business model tbs 2012v4 ppt

Entrepreneurship@TBS 2012

Wai Chamornmarn

Business model

Business idea

Business Concept

Product Innovation

Customer Intimacy

Low Price

Technology

Management

Opportunity

Go or No-Go?

Quantify and MAXimize Quantify and MINimize

Vernon’s Razor (ต่อ)

Uncover Opportunity Nucleus – Increase customer satisfaction – Create a new experience

– Uncovering •  unmet need •  underserved needs

Two Generic “Value types” – Trapped Value

•  More efficient markets •  More efficient value systems •  Ease of access •  Disrupt current pricing power

– New-To-The-World Value •  Customize offerings •  Extend reach and access •  Build community •  Enable collaboration •  Introduce new functionality or experience

Revealing Unmet or Underserved Needs What are the steps in the Customer Decision Process: l What is the ideal experience? How does reality differ? l What are the key frustration points? l What compensating behaviors do we see? l How/why is the customer successful? l Are their groups with underserved needs?

Profit pattern

The Value Chain

15 Source: Walters (2002)

Profit Zones / Profit Pools

Source: Adapted from Walters (2002), Gadiesh and Gilbert (1998) and Slywotzky and Morrison (1997)

Time Volume

Base Business

Buyers Sellers

Post-Launch

Q2 Q4 Q6 Q8 Q10

Revenue

Project Type

Key Asset

Other Forms

Base Business

Spin-Outs

Customer Solutions Profit Product Pyramid Profit Multicomponent Profit Switchboard Profit

Time Profit Blockbuster Profit Profit Multiplier Model Entrepreneurial Profit

Other Components

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Customer solutions profit

pyramid

Multicomponent profit

Switchboard profit

Time profit

New product profit

Transaction scale profit

Profit multiplier model

Entrepreneurship@TBS 2012 "

Thirty profit patterns

MEGA PATTERNS No profit Back to profit Convergence Collapse of the middle de facto standard Technology shifts the board CHANNEL PATTERNS Multiplication Concentration Compression Disintermediation KNOWLEDGE PATTERNS product to customer knowledge Operations to knowledge Knowledge to product VALUE CHAIN MODELS Deintegration Value Chain squeeze Strengthening the weak link Reintegration

CUSTOMER PATTERNS Profit shift Microsegmentation Power shift Redefinition

Product patterns Product to brand Product to blockbuster Product Profit multiplier Product to pyramid product to solution ORGANISATION PATTERNS Skill shift Pyramid to network Cornerstoning Conventional to digital business design

Business model

Which would you prefer?

Business Design “A”

$10 billion

$50 million

Business Design “B”

$8 billion

$300 million

Revenue

Profit

business design

Customer Selection

Profit Model

Strategic Control

Today Next

Unique Value Proposition

Business Design Example: Airline Industry Within a particular industry, companies may pursue very different Business Designs

United Southwest •  International & domestic; coach,

business and first-class travelers • Broad network & loyalty program

Customer Selection & Value Proposition

• Domestic travelers; coach only

•  Low-cost, no-frills w/ highly consistent customer service

•  Tiered fares based on class, flexibility

• Ancillary revenues

Value Capture/ Profit Model

• Every-day low prices • High asset utilization

• Sophisticated IT •  International Sales & Regulatory

capability

Organizational Systems • Cultural emphasis on Southwest way

• Global hub-and-spoke route system

Scope • US-only point-to-point route system

• Controlled-access airports in key geos

•  Loyal frequent fliers

Strategic Control •  Lowest costs • High frequency route coverage

Southwest Next?

•  $10BB •  $16BB Revenue

•  $4.7BB Market Cap •  $10BB

Business Model

Proposition

Partner

Network

Capacities

Configuration

Customer

Relationship

Distribution

Channel Customer Segment

Structure

Revenue

Streams

Success / Failure

Example business models over the years

•  The open business model •  The subscription business model •  The razor and blades business model

(bait and hook) •  The pyramid scheme business model •  The

multi-level marketing business model •  The network effects business model •  The monopolistic business model •  The cutting out the middleman model •  The auction business model •  The online auction business model •  The bricks and clicks business model

•  The loyalty business models •  The Collective business models •  The

industrialization of services business model

•  The servitization of products business model

•  The low-cost carrier business model •  The online content business model •  The freemium business model •  The premium business model •  The direct sales model •  The professional open-source model •  Various distribution business models

Value proposition designer

Components of the Value Proposition

Source: Adapted from Walters (2002)

Customer expectationsØ Product – service

characteristicsØ Service – support

characteristicsØ AvailabilityØ Information

Customer ValueModel

ValueProposition

RelativecompetitivepositioningØ Distinctive

competenciesØ Competitive

necessityØ Competitive

advantagePartner roles:Ø Co-developmentØ Co-productionØ Reseller servicesØ Customer servicing

Organisation

Customer

Customer Value Criteria and Value Perceptions

Customer Value

Criteria

Customer value Component Customer Value

Perceptions

Security Warranty, Parts availability Ø Response to claims

Ø Service parts for

emergencies

Performance Productivity Ø Plant utilisation

Ø Decrease in number of

reworked products

Ø Decreased R & D

expenditure

Ø Increased competitive

advantage

Aesthetics Customisation, Style/design Ø Enhanced workplace

image – ‘modern’

appearance – PR benefit

Convenience Order management system Ø Ease of ordering, rapid

response. Order

progressing information

readily available

Economy Price levels maintained Ø Price consistency

ensures margins

maintained and

competitive position

Reliability Delivery and product-service

availability consistent

Ø Inventory holding can be

maintained at financially

viable levels

Ø Customer’s customer

service deliverySource: Walters (2002)

Business model canvas

Business architecture

business model tbs 2012v4 ppt

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