Developing the Business Model

1. Developing the Business Model

2. NEW VENTURE PLANNING AND
CREATION
• Unit 1 Module 1
• Prepared by Lystra Stephens-James, MBA
• Objectives 10,11 and 12

3. OBJECTIVES
• Explain the components of a business model
• Develop a business model for a business plan
• Identify the components of a business plan

4. CLASS ACTIVITY
• Discover the components of Google’s Business model
• Divide the class in groups of two or three for the activity
listed below
• Instructions:
– Each group are to examine slide five
– Read the questions on slides six and seven and collaborate with
each other on their findings (allotted time 10 minutes)
• Re-arrange the groups of two or three and let them share their
discovery with each other (allotted time 10 minutes)
Teachers can use the students findings to explain the components
of a business model (including its role in developing a business
plan)

6. Value Proposition Components
1. The product offering: What will make the product offered
different from those of competitors?
2. Type of product: Will the product be standardized or
customized?
3. Distribution method: Will direct or indirect distribution be
used?
4. Manufacturing process: Internal manufacturing or
outsourcing?

7. (Google) Beneficiaries
1. Business to Business (B2B), Business to Consumer (B2C) or both?
2. Local, regional or international?
3. General or niche-market?

8. Considerations for Operations
• Internal capabilities of a business arising out of organizational structure
and/or culture
• Unique skills derived from previous experience, training or strategic
hiring
• Technologies which allow the firm to be more efficient or effective
• Benefits from existing patents and developing products which can be
patented
• Resources which the firm might be able to acquire to its advantage.

9. Product Differentiation Strategies
1. Operational excellence
2. Product quality
3. Innovative leadership
4. Cost Leadership
5. Networks

10. Google Differentiation Strategy:
Quality and Innovative Leadership

11. Growth Strategies
1. Subsistence model: The entrepreneur’s focus is on
personal survival
2. Income model: The entrepreneur’s focus is on enjoying
a lifestyle.
3. Growth model: The entrepreneur’s focus is on a long-
term vision.
4. Speculative model: This is a business where the
entrepreneur does not necessarily have a long-term
plan.

12. Google: Greiner Growth Model
http://www.startup-book.com/2011/05/18/the-challenge-of-growth-23-google/

13. Business Plan
• Student Activity:
• This exercise will give the student the opportunity
to listen to the views on (1) The importance of a
business plan (2) Business Model Canvas
Explained
• Students can view these as homework and
teachers can develop questions for discussion in
the classroom
• The links for students to download are
– (a)www.youtube.com/watch?v+CBYFYh6AZw
– (b)www.youtube.com/watch?=AO2MTLP5s