Business Model Canvas

Draw and label the business model canvas

A business model describes the rationale of how an organization creates, delivers, and captures value 1. Key Partners 2. Key Activities 3. Key Resources 4. Value Proposition 5. Customer Relationships 6. Distribution Channel 7.Customer Segments 8. Cost Structure 9. Revenue Streams

List and briefly describe the three categories of Key Activities

Key Activities describe the most important things a company must do to make its business model work 1. Production: these are activities related to designing, making, and delivering a product in substantial quantities and/or of superior quality. it dominates the business models of manufacturing firms 2. Problem Solving: relate to coming up with new solutions to individual customer problems. Operations of consultancies, hospitals, and other service organizations. Knowledge management and continuous training. 3. Platform/Network: networks, matchmaking platforms, software, and even brands. ex platform management, service provisioning and platform promotion

List and briefly describe the four types of partnerships

Partnerships describe the network of suppliers and partners that make the business model work 1. Strategic alliances between non-competitors 2. Coopetition: strategic partnership between competitors 3. Joint ventures to develop new businesses 4. Buyer-supplier relationships to assure reliable supplies

List an briefly describe five of the elements of a Value Proposition listen in the business model canvas reading

Value Propositions describe the bundle of products and services that create value for a specific customer segment 1. Newness: satisfy an entirely new set of needs that customers previously didn't perceive because there was no similar offering. Technology related 2. Performance: the way of improving a product or service performance 3. Customization: tailoring products and services to the specific needs of individual customers or customer segments that create value. ex. Mass customization and customer co-creation 4. Brand/Status: finding value in the simple act of using and displaying a specific brand. ex wearing a Rolex watch to signify wealth 5. Price: offering similar value at a lower price in order to satisfy the needs of price-sensitive customer segments

What should the Cost Structure of a Business Model Canvas describe?

-Cost structures describe all the costs incurred to operate a business model -Cost-driven business models try to minimize costs wherever possible ***This answer should be looked into***

List and briefly describe four of the types of customer relationships

Customer relationships describe the type of relationships a company establishes with specific customer segments 1. Personal Assistance: is based on human interaction. The customer can communicate with a real representative to get help during the sales process or after the purchase is complete 2. Self Service: a company maintains no direct relationships with customers since it provides all the necessary means for customers to help themselves 3. Communities: these are user communities in order to become more involved with customers/prospects and to facilitate connections between community members. ex online communities 4. Automated Service: Automated processes, can recognize individual customers and their needs/ past purchases

List and briefly describe the four categories of Key Resources

Key Resources describe the most important asset required to make a business model work 1. Physical: such as manufacturing facilities, building, vehicles, machines, etc. ex retailers like Amazon and Walmart 2. Intellectual: such as brands, proprietary knowledge, patents and copyrights, etc. ex Nike and Sony 3. Human: people are particularly prominent in certain business models 4. Financial: such as cash, lines of credit, or a stock option pool for hiring key employees

List and briefly describe five of the types of Revenue Streams

Revenue Streams represent the cash a company generates from each customer segment which it must be subtracted from revenue to create earnings 1. Asset Sales: from selling ownership rights to a physical product. ex amazon sells books and music 2. Usage Fee: is generated by the use of a particular service which the more it is used, then the more the customer pays. ex hotels charge for the number of nights rooms are used 3. Subscription Fees: generated by selling continuous access to a service. ex a gm having a monthly or yearly subscription 4. Lending/Renting/Leasing: is created by temporarily granting someone the exclusive rights to use a particular asset for a fixed period of time. ex rending or leasing a house 5. Advertising: results from fees for advertising a particular product, service or brand

What are the two broad classes of business model Cost Structures? Briefly describe both.

1. Cost-Driven: focus on minimizing costs wherever possible. This approach aims at creating and maintaining the leanest possible cost structure, using low value propositions, maximum automation, and extensive outsourcing. Ex Southwest 2. Value-Driven: Less concerned with the cost implication of a particular business model design and instead focus on value creation. Ex luxury hotels

List and briefly describe the four characteristics a Cost Structure can have

1. Fixed Costs: costs that remain the same despite the volume of goods or services produced. Ex salaries and rents 2. Variable Costs: costs vary proportionally with the volume of goods and services produced. Ex music festivals have high variable costs. 3. Economies of Scale: Cost advantages that businesses enjoy as its output expands. Larger companies, for instance, benefit from lower bulk purchase rates. 4. Economies of Scope: costs advantages that a business enjoys due to a larger scope of operations. Ex same marketing activities may support multiple products

List and briefly describe four of the different types of customer segments

1. Mass Market: focuses on one large group of customers with broadly similar needs and problems. Often found in consumer electronics sector 2. Niche Market: cater to specific, specialized customer segments. these are found in supplier-buyer relationships 3. Segmented: distinguish between market segments with slightly different needs and problems 4. Diversified: it serves two unrelated customer segments with very different needs and problems

List and briefly describe the three motivations for creating partnerships listed in the Business Model Canvas

1. Optimization and economy of scale: designed to optimize the allocation of resources and activities. Formed to reduce costs and often involve outsourcing to sharing infrastructure 2. Reduction of risk and uncertainty: reduce risk in a competitive environment. It is not unusual for competitors to form a strategic alliance in one area while competing in another 3. Acquisition of particular resources and activities: extending their own capabilities by relying on other firms to furnish particular resources or perform certain activities. Needs to acquire knowledge, licenses or access to customers.

List and describe the 5 channel phases

Channels describe how a company communicates with and reaches its customer segments to deliver a value proposition 1. Awareness: how do we raise awareness about our company's products and services? 2. Evaluation: how do we help customers evaluate our organization's value proposition? 3. Purchase: how do we allow customers to purchase specific products and services? 4. Delivery: how do we deliver a value proposition to customers? 5. After Sales:how do we provide post-purchase customer support?

If you want to expand your market penetration quickly, what two channel types might you use? What is a negative about using those channels? Briefly explain the reasoning for your answers.

1. Partner stores - Using indirect partner channel types will help get our product out there more quickly because of already established customers, a wider range of people, and overall benefit from partner strengths in reaching the market - One downside is that partner channels will lead to profit margins 2. Sales Force - Have a dedicated group of employees that will be reliable in delivering customer service, and building reputation and positive customer relationships -Can be very costly and hard to operate