pros and cons of business models - part one
TRANSCRIPT
Pros and Cons of Pros and Cons of Business Models Business Models
By Val A. Slastnikov,By Val A. Slastnikov,
Business Models ExpertBusiness Models Expert© 2009 Digitizer Group. All rights reserved© 2009 Digitizer Group. All rights reserved
PART ONE PART ONE
Business Model - Definition, Business Model - Definition, Components and TypesComponents and Types
(The Boring Part)(The Boring Part)
DefinitionDefinition
The term The term BUSINESS MODELBUSINESS MODEL describes a broad range of describes a broad range of informal and formal models that are used by enterprises to informal and formal models that are used by enterprises to represent various aspects of business, including its purpose, represent various aspects of business, including its purpose, offerings, strategies, infrastructure, organizational structures, offerings, strategies, infrastructure, organizational structures, trading practices and operational processes and policies. trading practices and operational processes and policies.
- Wikipedia, Online Encyclopedia- Wikipedia, Online Encyclopedia
ExplanationExplanation
BUSINESS MODEL:BUSINESS MODEL: a conceptual tool that contains a big set a conceptual tool that contains a big set of elements and their relationships and allows expressing the of elements and their relationships and allows expressing the business logic of a specific firm. business logic of a specific firm.
BUSINESS MODEL:BUSINESS MODEL: a description of the value a company a description of the value a company offers to one or several segments of customers and of the offers to one or several segments of customers and of the architecture of the firm and its network of partners for creating, architecture of the firm and its network of partners for creating, marketing, and delivering this value and relationship capital, to marketing, and delivering this value and relationship capital, to generate profitable and sustainable revenue streams.generate profitable and sustainable revenue streams.
VALUEPROPOSITION
COSTSTRUCTURE
CUSTOMERRELATIONSHIP
TARGETCUSTOMER
DISTRIBUTIONCHANNEL
VALUECONFIGURATION
CORECAPABILITIES
PARTNERNETWORK
REVENUESTREAMS
INFRASTRUCTURE CUSTOMEROFFER
FINANCE
ComponentsComponents
Business Model Design Templateby Dr. Alex Osterwalder, PhD.
FunctionsFunctions
““A business model performs two important A business model performs two important functions:functions:
CREATES VALUECREATES VALUE by defining a series of activities from raw materials through to the final consumer that will by defining a series of activities from raw materials through to the final consumer that will yield a new product or service with value being added through the various activities. yield a new product or service with value being added through the various activities.
CAPTURES VALUECAPTURES VALUEby establishing a unique resource, asset or position within that series of activities where the by establishing a unique resource, asset or position within that series of activities where the firm enjoys a competitive advantage.”firm enjoys a competitive advantage.”
- Henry Chesbrough, “Open Business Models”- Henry Chesbrough, “Open Business Models”
QuoteQuote
““VALUEVALUE is a combination of price, service, is a combination of price, service, quality and, most importantly, the relationship quality and, most importantly, the relationship that you have with your customers.”that you have with your customers.”
- Chris Malta, Worldwide Brands- Chris Malta, Worldwide Brands
The OfferThe Offer
VALUE PROPOSITION:VALUE PROPOSITION: The products and The products and services a business offers services a business offers
VALUEPROPOSITION
value proposition 1value proposition 2
…
OFFER
“THE WHAT”
The CustomerThe Customer
TARGET MARKET:TARGET MARKET: Who is the Offer Who is the Offer Targeted at?Targeted at?
value proposition 1value proposition 2
…
“THE WHO”
value proposition 1value proposition 2
…
target customer 1target customer 2
…
OFFER
TARGETCUSTOMER
DISTRIBUTIONCHANNEL
distribution channel 1distribution channel 2
…
target customer 1target customer 2
…
CUSTOMER
CUSTOMERRELATIONSHIP
relationship type 1relationship type 2
…
The Target MarketThe Target Market
TARGET CUSTOMER:TARGET CUSTOMER: The target audience for a business' The target audience for a business' products and services. products and services.
DISTRIBUTION CHANNEL:DISTRIBUTION CHANNEL: The means by which a The means by which a company delivers products and services to customers. This company delivers products and services to customers. This includes the company's marketing and distribution strategy. includes the company's marketing and distribution strategy.
CUSTOMER RELATIONSHIP:CUSTOMER RELATIONSHIP: The links a company The links a company establishes between itself and its different customer segments. establishes between itself and its different customer segments. The process of managing customer relationships is referred to as The process of managing customer relationships is referred to as CRM (Customer Relationship Management). CRM (Customer Relationship Management).
The InfrastructureThe Infrastructure
DELIVERY MECHANISM:DELIVERY MECHANISM: How is the How is the Offer delivered to the Customer?Offer delivered to the Customer?
value proposition 1value proposition 2
…
“THE HOW”
value proposition 1value proposition 2
…
target customer 1target customer 2
…
OFFER
value proposition 1value proposition 2
…
distribution channel 1distribution channel 2
…
target customer 1target customer 2
…
OFFER
VALUECONFIGURATION
CORECAPABILITIES
core capability 1core capability 2
…
activity 1activity 2
…
INFRASTRUCTURE
PARTNERNETWORK
partner 1partner 2
…
The Delivery MechanismThe Delivery Mechanism
CORE CAPABILITIES:CORE CAPABILITIES: The capabilities and competencies The capabilities and competencies necessary to execute a company's business model. necessary to execute a company's business model.
PARTNER NETWORK:PARTNER NETWORK: The business alliances which The business alliances which complement other aspects of the business model. complement other aspects of the business model.
VALUE CONFIGURATION:VALUE CONFIGURATION: The rationale which makes a The rationale which makes a business mutually beneficial for a business and its customers. business mutually beneficial for a business and its customers.
The FinanceThe Finance
EXPENSES AND REVENUE STREAMS:EXPENSES AND REVENUE STREAMS: The Cost of running business and the way Profit The Cost of running business and the way Profit is madeis made
““THE MONEY”THE MONEY”
value proposition 1value proposition 2
…
value proposition 1value proposition 2
…
target customer 1target customer 2
…
OFFER
value proposition 1value proposition 2
…
distribution channel 1distribution channel 2
…
target customer 1target customer 2
…
OFFER
COSTSTRUCTURE
Cost account 1Cost account 2
…
FINANCE
REVENUESTREAM
Revenue Stream 1Revenue Stream 2
…
VALUEPROPOSITION
COSTSTRUCTURE
CUSTOMERRELATIONSHIP
TARGETCUSTOMER
DISTRIBUTIONCHANNEL
VALUECONFIGURATION
CORECAPABILITIES
PARTNERNETWORK
REVENUESTREAMS
gives an overall view of a company's bundle of products and services
portrays the network of cooperative
agreements with other companies
describes the channels to communicate and
get in touch with customers
describes the arrangement of
activities and resources
explains the relationships a
company establishes with its customers
sums up the monetary consequences to run a
business model
describes the revenue streams through which
money is earned
describes the customers a company wants to offer value to
outlines the capabilities required to run a
company's business model
INFRASTRUCTURE CUSTOMER
OFFER
FINANCE
Business Model Summary
by Dr. Alex Osterwalder, PhD.by Dr. Alex Osterwalder, PhD.
Where do YOU stand right now?Where do YOU stand right now?
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Where do you go from here?Where do you go from here?Go and find out at:Go and find out at:
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