few cents per copy for copies in excess of 2000 a month), customers soon were making tens of thousands of copies in the same period. • This resulted into huge revenue generator.
- 3. Business Model Canvas •To encourage such kind of thinking, “Alexander Osterwalder” developed a Business Model Canvas. • BMC is a simple graphical template categorising the processes and internal activities of a business into nine essential categories needed to get a business (or product) successfully to market. • The categories in a canvas are: 1. Customer segments 2. Value propositions 3. Channels 4. Customer relationships 5. Revenue streams 6. Resources 7. Activities 8. Partnerships 9. Costs • These categories represent the four major aspects of a business; customers, offer, infrastructure and financial viability.
- 4. The Nine Categories 1.Value Propositions • It is the combination of products and services the company provides to its customers. • Value propositions can be divided into two categories Quantitative and Qualitative. 2. Customer segments • A company must identify who/which are the customers it tries to serve based on their different needs and attributes. • Customers can be segmented Mass Market, Segmented Market, Multi-Sided Market and so. 3. Key Activities • The steps the team must complete to make it successful. 4. Key Resources • The resources that are necessary to create value for the customer. These resources could be human, financial, physical etc. 5. Channels • Identify through which channel you will reach your customers and vice versa? • Which channels will work best? • How much do they cost?
- 5. The Nine Categories 6.Customer Relationships • Company must select the kind of relationship it will have with its customer segment. • Customer Relationships can be Personal Assistance, Dedicated Personal Assistance, Self-Service,Communities and so 7. Key Partners • Key partnerships are the network of suppliers and partners who complement each other in helping the company create its value proposition. 8. Cost structure • This defines the cost of running a business according to a particular model. • Businesses can either be cost driven i.e. focused on minimizing investment into the business • Or value driven i.e. focused on providing maximum value to the customer. 9. Revenue Streams • The way a company follows to make revenue from each customer segment. • Several ways includes Usage Fee, Subscription Fees, Lending/Leasing/Renting Brokerage Fees, Advertising and so.
- 6. The Business ModelCanvas Revenue Streams Channels Customer SegmentsValue PropositionsKey ActivitiesKey Partners Key Resources Cost Structure Customer Relationships Designed by: Date: Version:Designed for: designed by: Business Model Foundry AG The makers of Business Model Generation and Strategyzer This work is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported License. To view a copy of this license, visit: http://creativecommons.org/licenses/by-sa/3.0/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA. What are the most important costs inherent in our business model? Which Key Resources are most expensive? Which Key Activities are most expensive? is your business more Cost Driven (leanest cost structure, low price value proposition, maximum automation, extensive outsourcing) Value Driven (focused on value creation, premium value proposition) sample characteristics Fixed Costs (salaries, rents, utilities) Variable costs Economies of scale Economies of scope Through which Channels do our Customer Segments want to be reached? How are we reaching them now? How are our Channels integrated? Which ones work best? Which ones are most cost-efficient? How are we integrating them with customer routines? channel phases 1. Awareness How do we raise awareness about our company’s products and services? 2. Evaluation How do we help customers evaluate our organization’s Value Proposition? 3. Purchase How do we allow customers to purchase specific products and services? 4. Delivery How do we deliver a Value Proposition to customers? 5. After sales How do we provide post-purchase customer support? For what value are our customers really willing to pay? For what do they currently pay? How are they currently paying? How would they prefer to pay? How much does each Revenue Stream contribute to overall revenues? For whom are we creating value? Who are our most important customers? Mass Market Niche Market Segmented Diversified Multi-sided Platform What type of relationship does each of our Customer Segments expect us to establish and maintain with them? Which ones have we established? How are they integrated with the rest of our business model? How costly are they? examples Personal assistance Dedicated Personal Assistance Self-Service Automated Services Communities Co-creation What Key Activities do our Value Propositions require? Our Distribution Channels? Customer Relationships? Revenue streams? catergories Production Problem Solving Platform/Network What Key Resources do our Value Propositions require? Our Distribution Channels? Customer Relationships? Revenue Streams? types of resources Physical Intellectual (brand patents, copyrights, data) Human Financial Who are our Key Partners? Who are our key suppliers? Which Key Resources are we acquairing from partners? Which Key Activities do partners perform? motivations for partnerships Optimization and economy Reduction of risk and uncertainty Acquisition of particular resources and activities What value do we deliver to the customer? Which one of our customer’s problems are we helping to solve? What bundles of products and services are we offering to each Customer Segment? Which customer needs are we satisfying? characteristics Newness Performance Customization “Getting the Job Done” Design Brand/Status Price Cost Reduction Risk Reduction Accessibility Convenience/Usability types Asset sale Usage fee Subscription Fees Lending/Renting/Leasing Licensing Brokerage fees Advertising fixed pricing List Price Product feature dependent Customer segment dependent Volume dependent dynamic pricing Negotiation (bargaining) Yield Management Real-time-Market strategyzer.com
- 7. Why use theBusiness Model Canvas? • In startup or gaining traction mode, you need real clarity on your business model to make it success. • Provides a simple, intuitive and flexible tool that can be developed rapidly and applied ongoing to iterate and refresh the business strategy. • Provides a neat breakdown of the major considerations impacting the business. • Gives a clear direction the organization is taking through its business model. • Evaluate the exact position of where a company is standing. • Set the target and decide how can we achieve it.
- 8. Methodology • Choose yourcompetitors, learn about them and map their business models. • Uncover the vital information about how other successful businesses have created their own spaces in the market. • Armed with this information, you’ll have deep insight into what customers want and what they are willing to pay for. • Then we can map a clear picture of how customers’ needs are met in our company.
- 9. Success Story • Thebiggest Business Model success story is Apple. • Apple was a game changer when it introduced the iPod to the world. • Through iTunes, Apple integrated device, software and an online store into an experience that set the music industry on its ear and that competitors have been hard pressed to match. • Apple has lasting partnerships through the deals it negotiated with music producers so it could sell their music through its store.
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