Prepared by: Avinash Ramsubhag BUSINESS MODEL Prepared by: Avinash Ramsubhag

DEFINITION The rationale of how an organization creates, delivers and captures value. (Osterwalder and Pigneur, 2010)

COMPONENTS OF A BUSINESS MODEL Value Proposition – The benefit the firm intends to deliver Beneficiary – Who is your target market Operations – The structure or systems within which the firm can be a source of strength or weakness Product Differentiation – Finding a way to stand out from competitors Income Generation – How do you intend to make money Growth Model – medium and long term prospects

VALUE PROPOSITION The Product Offering - The actual good or service (or combination) that will be sold Standardized or Customized – Is it one set product or can you customize to the needs of the customer Distribution – Are you using direct or indirect distribution channels Make or Buy – Would you make the product yourself or buy and resell

BENEFICIARY What type of relationship is it? – Business to Business (B2B), Business to Customer (B2C), Business to Government (B2G) or a combination? Geographical Scope – Local, regional or international? Market – General or Niche?

OPERATIONS Organizational Structure / Culture – does your structure or culture facilitate the kind of product you would like to produce Skills – There may be unique skills or experiences amongst the owner or staff that give them an advantage Technology – the firm may have efficient or up to date technology Intellectual Property – there may be intellectual property rights that may give the firm a competitive advantage Resources – The can be other resources that the firm may acquire that may give them a competitive advantage such as their location, brand manager or agent etc

PRODUCT DIFFERENTIATION Operational Excellence – The way the firm works and its ability to deliver a superior customer experience Product Quality – Delivering a better product that customers value Innovative Leadership – The organizations prides itself on their ability to be innovative and creative Cost – Being efficient and keeping costs down Networks – Differentiate through the use of collaborative networks

INCOME GENERATION Operating Leverage – How best to use the finance that is available to manage cash and protect profits Volume and Margins – Are you aiming for high volume and lower margins or low volume with higher margins Pricing – What pricing strategy are you using? Cost plus, competitor based, price discrimination, fixed pricing, variable pricing, market skimming, market penetration etc. Revenue Sources – How exactly will you be generation revenue. Is there one source or multiple sources?

GROWTH MODELS Subsistence Model (Survival) – Enters into entrepreneurship strictly for the purpose of survival Income Model (Lifestyle) – Focus is on enjoying a specific lifestyle. Growth Model – focus is on a long-term vision for the growth of the business. Short-term milestones are set in order to achieve these long-term goals Speculative Model – The entrepreneur does not necessarily have a long term plan. A contingency based approach for exploiting an attractive opportunity

BUSINESS MODEL CANVAS

SAMPLE FACEBOOK BUSINESS MODEL CANVAS

GOOGLE SAMPLE BUSINESS MODEL CANVAS

SKYPE SAMPLE BUSINESS MODEL CANVAS

ACTIVITY In groups of 5, choose a company that you know and prepare a business model canvas for it.

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