Business Models Quiz: P2P, Crowdsourcing, Affiliate

Course Information

• Course title: Information Systems and Organisations
• Week: 11
• Block: 4
• Topic: Business Models
• Lecturers: Dr. Navid Dorudian, Dr. Oussama Alsabek

Module Content

• Block 1: Human Information Systems
• Block 2: Modelling and Design
• Block 3: Methodology
• Block 4: Business Systems & Organisations

Previously Covered

• SWOT analysis
• PESTLE analysis
• Used to develop strategies, assess ideas, make decisions

Plan for Today

• Learning about business models
• Defining a business model
• Types of business models

From Idea to Profit

• Transition from idea to generating profit

What is a Business Model?

• A simplified description of how a company plans to make money
• For new companies, it attracts investment
• For established companies, it serves as a strategy

How Does X Make Money?

• Examples of business models : Snapchat, LinkedIn, Netflix, Amazon

Business Model Types

• Numerous types of business models exist
• Companies often employ multiple types of business models

Some Types of Business Models

• Franchise model
• Subscription model
• Freemium model
• Advertisement model
• Razor blades model
• Retailer model
• Manufacturer model
• Distributor model
• Peer-to-Peer/platform model
• Leasing model
• Crowdsourcing model
• Bundling model
• Product-as-a-service model

Franchise Model

• A blueprint for reproducing an established business
• Franchisor (original owner) guides the franchisee
• Franchisee pays a percentage of profits in return

Subscription Model

• Recurring payments for access to a service or product

Freemium Model

• Use parts of a product for free, but pay for advanced features
• Often seen in software-as-a-service (SaaS) space

Razor Blades Model

• A cheaper product is sold with costly replacement components or accessories

Retailer Model

• Purchases goods (from suppliers) and resells them to the end customer

Manufacturer Model

• Converted raw materials into a new product & subsequently sell it

Bundling Model

• Two or more products are sold together at a lower price than if purchased individually

Leasing Model

• Leasing agreements are usually most efficient for large items like equipment
• Leasing has a longer term than product as a service business model

Product-as-a-Service Model

• Businesses charge customers for use of physical products
• Varying fees - by subscription, per use or per mile

Distribution Model

• Reselling manufactured products in bulk

Advertising or Affiliate Marketing Model

• Leveraging the audience as an asset
• Advertisers pay for space allocated by a business's audience
• Affiliate marketing - commission earned from referrals.

Peer-to-Peer/Platform Model

• Acts as an intermediary between individuals / entities wanting something and who have something
• Platforms connect both sides (buyer/seller, etc.)
• Established rules and regulations.

Crowdsourcing Model

• Obtaining information/opinions from a large group of people

Developing a Business Model

• Answers four key questions
• Who is the customer?
• What value does the business deliver to customers?
• How does the business operate?
• How does the business make money?

Who is the Customer?

• Defining the target market/customer base for a product/service

What Value Does the Business Deliver to the Customer?

• Functional value (practical)
• Societal value
• Emotional value
• Connectivity
• Sharing ideas and content
• Brand expansions
• Marketplace
• Payment infrastructure
• Work tools

How does the Company Operate?

• Key Activities
• Key Partners
• Key Resources
• Key Channels
• Customer Relationships

How Does the Business Make Money?

• Cost Structure
• Revenue Streams

Business Model Canvas

• A template for presenting business model information
• Developed by Alexander Osterwalder

Objectives for Today

• Business organisations
• Sectors and types
• Business activities
• Value Chain model
• Supply Chain and Supply Chain Management
• Understanding how systems support them

Definition by Max Weber

• An organisation is a group of people intentionally organised to achieve a common goal, not necessarily a legal entity

Organisations as Systems

• Diagram illustrating the components & inputs/outputs of an organisation

Private and Public Sectors

• Private Sector
• Run for profit, not controlled by the government
• Allocate goods/services
• Public Sector
• Run by the government
• Provide services to the public

Types of Business Organisations in the Private Sector

• Sole Traders
• Partnerships
• Companies
• Private limited Companies (Ltd)
• Public Limited Companies (PLC)
• Franchises

The Private Sector - Sole Trader

• Business owned by one person
• Small in size
• Funded by personal savings or loans

The Private Sector - Partnerships

• Minimum of two to a maximum of 20 partners
• Common in professions like law, estate agency, and dentistry
• Deed of Partnership outlines roles, investments

The Private Sector - Limited Company

• Companies often become limited companies to grow beyond the partner limit

The Private Sector - Public Limited Company (PLC)

• Can offer shares to the public
• Requirements for becoming a PLC include minimum capital and required parties

The Private Sector - Multinational Organisations

• Headquarters in one country but international production facilities in other countries

Reasons for Becoming a Multinational

• Increasing market share
• Securing cheaper resources, e.g., labour and premises
• Avoiding tax or trade barriers
• Taking advantage of government grants

The Private Sector - Franchises

• Joint venture between franchisor and franchisee
• Franchisee purchases the right to use a business's format
• Reduces the risk compared to starting a business from scratch

The Public Sector

• Run by the state for the people
• Financed by public money/taxes (e.g., income tax)

Other Business Types: Cooperatives

• Owned by their members
• Profits & losses are shared amongst members

Business Size

• Classified into small, medium, and large enterprises based on number of employees and annual turnover
• SME: Small and Medium Enterprises
• Different classifications based on industry type

Classify Businesses - Examples

• Rowantree PLC
• Ibrahim Fairweather LLP

Teams

• Video on Apple's use of teams

The Best Teams

• Effective teams range from 2 to 25 members

Value Chain Model

• Developed by Michael Porter in 1985
• Identifies activities required for effective business function
• Value added by efficiently executing activities at lower costs compared to competitors

Value Chain Model Summary

• Four-minute summary video available

Porter's Value Chain Model

• General-purpose model to analyze value-chain activities
• Helps understand value sources

IT through the Value Chain

• IT systems and how they support primary business activities

Supply Chain

• Definition of the supply chain
• Video URLs
• Diagram showing components

Supply Chain Management (SCM)

• Overseeing/controlling the movement of goods/services from manufacturer to customer
• Managerial objective is to increase efficiency & decrease costs

Quiz Questions (Multiple Choice)

• Various questions regarding the private sector, NPOs, value chain, and ICT support of businesses

Test your knowledge on different business models including peer-to-peer, crowdsourcing, and affiliate marketing. This quiz will challenge your understanding of their purposes, characteristics, and roles in innovative problem-solving and content creation.