GB370 Business Model Canvas (Exam 1)

9. Cost Structure

- The Cost Structure describes all costs incurred to operate a business model -This building block describes the most important costs incurred while operating under a particular business model

1. Customer Segments

- The Customer Segments Building Block defines the different groups of people or organizations an enterprise aims to reach and serve - In order to better satisfy customers, a company may group them into distinct segments with common needs, common behaviors, or other attributes - a business model can be carefully designed around a strong understanding of specific customer needs.

7. Key Activities

- The Key Activities Building Block describes the most important things a company must do to make its business model work -These are the most important actions a company must take to operate successfully.

8. Key Partnerships

- The Key Partnerships Building Block describes the network of suppliers and partners that make the business model work -Companies create alliances to optimize their business models, reduce risk, or acquire resources.

Types of Revenue Streams

-Asset sale or Product: Selling ownership rights to a physical product, e.g. apples, vacuum cleaners and e-books) -Service or Usage Fee: Providing access to a service for a fee based on usage, e.g. hotel nights, text messages, haircuts -Subscription or Shared Resource: Providing continuous access to a tangible or intangible asset that can be used by many people, e.g. gym membership, world of warcraft. -Resale: Acquisition of an asset from a seller, followed by the sale of that asset to a buyer at a higher price, e.g. car dealership. -Lending/Renting/Leasing: Granting someone the exclusive right to use a particular asset for a fixed period of time in return for a fee, e.g. property rental. -Licensing: Providing permission to use protected intellectual property in exchange for licensing fees, e.g. patent fees. -Brokerage: Earning a fee or commission by establishing a new relationship between a source and a buyer, e.g. estate agents. -Advertising: Selling access to a group of a people with similar characteristic, e.g. Google Ads.

Types of Cost Structures:

-Cost-driven: Cost-driven business models focus on minimizing costs wherever possible. This approach aims at creating and maintaining the leanest possible Cost Structure, using low price Value Propositions, maximum automation, and extensive outsourcing -Value-driven: Premium Value Propositions and a high degree of personalized service usually characterize value-driven business models -Fixed costs: Costs that remain the same despite the volume of goods or services produced ex. Salaries -Variable Cost: costs that vary proportionally with the volume of goods or services produced -Economies of scale: Cost advantages that a business enjoys as its output expands. Larger companies, for instance, benefit from lower bulk purchase rates -Economies of scope: Cost advantages that a business enjoys due to a larger scope of operations

Types of Value Proposition:

-Newness: satisfy an entirely new set of needs that customers previously didn't perceive because there was no similar offering -Performance: Improving product or service performance has traditionally been a common way to create value. -Customization: Tailoring products and services to the specific needs of individual customers or Customer Segments creates value -"Getting the job done": Value can be created simply by helping a customer get certain jobs done -Design -Brand/status -Price: Offering similar value at a lower price is a common way to satisfy the needs of price-sensitive Customer Segments -Cost reduction: Helping customers reduce costs is an important way to create value. -Accessibility: Making products and services available to custom- ers who previously lacked access to them is another way to create value. -Risk Reduction: Customers value reducing the risks they incur when purchasing products or services. -Convenience/usability: Making things more convenient or easier to use can create substantial value.

Types of Key Partnerships:

-Optimization and economy of scale: The most basic form of partnership or buyer-supplier relationship is designed to optimize the allocation of resources and activities **Optimization and economy of scale partnerships are usually formed to reduce costs, and often involve outsourcing or sharing infrastructure -Reduction of risk and uncertainty: Partnerships can help reduce risk in a competitive environment characterized by uncertainty -Acquisition of particular resources and activities: they extend their own capabilities by relying on other firms to furnish particular resources or perform certain activities. Such partnerships can be motivated by needs to acquire knowledge, licenses, or access to customers

3. Channels

-The Channels Building Block describes how a company communicates with and reaches its Customer Segments to deliver a Value Proposition -Channels are customer touch points that play an important role in the customer experience.

4. Customer Relationships

-The Customer Relationships Building Block describes the types of relationships a company establishes with specific Customer Segments -A company should clarify the type of relationship it wants to establish with each Customer Segment.

6. Key Resources

-The Key Resources Building Block describes the most important assets required to make a business model work - These resources allow an enterprise to create and offer a Value Proposition, reach markets, maintain relationships with Customer Segments, and earn revenues. -Key resources can be physical, financial, intellectual, or human. -Key resources can be owned or leased by the company or acquired from key partners.

5. Revenue Streams

-The Revenue Streams Building Block represents the cash a company generates from each Customer Segment (costs must be subtracted from revenues to create earnings) -What value are people willing to pay? -Each Revenue Stream may have diΩerent pricing mechanisms, such as fixed list prices, bargaining, auctioning, market dependent, volume depen- dent, or yield management.

2. Value Proposition

-The Value Propositions Building Block describes the bundle of products and services that create value for a specific Customer Segment -The Value Proposition is the reason why customers turn to one company over another. -It solves a customer problem or satisfies a customer need. -A Value Proposition creates value for a Customer Segment through a distinct mix of elements cater- ing to that segment's needs. Values may be quantitative (e.g. price, speed of service) or qualitative (e.g. design, customer experience).

Types of Customer Segments:

-mass market: all focus on one large group of customers with broadly similar needs and problems -niche market: cater to specific, specialized Customer Segments -segmented market: distinguish between market segments with slightly different needs and problems -diversified market: serves two unrelated Customer Segments with very different needs and problems -multi-sided market: serve two or more interdepen- dent Customer Segments

Types of Customer Relationships:

-personal assistance: he customer can communicate with a real customer representative to get help during the sales process or after the purchase is complete. -dedicated personal assistance: This relationship involves dedicating a customer representative specifically to an individual client. It represents the deepest and most intimate type of relationship and normally develops over a long period of time -self-service: a company maintains no direct relationship with customers -automated services: mixes a more sophisticated form of customer self-service with automated processes -communities: companies are utilizing user communities to become more involved with customers/prospects and to facilitate connections between community members -co-creation: writing reviews and assisting with the creation of new products

Types of Key Resources:

-physical: includes physical assets such as manufacturing facilities, buildings, vehicles, machines, systems, point-of-sales systems, and distribution networks -intellectual: such as brands, proprietary knowledge, patents and copyrights, partnerships, and customer databases -human: Every enterprise requires human resources, but people are particularly prominent in certain business models -financial: Some business models call for financial resources and/or financial guarantees, such as cash, lines of credit, or a stock option pool for hiring key employees

Types of Key Activities:

-production: These activities relate to designing, making, and delivering a product in substantial quantities and/or of superior quality -problem solving: relate to coming up with new solutions to individual customer problems -platform/network: Networks, matchmaking platforms, software, and even brands can function as a platform

Channel Phases:

1. Awareness 2. Evaluation 3. Purchase 4. Delivery 5. After sales

The 9 building blocks:

1. Customer Segments 2. Value Proposition 3. Channels 4. Customer Relationships 5. Revenue Streams 6. Key Resources 7. Key Activities 8. Key Partnerships 9. Cost Structure

Business Model

A business model describes the rationale of how an organization creates, delivers, and captures value

Types of Channels

Owned Channels- direct -Owned Channels and particu- larly direct ones have higher margins, but can be costly to put in place and to operate. Partner Channels- indirect -Partner Channels lead to lower margins, but they allow an organization to expand its reach and benefit from partner strengths.