LS 126 I LT Reviewer

Professor: Arturo Valencia

Arrah Mae Davin
Lessons to cover:
Business Model Canvass (attach boxes)
Need for strategy
Vision/ Mission
External Porters 5 forces.
Internal/ Swot/Tows Analysis how to match
Objectives / Value Chain
Generic Strategies (Differentiation, Cost leadership etc)
Business Plan
Balanced Scorecard

Memorize:
Business Model Canvas
PEST, Industry Trends, 5 forces
SWOT/ TOWS Matrix
BCG Matrix
Value Chain

Additional (might come up)

Plenary presentation skills
Governance.

Business Model Canvas

- Reference file: business modelgeneration_preview.pdf
- Overview of BMC:
 -

Description of 9 aspects / boxes/building blocks in a Business Model Canvas:

1. Key Partners (8) some activities are outsourced and some resources are acquired outsired the
enterprise
2. Key Activities (7) by perfoming a number of Key Activities.
3. Key Resources the assets required to offer and deliver the previously described elements.
4. Cost Structure (9) business model elements result in the cost structure.
5. Value Proposition (Center of CS and RS) (3) seeks to solve customer problems and satisfy
customer need with value propositions.
6. Customer Relationships (4) established and maintained with each customer segment.
7. Channels (2) value propositions are delivered to customers through communication distribution,
and Sales channels.
8. Customer Segments (1) who do we serve?
9. Revenue Streams (5) - result from value propositions successfully ffered to customers.

Customer Segments
- defines the different groups of people or organizations an enterprise aims to reach and serve.
- Heart of any business model.
- Business model may cater/define one or several Customer Segments
- Strong understanding of specific customer needs.
- Separate customer segments: different distribution channels, distinct offer, different type of
relationship (with wedding planners), different profitabilities, willing to pay for different
aspects of the offer.
Value Proposition
- The bundle of products and services that create value for a specific Customer Segment
- Solves customer problem/ satisfies need.
- Benefits that a company offers.
- Similar to existing but with added features and attributes.
- What value do we deliver? What are we solving faster.
- Create value for customer segment through distinct mix of elements catering to that segments
needs. (price, speed of service) or qualitative (design, customer experience)
- Tailoring service needs customization.
- Design, brand/status, price, cost reduction, risk reduction, accessibility,
convenience/usability.

Channels
- How a company communicates with and reaches it customer segments to deliver a value
proposition.
- Post-purchase customer support, value proposition to customers
- Channel Types: Partner Indirect(Partner Stores, Wholesaler) + Own Direct and Indirect
(Own stores, web sales, sales force)

Customer Relationships
- Describes the type of relationships a company establishes with specific Customer Segments
- Personal / Automated.
- Driven by the following: customer acquisition, customer retention, boosting sales,

Revenue Streams:
- Represent the cash a company generates from each customer segment (costs must be
subtracted from revenues to create earnings)
- Customers are heart, revenue are arteries
- Depends on pricing: fixed pricing or dynamic pricing

Key Resources:
- Describes the most important assets required to make business model work.
- Physical, financial, intellectual or human.
- Can be leased/ owned

Key Activities
- The most important things a company must do to make its business work
- These are required to create value proposition
- Production, problem solving, platform/network.

Key Partnerships
- The network of suppliers and partners that make the business model work.
- (ex: strategic alliances between non-competitors, coopetition, joint venture to develop new
businesses, buyer-supplier relationships to assure reliable supplies)
Cost Structure
- cost structure describes all costs incurred to operate a business model.

Vision/Mision:
Vision:
- What do we want to become?
- A picture of ambition and aspiration
- End-point; superlative position; legacy
Mission:
- What is our business
- What is our reason?
 - Philosophy, principles, values
- A clear business, vision produces a comprehensive mission statement

Core Values
Core Competence
Competitive Advantage
Value Margin

External Audit: Porters 5 Forces (within an industry)

- Potential development of substitute products

- Potential Entry of New Entrants/ Competitors
- Bargaining Power of Suppliers
- Bargaining Power of Buyers
- Rivalry Competitors

- Causes for rivalry: high number of competing firms, similar size of firms, failing demand
for industrys products, consumers switch brands easily, barriers to leaving market are high, no
differentiation among products, mergers are common.

- New Entrants: Strong threat. So leading firms lower prices, guarantees, offer financing
specials.

- Substitutes: plastic container for paper container/glass etc. Substitutes put a ceiling on the
amount they can charge.

- Bargaining power of Suppliers: High especially when raw material supplier for that industry
is limited; affects intensity of competition; especiallywhen there are a few suppliers for raw
materials; switching raw materials is especially high.

- Bargaining power of consumers: Large in number/ buy in volume: represent major force in
intensity of competition. Firms may tend to offer special services to gain customer loyalty.

o Consumers gain power: if they can inexpensively switch to competing brads or subs;
if they are particularly important to the seller; if seller is facing problem with falling
demand aka desperate sellers.

External Audit: PEST/TEMPLES:

- Technology, Economic, Market, Political, Legal, Environmental and Social.
o Competititors, suppliers, dstributors, labor unions, markets, natural environment,
specia interest groups
o An orgs opportunities and threats.

I/O View: Industrial Organization

- I/O approach to competitive advantage advocates that external (industry) factors are more
important than internal factors in a firm for achieving competitive advantage.
- Organizational performance will be primarily determined by industry forces.
- Example: Porters 5-forces model.
- Competitive advantage is largely determined by competitive positioning in an industry.
SWOT Matrix
SWOT match internal S and W to External O and T.--> find strategies/action plans: SO, ST, WO,
WT.

BCG MATRIX
Market Share Position x Industry Sales Growth Rate

MARKET SHARE HIGH MARKET SHARE LOW.

STAR (II) QUESTION MARK (I)
- obviously stars! - needs further development
Industry - Best growth, profitability. (market pen, product dev)
growth - has potential since high industry
HIGH growth.

COW (III) DOG (IV)

- generate excess cash. - low market share
- High market share in low - low growth rate of industry.
Industry growth industry. - Often
growth divested/liquidated/retrenched.
rate
LOW.
Value Chain

Firm Infrastructure
HR Management
Procurement
Technology

Frontline:
Inbound Logistics
Operations
Outbound Logistics
Marketing and Sales
Service

Value / Margin.

Generic Strategies:

Different types of views.

Operational Strategies.