Untitled Quiz

Business Model Overview

• A business model is a simple representation of a business's complex reality.
• The model should be simple, relevant, and understandable without oversimplifying complexities.
• It describes the rationale of how an organization creates, delivers, and captures value.
• A model includes nine building blocks that show the logic of how a company aims to make money.
• These blocks cover the core areas of customers, offer, infrastructure, and financial viability.

The 9 Building Blocks

• Customer Segments: An organization targets one or more specific customer groups (segments) with common needs, behaviours, or attributes.
• Value Propositions: The bundles of products or services designed to solve customer problems or satisfy their needs (e.g., quality, price, brand image).
• Channels: How value propositions are delivered and communicated to customers (e.g., websites, retail stores, advertising).
• Customer Relationships: The types of relationships companies establish with different customer segments (e.g., personal, automated, or self-service).
• Revenue Streams: The sources of revenue for the business (e.g., transaction revenues, recurring revenues).
• Key Activities: The most important tasks required to create and deliver a value proposition (e.g., production, problem-solving, platform development).
• Key Resources: The essential assets necessary for the business to function (e.g., physical facilities, intellectual property, human resources).
• Key Partnerships: The network of suppliers and partners (e.g. strategic alliances, buyer-supplier relationships).
• Cost Structure: All the costs associated with operating the business model (e.g., fixed costs, variable costs).

Customer Segments

• Customers are the heart of any business model.
• Companies group customers into segments based on common needs, behaviours, etc.
• An organization needs a conscious decision about which segments to serve and which to ignore.
• There are different types (Mass Market, Niche Market, Segmented, Diversified, Multi-sided Platform).
• Each group may have different needs, preferences for channels, relationship types, and profitability characteristics.

Value Propositions

• Value proposition is the reason why customers choose a company over others.
• Value propositions solve customer problems or fulfil customer needs.
• These can be quantitative (e.g., price, speed) or qualitative (e.g., design, customer experience, status).
• Newness, performance, customization, design, price/brand/status, accessibility, risk reduction, and convenience are examples used to create value.

Channels

• Channels describe how companies reach and communicate with customers.
• Channels can be direct (e.g., sales force) or indirect (e.g., wholesalers).
• Channels are often integrated to create a seamless customer experience.
• Effective channel selection and integration are essential to maximizing sales and customer satisfaction..

Customer Relationships

• Relationships can range from personal to automated.
• Motivations include customer acquisition, retention, and upselling.
• Relationship models include: Personal Assistance, Dedicated Assistance, Self-Service, and Automated Services.
• Customer communities can be used.
• Customers may prefer different types of relationships depending on their needs and preferences.

Revenue Streams

• Revenue streams are a company's sources of income.
• These include Transaction Revenue (one-time) and Recurring Revenue.
• Various models exist (Asset Sale, Usage Fees, and Subscription Fees).
• Different segments may have different willingness and preferences to pay.

Key Activities

• Key activities are the critical tasks to deliver a value proposition.
• These include producing a product, solving problems, or building platforms.
• Companies need to identify and prioritize core activities for effective operation.

Key Resources

• Key resources are essential assets for successful business operations (physical, intellectual, financial, human).
• These support activities and interactions within the model.
• Resource types include physical items, brand recognition, skilled workers, or financial capital.

Key Partnerships

• Key partnerships determine the company's network of suppliers and partners.
• These create synergies, optimise resource allocation, reduce risks, and provide access to key resources or activities.
• Different partnership types exist, including strategic alliances, co-opetition, and joint ventures.

Cost Structure

• The cost structure covers all operating expenses (fixed and variable).
• Understanding costs is crucial for profitability, allowing informed decisions about pricing and resource allocation.
• Companies need different cost structures depending on the type of business model (cost-driven vs. value-driven).