what is a business model?
TRANSCRIPT
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Why to know Business Model :-
• Today, The new generation is buzzing with Idea of having their own business and everyone wants to start his own venture.
• So the new generation is coming to know the term “Business Model”.
• To me Business Model is the support structure to the basic Idea, Idea comes from imagination but Business model comes from Strategic Planning.
• The Business Model should give answer to every question related to the Idea like WHY?, WHEN?, WHERE?, HOW? (Like W5H2 questions).
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What is Business Model? :-
• A business model is the plan implemented by a company to generate revenue and make a profit from operations. The model includes the components and functions of the business, as well as the revenues it generates and the expenses it incurs.
• poorly thought out business models were the downfall of many Businesses.
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Continued :-
• Business Model is used for a broad range of informal and formal descriptions to represent core aspects of a business, including purpose, business process, target customers, offerings, strategies, infrastructure, organizational structures, sourcing, trading practices, and operational processes and policies including culture.
• The type of business models might depend on how technology is used.
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6 Elements of Business Models :-1. Acquire high value customers2. Offer significant value to customers3. Deliver products or services with high margins4. Provide for customer satisfaction5. Maintain market position6. Fund the business
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Categorization of Business Models :-• V4 BM framework –
The Four main dimensions encapsulating sixteen elements: Value Proposition, Value Architecture, Value Network, and Value Finance• Shift from pipes to platforms –
In the case of pipes, firms create goods and services, push them out and sell them to customers. Value is produced upstream and consumed downstream. There is a linear flow, much like water flowing through a pipe. Unlike pipes, platforms do not just create and push stuff out. They allow users to create and consume value.
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Categorization of Business Models :-• Platform business models –1. The Toolbox creates connection by making it easy for others to
plug into the platform.2. The Magnet creates pull that attracts participants to the platform.3. The Matchmaker fosters the flow of value by making connections
between producers and consumersData is at the heart of successful matchmaking, and distinguishes platforms from other business models.
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Business Model Design :-
• It is part of the business development and business strategy process and involves design methods.
• During Designing Business Model 3 main things to be focused –1. Economic consideration(information related to costing, pricing
methods, and revenue structure)2. Component consideration(blueprint of how a company does
business)3. Strategic outcome(design of key interdependent systems that
create and sustain a competitive business)
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Examples of Business Models :- 1. Bricks and clicks business model - Business model by
which a company integrates both offline (bricks) and online (clicks) presences.
2. Collective business models - a science park or high-tech campus provides shared resources (e.g. cleanrooms and other lab facilities) to the firms located on its premises, and in addition seeks to create an innovation community among these firms and their employees.
3. Cutting out the middleman model - The removal of intermediaries in a supply chain.
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Examples of Business Models :- 4. Direct sales model - Direct selling is marketing and selling
products to consumers directly, away from a fixed retail location.5. Distribution business models6. Value-added reseller model - is a model where a business
makes something which is resold by other businesses but with modifications which add value to the original product or service.
7. Fee in, free out - Business model which works by charging the first client a fee for a service, while offering that service free of charge to subsequent clients.
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Examples of Business Models :- 8. Franchise - Franchising is the practice of using another firm's
successful business model.9. Sourcing business model - Type of business model that is applied
specifically to business relationships where more than one party needs to work with another party to be successful.
10.Freemium business model - Business model that works by offering basic Web services, or a basic downloadable digital product, for free, while charging a premium for advanced or special features.
11.Pay what you can – Non-profit business model which does not depend on set prices for its goods, but instead asks customers to pay what they feel the product or service is worth to them.
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Business Model Framework :- • Business model frameworks represent the core aspect of any
company; they involve “the totality of how a company selects its customers defines and differentiates its offerings, defines the tasks it will perform itself and those it will outsource, configures its resource, goes to market, creates utility for customers, and captures profits”.
• A business framework involves internal factors (market analysis; products/services promotion; development of trust; social influence and knowledge sharing) and external factors (competitors and technological aspects).
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Different Frameworks :-• Business Model Canvas - Strategic management and lean start-up
template for developing new or documenting existing business models.• Business reference model - concentrating on the architectural aspects of
the core business of an enterprise, service organization or government agency.
• Component business model - logical representation or map of business components.
• Industrialization of services business model - Business model used in strategic management and services marketing that treats service provision as an industrial process, subject to industrial optimization procedures.
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Business Model Canvas :-
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References :-
• Business Model Definition | Investopedia http://www.investopedia.com/terms/b/businessmodel.asp#ixzz42rgMFLtg
• http://www.businessmodelgeneration.com/
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ThankYou!!!