The document focuses on understanding inclusive business models, particularly in the context of agricultural value chains. It provides a framework for analyzing business models through a comprehensive tool, the business model canvas, which highlights essential components such as customer relationships, value propositions, and key activities. Various methodologies for gathering insights from producers, buyers, and stakeholders are also discussed to enhance understanding of how these models operate effectively.

1. Inclusive business models
www.fao.org/economic/esa/ © FAO, 2017
Step 1: Understanding the business model
SESSION 7

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Understanding the BM
Session 7
From Value Chains to Business Models
Value chain map ->
High-level view on the
system
Business model ->
Close-up on one
organization with a 360°
view
Business Model
Analysis
Input supplier Producer Buyer Wholesaler Retailer Consumer

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Understanding the BM
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Farmers & Cooperatives
First buyer
How are they doing business?

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Understanding the BM
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How to understand the BM
• Open interviews with:
– Producers
– Buyers
– Stakeholders & partners
• Speak to more than one person -> variety of
answers
• Ask broad questions & follow with more detailed
ones
• Keep discussions friendly and relaxed

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Understanding the BM
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Tool: Business Model Canvas*
1. What does the organization do?
2. How does it do it?
3. Who does it?
• Who are the customers?
4. How much does it cost to do it?
• How much does it earn?
*Source: Material for BM Canvas tool is extracted from CIAT’s Link Methodology: a participatory guide to business
models that link smallholders to markets.

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Four questions

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How?
How much?
What?
Who?
9 Building blocks

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1. Understanding Producer Organization BM
• Organizational structure
• Members
• Resources
• Capacities
• Product characteristics
• Logistical process

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Understanding the BM
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2. Understanding Buyers BM
• Why procuring from smallholders
• Final clients
• Needs
• Challenges
• Product requirements
• Risks

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Understanding the BM
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Business Model Analysis
Customer or supplier? A matter of perspective

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Understanding the BM
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1. Customers
• For whom is the organization creating value?
• Who are the customers paying for the product?
-> Without customers no business can survive
-> Important to understand their needs to satisfy
them

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2. Value proposition
• Products and services
• Reason why customers buy the product
• Specific characteristics
• Need or problem your product satisfies
• What value is offered to customers?
• Which customer need it satisfies?

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3. Channels
• How do products reach customers?
• What is the logistics chain?
• Through which channels is the product
delivered?
• How do channels work?

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4. Customer relationships
• How is the relationship with customers?
• How costly is the relationship?
• Is the relationship what customers want?
• How do we communicate with customers?

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5. Revenue Stream
• How is the organization capturing value?
• What are the pricing mechanisms?
• How is income created?
• For what do customers pay?
• How do customers pay?
• How stable is the income?

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6. Key Resources
• Infrastructure to create and deliver value
• Physical, intellectual, financial and human
resources needed for value creation
• Indispensable assets (e.g. machinery,
equipment, technology, knowledge, access to
credit)

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7. Key Activities
• What does the organization do to function?
• Actions to create value
• Production, processing, marketing, logistics and
quality control

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Understanding the BM
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8. Key Partners
• Who interacts with your business model?
• Direct partners: producers, transporters,
suppliers
• Indirect partners: financial institutions, research
centres, NGOs, public organizations

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9. Cost Structure
• Cost for the creation of value
• Fixed costs
• Variable costs
• Economies of scale
• Economies of scope

20. Partners
- Who are the
partners?
- Who are the
suppliers?
- What are the
activities the
partners
perform?
Key activities
- What are the key
activities for the value
proposition (production,
processing, marketing,
logistics, quality)?
- Who is responsible
for the activities?
Value proposition
- What is the product
offered to
customers?
- Why do customers
buy the product
(quality, reliable
supply, available
resources, price)?
- What is the
problem or need that
the product
satisfies?
Customer
relationships
- How does the
organization
communicate with its
customers?
- What is the type of
relationship with the
customers?
Customers
- For whom is the
organization
creating value?
- Who are the
customers?
- Who is paying for
the product?
Key resources
- What are the key
resources for the value
proposition?
- Are the key resources
available?
- How are the key
resources allocated
and distributed?
Channels
- How do products
reach the customer?
- What are the tools
to get products from
producers to
customers?
- Is there more than
one way to get
products from
producers to
customers?
Cost structure
-Fixed costs
-Variable costs
-Economies of scale
-Economies of scope
Revenue steam
- What is the selling price?
- How is the price determined?
- How do customers pay?
- How long does it take to receive the
payment?
- How stable is the income?