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Lecture 3 - Business Model
The document discusses the importance of developing an effective business model. It introduces the Business Model Canvas as a tool to map the key elements of a business model. The canvas covers 9 building blocks across 4 areas: customers, offer, infrastructure, and financial viability. Understanding these building blocks provides the blueprint for a company's strategy to create, deliver, and capture value.
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Lecture 3 - Business Model
- 1. Business Models The Thought Process Behind Building Your Business Model http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 2. In the first 2 lectures, we have covered the basics of what entrepreneurship is like in Pakistan and how to idea proof your venture. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 3. While building on the right idea is essential to the success of your venture, getting the model right is critical. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 4. Did you know that 80% of businesses are started without a business plan? http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 5. Without a business plan, you don’t have a guidebook that will show you – or anyone else – what your business is about to do and why it’s important. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 6. A business plan is essential, but how do you write a business plan that works? http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 7. Business Model Canvas Mapping Your Business http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 8. At emagine, we like to use a tool called the Business Model Canvas. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 9. Develop a simple 1 page document that could be used by entrepreneurs to develop their business models accurately and efficiently. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 10. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 11. The Canvas is comprehensive. It highlights all the key areas that matter to successful business model generation and eliminates everything else. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 12. We are going to dig deep into this canvas so that you can effectively use it to develop your business model and then use it to write your business plan. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 13. The Business Model & It’s Importance http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 14. The first question you are going to ask is – What is a business model? http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 15. Now, there are multiple definitions of what makes up a business model depending on who you talk to, their level of education/ experience and what they do for a living. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 16. But essentially, a business model: Describes the rationale of how an organization creates, delivers, and captures value. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 17. Confused? http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 18. A business model is the reason that you do what you do, why you do it, and how you expect to make money from it. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 19. When you get this wrong, your entire business plan is weak and can easily be turned down by investors, but more importantly – it won’t give you the guidance you need to run your business. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 20. So let’s break this down… http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 21. The 9 Building Blocks The Logic of How a Company Makes Money http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 22. To build an effective business model, we believe that there are 9 basic building blocks that must be addressed. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 23. These 9 building blocks cover 4 main areas: Customers Offer Infrastructure Financial Viability http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 24. These 9 building blocks give us the blueprint for our strategy http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 25. So what are the 9 building blocks? http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 26. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 27. And they all fit together like this… http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 28. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 29. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 30. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 31. Block 1 – Customer Segments http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 32. Defines the different groups of people or organizations a venture aims to reach and serve. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 33. Customers are the heart of the business model and without them, no business can survive. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 34. A company may group them into different segments: Common Needs Common Behaviors http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 35. You can also have multiple Customer Segments within 1 business model http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 36. But you must decide on who your customers are when developing the business model. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 37. Needs require and justify a distinct offer Reached through different distribution channels Require different types of relationships http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 38. Substantially different profitabilities Willing to pay for different aspects of an offer http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 39. The Different Segments of Customers Businesses focused on mass markets don’t distinguish between different Mass Customer Segments – they focus on one large group with broadly similar Market needs and problems. Businesses targeting niche markets cater to very specific, specialized Niche Customer Segments. Value Propositions, Distribution Channels and Market Customer Relationships are all tailored to the specific requirements of the market Some businesses distinguish between market segments with slightly different needs and problems. The segments have similar but varying Segmented needs and problems which affect Value Proposition, Distribution Channels, Customer Relationships and Revenue Streams. Businesses with diversified customers serve two or more unrelated Diversified Customer Segments with very different needs and problems. Multi-‐sided Businesses that serve two or more independent Customer Segments. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 40. Block 2 – The Value Proposition http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 41. Describes the bundle of products and services that create value for a specific Customer Segment http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 42. It’s the reason why customers turn to one company over another – because it solves the problem or satisfies the need. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 43. The Value Proposition is an aggregation, or bundle, of benefits that a company offers customers. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 44. Some can be innovative representing a new or disruptive offer. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 45. Others can be similar to existing market offers, with added features and attributes. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 46. What value do we deliver to the customer? Which one of our customer’s problems are we helping to solve? Which customer needs are we satisfying? What bundles of products/services are we offering each Customer Segment? http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 47. Value can be created by simply helping a customer get certain jobs done. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 48. But the value proposition is determined through specific things: Design Brand/Status Price Cost Reduction Accessibility Ease of Use Convenience http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled
- 49. We will continue this lecture in 2 weeks when we move back to our 3 hour format. http://emagine-‐group.com Brand Focused, Socially Active, Digitally Enabled