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Business ModelSachidananda B SBoot Camp – Anthah:Prerana8th Jan 2016, IIMB

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The Essence of Good strategy

Diagnosis

Guiding Policy

Coherent

ActionGood Strategy doesn’t simply build on existing strength!

It is a source of strength because it is coherent

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Lets use the Business Model Canvas to do this!

What is a Business Model?

“There’s not a single business model…There are really a lot of opportunities and a lot of options and we just have to discover all of them.”

Tim O’Reilly, CEO, O’Reilly

“a business layer (acting as a sort of glue) between business strategy and processes.”

Alex Osterwalder

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Business Model Canvas - 1

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Business Model Canvas - 2

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Business Model Canvas - 3

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Business Model Canvas - 4

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Business Model Canvas -5

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Business Model Canvas - 6

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Business Model Canvas - 7

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Business Model Canvas -8

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Business Model Canvas - 9

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ACTIVITY

05/01/2023 14Src: Leo Exter

05/01/2023 15Src: Leo Exter

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PRESENTATION

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Now let’s talk about YOUR

business

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RECAP

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So, Lets use the Business Model Canvas?

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Customer SegmentsCustomer groups represent separate segments if:

• Their needs require and justify a distinct offer• They are reached through different Distribution Channels• They require different types of relationships• They have substantially different profitabilities• They are willing to pay for different aspects of the offer

An organization must make a conscious decision about which segments to serve and which segments to ignore. Once this decision is made, a business model can be carefully designed around a strong understanding of specific customer needs.

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So, Lets use the Business Model Canvas?

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Value PropositionA Value Proposition creates value for a Customer Segment through a distinct mix of elements catering to that segment’s needs. Values may be quantitative (e.g. price, speed of service) or qualitative (e.g. design, customer experience).• 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 and services are we offering to each Customer Segment?

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So, Lets use the Business Model Canvas?

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ChannelsChannels serve several functions, including:

• Raising awareness among customers about a company’s products and services• Helping customers evaluate a company’s Value Proposition• Allowing customers to purchase specific products and services• Delivering a Value Proposition to customers• Providing post-purchase customer support

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So, Lets use the Business Model Canvas?

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Customer RelationshipsCustomer relationships may be driven by the following motivations:• Customer acquisition• Customer retention• Boosting sales (upselling)

The Customer Relationships called for by a company’s business model deeply influence the overall customer experience.

• Personal Assistance• Dedicated Personal assistance• Self-service• Automated services• Communities• Co-creation

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So, Lets use the Business Model Canvas?

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Revenue StreamsA business model can involve two different types of Revenue Streams:

• Transaction revenues resulting from one-time customer payments• Recurring revenues resulting from ongoing payments to either deliver a Value Proposition to customers or provide post-purchase customer support

• Asset Sale• Usage fees• Subscription fees• Lending/Renting/Leasing• Licensing• Brokerage Fees• Advertising

Each Revenue Stream might have different pricing mechanisms. The type of pricing mechanism chosen can make a big difference in terms of revenues generated. There are two main types of pricing mechanism: fixed and dynamic pricing.

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Revenue Streams

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So, Lets use the Business Model Canvas?

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Key Resources

What Key Resources do our Value Propositions require?Our Distribution Channels? Customer Relationships?Revenue Streams?

Key resources can be physical, financial, intellectual, or human.Key resources can be owned or leased by the company or acquired from key partners.

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So, Lets use the Business Model Canvas?

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Key ActivitiesThe Key Activities Building Block describes the most important things a company must do to make its business model work.

What Key Activities do our Value Propositions require?Our Distribution Channels? Customer Relationships?Revenue streams?

• Production • Problem Solving• Platform/Network

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So, Lets use the Business Model Canvas?

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Key PartnersThe Key Partnerships Building Block describes the network of suppliers and partners that make the business model work

We can distinguish between four different types of partnerships:• Strategic alliances between non-competitors• Coopetition: strategic partnerships between competitors• Joint ventures to develop new businesses• Buyer-supplier relationships to assure reliable supplies

Motivations:• Optimization and Economy of Scale• Reduction of Risk and Uncertainty• Acquisition of particular resources and activities

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So, Lets use the Business Model Canvas?

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Cost StructureThe Cost Structure describes all costs incurred to operate a business model

Costs should be minimized in every business model. But low Cost Structures are more important to some business models than to others. Therefore it can be useful to distinguish between two broad classes of business model Cost Structures: cost-driven and value-driven (many business models fall in between these two extremes):

Cost Structures can have the following characteristics:• Fixed costs• Variable costs• Economies of scale• Economies of scope

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So, Lets use the Business Model Canvas?

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QUESTIONSTHANK YOU

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& The Value Proposition Canvas

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References:• The Business Model Generation – Book & Website• Leo Exter’s presentation on Business Model Canvas • Images of Business Model segments - JAM• http://www.slideshare.net/Michaelcmcdermott/a-rumelt-perpsective-on-good-str

ategy