Lecture Five Flashcards
(13 cards)
what is a business model
A business model is the conceptual structure supporting the viability of a business.
Business models are “at heart, stories —
stories that explain how enterprises work”
“….they describe, as a system, how the
pieces fit together ” (Magretta, 2002)
At the heart of any business model is identifying how innovation will create
and capture value. Some firms may be better at one aspect than the other, but both are critical.
what are the key components of a business model?
Value Proposition: Core offering that solves a problem or meets a need for customers.
Target Customer Segments: Identifies the characteristics and needs of the target customers.
Revenue Streams: Describes how the company generates revenue (e.g., one-time sales, subscriptions).
Cost Structure: Outlines the costs incurred to deliver the value proposition, including fixed and variable costs.
Key Resources: Critical resources needed to deliver the value proposition (e.g., physical, human, intellectual property).
Key Activities: Core activities (e.g., manufacturing, marketing, customer support) to generate revenue.
Channels: Ways the company reaches and communicates with customers (e.g., sales, online marketing, partnerships).
Partnerships and Alliances: External collaborations that enhance the value proposition or reach new customer segments.
Competitive Advantage: Factors that give the company an edge over competitors (e.g., unique IP, customer service, exclusive distribution).
what are types of innovative business models?
E-commerce business model: Amazon
Subscription business model: Netflix
Freemium business model: Zoom
On demand business model: Uber/Deliveroo
Franchise business model: McDonalds
Advertising business model: Instagram
Direct Sales business model: Avon
Crowdfunding business model: GoFundMe
How do you design and implement a new business model?
Identify the Problem/Opportunity: Look for unmet customer needs, new trends, or events changing the market.
Conduct Market Research: Understand the target market and assess if it’s an attractive opportunity.
Define Your Value Proposition: Determine the benefits offered to target customers.
Identify Target Customers: Understand their needs, preferences, and behaviours.
Define Revenue Streams: Decide how to capture value from your offering.
Develop a Cost Structure: Identify the resources, activities, and partnerships needed to deliver and capture value.
Identify Partnerships & Channels:
Determine the networks and channels required to deliver your value proposition.
Test & Refine the Business Model: Gather market feedback and refine your model.
Implement & Scale: Once refined, scale the model to reach a larger audience or explore new markets.
Continuously Monitor & Adapt: Stay adaptable as market conditions evolve.
what are the four key questions (business model dimensions)
WHO (is our client) - the client and their needs is at the centre of every business model
WHAT (do we deliver to our clients) - what is actually offered to the client to meet their needs
HOW (is the offering created) - need to execute certain processes / activities, using resources and capabilities (and partners in the value chain)
WHY (is this financially viable) - cost structure and revenue streams are described to explain how to make money with this business model.
what is business model innovation
patterns of creative imitation and the power of recombination.
combination of a radical new product, service innovation, and fundamental business model innovation (introduction of iPhone)
INNOVATIVE BUSINESS MODEL EXAMPLE
what is a business model canvas?
Designed by Alexander Osterwalder and Yves Pigneur in 2005;
Strategic management tool and visual framework for designing, analysing, and iterating on business models.
The Canvas provides a visual and collaborative framework for strategic decision-making, and can help
businesses to communicate their business model to stakeholders and investors
what are the 9 building blocks of a business model canvas?
Customer Segments
Value Proposition
Channels: sales and marketing, distribution, and customer support.
Customer Relationships: personal assistance, self-service, or automated services.
Revenue Streams
Key Resources: resourced needed to create, deliver, and capture value, such as physical assets, intellectual property, human resources, or financial resources.
Key Activities: activities needed to create, deliver, and capture value, such as production, marketing, sales, or customer support.
Key Partnerships: strategic partnerships or collaborations the firm needs to leverage in order to create, deliver, and capture value.
Cost Structure: fixed costs, variable costs, or economies of scale.
what are the challenges / risks of business model innovation
Resistance to change!
As with all types of innovation, uncertainty and unpredictability.
Resource intensity.
Complexity in designing and implementing
business models in dynamic and rapidly changing environments.
Cannibalisation of existing revenue streams in favour of new, potential revenue streams.
EXAMPLE OF FAILED BUSINESS MODEL INNOVATION??
what is sustainable business model innovation
Incremental sustainability efforts often focus on:
Eco-friendly product innovation
Reducing environmental impact in processes
Full integration of sustainable innovation is needed within the overall business model.
Sustainability drives creative innovation in many firms, requiring changes to business models to create new ways of delivering and capturing value, shifting the competitive landscape (Nidumolu et al., 2009).
Expand on the traditional business model canvas to explore sustainability-oriented business innovations.
Transition from incremental and isolated innovations to more integrated, systemic sustainability innovations, which are better suited to address global challenges and resource constraints (Joyce & Paquin, 2016).
what is added to the sustainable business model canvas
eco-social costs
eco-social benefits
