Scribd
Upload
9 views

Objective 11- Components of a Business Model

A business model outlines how a company creates, delivers, and captures value, serving as a blueprint for its operations and revenue generation. Key components include value proposition, target beneficiary, operations, product differentiation, income generation, and investment model. Understanding these elements is crucial for a company's success and competitive advantage.

Uploaded by

Antonia Pierre
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
9 views

Objective 11- Components of a Business Model

A business model outlines how a company creates, delivers, and captures value, serving as a blueprint for its operations and revenue generation. Key components include value proposition, target beneficiary, operations, product differentiation, income generation, and investment model. Understanding these elements is crucial for a company's success and competitive advantage.

Uploaded by

Antonia Pierre
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 21

Understanding Business Models: Components and

Strategies
What is a Business
Model?

● A business model is a plan for how a


company creates, delivers, and captures
value
● It outlines the core aspects of how a
business operates and generates revenue
● Think of it as the blueprint for how a
company makes money and stays
competitive
● Why do you think having a clear business
model is important for a company's
success?
Key Components of a Business Model

● Value Proposition
● Target Beneficiary
● Operations
● Product Differentiation
● Income Generation
● Investment Model
● Let's explore each of these components in detail
● Can you think of a business and try to identify some of these
components?
Value Proposition: How
Do You Create Value?

● Product Offering: Good, service, or


combination
● Standardized or Customized offerings
● Direct or Indirect distribution
● Internal manufacturing or Outsourcing
● What's an example of a company with a
unique value proposition you admire?
Product Offering Examples

● Goods: Apple's iPhone, Nike shoes


● Services: Netflix streaming, Uber rides
● Combination: Amazon (products + Prime services)
● How do these examples create value for their customers?
Standardized vs.
Customized Offerings

● Standardized: McDonald's burgers, Coca-


Cola
● Customized: Etsy crafts, bespoke tailoring
● Can you think of pros and cons for each
approach?
Direct vs. Indirect Distribution

● Direct: Tesla selling cars online, Dell computers


● Indirect: Most consumer goods in supermarkets
● How might distribution strategy affect a company's costs and
customer relationships?
Internal Manufacturing vs.
Outsourcing

● Internal: Apple designing its own chips


● Outsourcing: Many clothing brands using
contract manufacturers
● What factors might influence a company's
decision to manufacture internally or
outsource?
Beneficiary: For Whom Do You Create Value?

● Business to Business (B2B)


● Business to Consumer (B2C)
● Or both
● Local, Regional, or International market
● General or Niche market
● Can you name a company for each of these categories?
B2B vs. B2C Examples

● B2B: Salesforce, Oracle


● B2C: Spotify, Netflix
● Both: Amazon (AWS for businesses, retail
for consumers)
● How might marketing strategies differ for
B2B and B2C companies?
Market Scope: Local to International

● Local: Neighborhood bakery


● Regional: Supermarket chain
● International: Coca-Cola, Apple
● How does market scope affect a company's operations and
strategy?
General vs. Niche
Markets

● General: Walmart, Amazon


● Niche: Specialty running shoes, vegan
cosmetics
● What are the advantages and challenges
of targeting a niche market?
Operations: What Is Your Internal Source of Advantage?

● Internal capabilities of a business


● Unique skills
● Proprietary technologies
● Exclusive resources
● How do these factors contribute to a company's competitive
advantage?
Examples of Operational
Advantages

● Google's search algorithm


● Coca-Cola's secret formula
● Toyota's lean manufacturing process
● Can you think of other examples of unique
operational advantages?
Product Differentiation: How Do You Stand Out?

● Operational excellence
● Product quality
● Innovative leadership
● Cost leadership
● Network effects
● Which of these do you think is most important in today's
market?
Differentiation Strategies
in Action

● Operational excellence: Amazon's logistics


● Product quality: Apple's devices
● Innovation: Tesla's electric vehicles
● Cost leadership: Walmart's everyday low
prices
● Networks: Facebook's social platform
● Can you identify companies using multiple
differentiation strategies?
Income Generation: How Do You Make Money?

● Operating leverage (fixed and variable costs)


● Volumes (high, medium, low)
● Margins (high, low)
● Pricing (fixed, flexible)
● Revenue sources
● Why is understanding these factors crucial for a business's
success?
Operating Leverage and
Volumes

● High fixed costs: Airlines, car


manufacturers
● Low fixed costs: Consulting firms, software
companies
● High volume: Fast food chains
● Low volume: Luxury goods
● How do these factors affect a company's
risk and potential profitability?
Pricing Strategies and Revenue Sources

● Fixed pricing: Most retail products


● Flexible pricing: Airlines, hotels
● Single revenue source: Specialty retailers
● Multiple revenue sources: Amazon (retail, AWS, advertising)
● How might a company's pricing strategy impact its customer
relationships?
Investment Model: Time
Scope and Ambitions

● Subsistence model
● Income model
● Growth model
● Speculative model
● Which model do you think is most common
among startups? Why?
Investment Model Examples

● Subsistence: Local family-owned restaurant


● Income: Freelance professional, small stable business
● Growth: Tech startups aiming for rapid expansion
● Speculative: Biotech companies, cryptocurrency ventures
● How does the choice of investment model affect a company's
operations and strategy?

You might also like