Business model

Business model

Frieda Brioschi

[email protected]

IEDLesson 5

Course program1. Italian Startups2. Set up a startup in Italy3. I've got an idea. And now? 4. Value analysis5. Business model6. Communicate, communicate, communicate7. Being net 8. Find your market9. Funding: venture capital, business angel and other ways of financing 10. Pitch

Today's table of content

1. Business Model

2. Examples

3. Business Plan

Value analysis: quick recap

During last lesson you learnt about direct and indirect costs:

1. the former are costs that can be identified specifically with a particular project or activity labour agreements

2. the latters include all the other costs

Value analysis: quick recap

You went through the definitions of cash and accrual basis accounting:

• difference between them has to do with the time frame in which revenues and expenses are recorded and reported

Value analysis: quick recapSome examples of perceived value:

• Gillette Fusion Vs Gillette Custum Plus Disposable

• 3M Scotch Tape Vs 3M Scotch Command Strips

• A-Style, Lacoste, etc.

Value is the extent to which a good/service is perceived by its customer to meet his needs/wants, measured by the customer’s willingness to pay for it.

Business model

Business model /1A business model describes the rationale of how an organization creates, delivers, and captures value (economic, social, cultural, or other forms of value). The process of business model construction is part of business strategy.

It's a way to represent core aspects of a business, including purpose, offerings, strategies, infrastructure, organizational structures, trading practices, and operational processes and policies.

http://en.wikipedia.org/wiki/Business_model

Business model /2The essence of a business model is that it defines the manner by which the business enterprise delivers value to customers, entices customers to pay for value, and converts those payments to profit: it thus reflects management’s hypothesis about what customers want, how they want it, and how an enterprise can organize to best meet those needs, get paid for doing so, and make a profit.

http://en.wikipedia.org/wiki/Business_model

The business model canvas

1 – Value propositionThe collection of products and services a business offers to meet the needs of its customers. It's what distinguishes itself from its competitors. It provides value through various elements • newness, • performance, • customization, • "getting the job done", • design, • brand/status, • price, • cost /risk reduction, ecc.

http://en.wikipedia.org/wiki/Business_Model_Canvas

Value Proposition Builder1.Market: for which market is the value proposition being

created?2.Value/customer experience: what does the market value

most? The effectiveness of the value proposition depends on gathering real customer, prospect or employee feedback.

3.Offering: which products or services are being offered?4.Benefits: what are the benefits the market will derive from

the product or service?5.Alternatives and differentiation: what alternative options

does the market have to the product or service?6.Proof: what evidence is there to substantiate your value

proposition?

http://en.wikipedia.org/wiki/Value_proposition

2 – Customer segmentsA company must identify which customers it tries to serve. Various set of customers can be segmented based on the different needs and attributes to ensure appropriate implementation of corporate strategy meets the characteristics of selected group of clients. The different types of customer segments include:• Mass Market• Niche Market• Segmented• Diversify (multiple customer segments with different needs and characteristics)


Do you know who your customers are?

http://www.designvision.com/strategy/

Really?

http://www.designvision.com/strategy/

3 - Channels

A company can deliver its value proposition to its targeted customers through different channels. Effective channels will distribute a company’s value proposition in ways that are fast, efficient and cost effective.


4 – Customer relationshipTo ensure the survival and success of any businesses, companies must identify the type of relationship they want to create with their customer segments.

• Personal Assistance• Dedicated Personal Assistance• Self Service• Automated Services• Communities• Co-creation


Why does it matter?

http://soffrontblog.com/2011/02/07/benefits-of-an-on-demand-crm-application/

5 – Revenue streamsThe way a company makes income from each customer segment.

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


http://www.flickr.com/photos/silkcharm/2893602428/

6 – Key resourcesAre the assets required to offer and deliver value proposition to the customer.

• Physical• Intellectual• Human• Financial

http://en.wikipedia.org/wiki/Key_resources_(business_model)

7 – Key partnerIn order to optimize operations and reduce risks of a business model, organization usually cultivate buyer-supplier relationships so they can focus on their core activity. Complementary business alliances also can be considered through joint ventures, strategic alliances between competitors or non-competitors.


8 – Key activitiesThe most important activities in executing a company's value proposition.


9 – Cost structureThis describes the most important monetary consequences while operating under different business models.

• Fixed Costs• Variable Costs• Economies of Scale• Economies of Scope


Examples

Coca Cola

http://sopinion8ed.wordpress.com/2012/11/23/the-coca-cola-business-model-and-their-competitive-advantage/

Financial Times

http://glennas.wordpress.com/2010/07/31/business-model-innovation-alexander-osterwalder/

LinkedIn

http://bmimatters.com/

Groupon

http://www.adriaanrijkens.nl/2011/06/29/the-groupon-business-model-canvas/

Twitter

http://bmimatters.com/2012/02/18/understanding-twitter-business-model-design/

Facebook

http://bmimatters.com/2012/04/10/understanding-facebook-business-model/

Blockbuster

http://daphnecurry.wordpress.com/2011/08/25/business-model-for-blockbuster-video/

Google

http://bmimatters.com/2012/04/18/comparing-facebook-and-google-business-models/

WikipediaDoes an original business plan still exist for Wikipedia?

http://www.quora.com/Wikipedia/Does-an-original-business-plan-still-exist-for-Wikipedia

Community models

Geographically based

• neighbourhood

• productive district

• close to me

http://www.oilproject.org/lezione/cos-un-business-community-model-6346.html

Professional community All the people making the same job.

It’s an easy target.


Online community • Easy to reach (massive tools available)

• There’s no clear limits between being part of a community and a company business (let’s think of UGC)

• Online users are available to pay for an interesting service (freemium!)

• Can be created as part of my business (i.e. Amazon’s libraries network)


Business plan

Business plan

Business plan describes what, how long e how much money you need to realize your business model.

Usually a business plan is a doc both for internal and external use. Internally it describes the company strategy, externally it presents the project to stakeholder.

Business planWriting a business plan help to clarify every company activities and

• optimize and develop available resources• improve consciousness on financial aspects, cash flows, break even, etc.

• Analyze risks• Identify path to specific goals• Etc.

http://www.nascelimpresa.it/doc/guida_BUSINESS_PLAN.pdf

Business model Vs Business plan

Plans are static

..models are dynamic!

- Steve Blank -

http://www.slideshare.net/sblank/bus-model-and-cust-dev-jan-2013

Never forget.. !!!

http://retrolife.typepad.com/the_overexamined_life/entrepreneurship/

Next week

Communicate, communicate, communicate.

Business model

Education

Transcript of Business model