BAD120/200: Business Models Quiz

Developing an Effective Business Model

• Lecture 7, presented by Dr. Iman Boseila at October University
• A quiz (BAD120/200) on the business model will be given on December 9th
• Lectures for the quiz cover from 4:00 PM to 7:00 PM

Lecture 7 Outline

• Business models and their importance
• Definition of a Business Model

Learning Objectives

• Students will understand the importance of business models
• Students will understand the definition of a business model

Business Models and their Importance

• A business model is a firm's plan for how it creates, captures, and delivers value to customers
• A business model is a simplified representation of a business's complex reality
• Three crucial components of a firm's business models are: target market, basis for differentiation, and key assets

Key Elements of a Business Plan: Target Market

• Target market represents a narrower segment of a larger market
• Customers within this segment share similar interests
• Most new businesses begin by identifying a specific underserved niche within a broader market, rather than directly targeting the whole market

Key Elements of a Business Plan: Basis of Differentiation

• Differentiation is what makes a company's products stand out from competitors, solving problems or satisfying customer needs
• Points of differentiation that focus on product benefits are more effective than those focusing on product features

Key Elements of a Business Plan: Key Assets

• Key assets are vital resources that enable a business model's operation
• These assets can be physical, financial, intellectual, or human
• Success of a business model often depends significantly on a single key asset

What is a Business Model?

• A business model includes nine building blocks:
• Key partners
• Key activities
• Value proposition
• Customer relationships
• Channels
• Customer segments
• Revenue streams
• Cost structure
• Key resources

Key Resources

• Identify resources needed for value propositions, distribution channels, customer relationships, and revenue streams.

Key Activities

• Identify key activities necessary for value propositions, distribution channels, customer relationships, and revenue streams.

Key Partners

• Identify partners required for key resources and activities to support value propositions, distribution channels, customer relationships.

Value Propositions

• Identify the value provided to satisfy customer needs and solve customer problems.

Customer Relationships

• Define the desired relationship type and how it integrates into the business model.

Channels

• Identify how customer segments prefer to be reached and how channels can be integrated with customer routines

Customer Segments

• Identifying ideal customer segments who benefit from the provided value proposition

Revenue Streams

• Determine value customers are willing to pay for and the various ways revenue is generated

Cost Structure

• Determine the most important costs embedded in the business model, including those for key resources and activities.

Google Business Model (Example)

• Key Partners: Distribution Partners, Open Handset Alliance, OEMs (for Chrome OS devices)
• Key Activities: R&D, Building new/improving existing products, Managing Infrastructure
• Key Resources: Datacenters, IPs, Brand
• Value Propositions: Web Search, Gmail, Google+, Targeted Ads
• Customer Relationships: Automation (where possible), Dedicated Sales for Large Accounts
• Channels: Global Sales and Support Teams, Multi-product Sales Force
• Customer Segments: Internet Users, Advertisers, Ad Agencies, Mobile Device owners, Developers, Enterprises
• Revenue Streams: Ad Revenue (Google websites and Google Network websites), Enterprise Product Sales, Free (website access)
• Cost Structure: R&D costs (personnel), Traffic acquisition costs, Data center operations

Workshop 7

• Brainstorm as a group to create a product or service with a strong competitive advantage.
• Present your idea.

References

• Burrow, J., Kleindl, B., Everard, K., 2008; Business principles and management
• Fatehi, K., 2019; International Business Management
• Aldrich, H.E., 2008; Organizations and Environments
• Ansoff, I.H., 2007; Strategic Management

Prepare for the upcoming quiz on business models presented in Lecture 7 by Dr. Iman Boseila. This quiz will cover the significance of business models, their definitions, and key elements like target markets and differentiation strategies. Join us on December 9th from 4:00 PM to 7:00 PM for an insightful assessment.