Biz models Flashcards
Franchise model
Best for the company’s expansion, franchising allows the franchisor to license its resources, brand name. Intellectual property and rights for a franchise to sell its products and services in exchange for a royalty.
rev model: royalty
example: mcdonalds
Multi-sided platform model
Offers services to both sides of business carries out a multi-sided business model.
Example: LinkedIn, which provides subscription services to people to find job opportunities as well as to HR managers to find candidates for their vacancies.
Cash machine business model
How quickly a company converts cash to good and services and then again into cash. This model is used by the companies who
rev: low-profit margin but survive in the market with a disruptive position.
Example: Amazon generates a massive amount of cash from its online store before it pays to its suppliers. Another way to look is that Amazon runs its supply chain on vendor credit.
Freemium
A mix of free and paid services, the freemium model is mostly used by tech companies in the Software as a Service (SaaS) or apps business model. To grow business and acquire customers, companies offer free (lite) versions to customers but for a limited time or with limited features. To unlock the upgraded features, the customer has to opt for paid services.
Example: Spotify
Subscription biz model
get services by paying a fixed amount every month or year. In this case, the company has to provide enough value to its customer, so they visit the website over and over again.
Example: netflix
Peer-to-peer
middleman between two individual parties and create value for both demand and supply side. It’s different than a typical relationship of a business selling its services to consumers (B2B or B2C). It makes money through commissions.
example: airbnb
one-for-one model
social entrepreneurship business model. It’s a hybrid solution, a combination of both profit and not-for-profit services
example: toms
hidden revenue
users don’t have to pay for the services offered, but the company still earns revenue streams from other sources
example: google, fb
razor and blade model
printer & cartridge
one item (Razor) is sold at a low price while another associated item (blade) is sold at a premium price. It is also known as a printer and cartridge business model
rev: premium, one-time fee to buy this; smaller fee to keep up the purchase
example: quip
Reverse Razor and Blade business model
one-time offer for the premium product and acquires more revenue from secondary items in the long term.
example: apple (iphone)
Direct sales
products are directly sold to the end customers either in a one-on-one conversation or small gathering, remember Tupperware house parties?
rev: the salesperson gets a share of every sale.
example: avon
affiliate marketing
make money by featuring, reviewing, and recommending other company’s products or services. Think about product review websites.
rev: These websites are paid based on sales opportunities that they bring to their vendor companies
consulting
charge on the hourly basis and/or they take a percentage share based on the successful completion of the project (cost reduction project)
ex: IDEO
agency-based
project-based business model, where an outside firm is hired to complete a specific task. Traditionally, businesses that lack internal expertise hire agencies to get a customizable solution for their needs.
niche agencies are digital marketing, design & architecture, survey, promotion, media, public relationship, branding, website development, social media, etc
ex: Leo Burnett Company (United Airlines, McDonald’s, Kellogg’s are some of their notable clients)
user-generated content
generate quality content on websites for free to answer other users’ questions and provide reviews
rev: User-generated content is compiled and sold to companies seeking to exploit consumers’ ideas and content to promote their brands.
online ed
get access to educational resources via flat course fees or subscription.
combo of: freemium, course fees, subscription-based
multi-brand
marketing more than two products, almost similar yet competing with each other and come under a single organization but having different brand names
goal: create economies of scale and to build an empire.
ex: p&g, nestle
e-commerce
allows buyers and sellers to connect and transact using an online platform (online shop).
distribution based model
provide channels for businesses to sell to customers via dealers, brokers, supermarkets, retailers, and so on.
ex: unilever spends a lot of money in maintaining proper distribution
- zero levels (manufacturer –> customer)
- one level (manufacturer –> retailer –> cust)
- two levels: (manufacturer –> wholesaler –> retailer –> customer)
drop-shipping business model
business owner contacts many different suppliers/ wholesalers to sell their product on the website. Once an order is placed on a business owner’s website, wholesaler drop-ships the products directly from the manufacturer to the customer.
In this case, the business owner does not have to hold any an inventory and uses the third party to manage all the shipping and logistics needs.
examples: doba
enterprise
Targeting and focusing only the large clients, enterprise business model is all based on getting big deals
example: boewing, raytheon, spacex
social enterprise
companies spend money to improve human living conditions.
example: Brunello Cucinelli is an Italian luxury brand that donates about 20% of its profits towards a social cause.
family owned
business that is run by a family, and its decision-making processes are controlled by two or more family members is a family-owned business.
The leadership of the company is passed to the heir, who will hand over the reins to their children.
example: ford, walmart
franchise and company-operated stores
mix of operated chains and licensed stores (franchising)
ex: starbucks
