Course Code: ITE 351 - New Venture Creation

PHINMA EDUCATION Module #7 STUDENT ACTIVITY SHEET

Name: ------------------------ Class n11mbsr

Section: ----- Schedule: --------------- Date.

Lesson title: Business Models Materials: Student module

Learning Targets:
At the end of the module, students will be able to:
1. List and explain different business models
2. Identify what business model is used for a
certain business
References:
Barringer, Bruce R. and Ireland, R.
Duane (2019) Entrepreneurship:
Successfully Launching New
Ventures, 6th Edition (Global Edition).
Pearson. ISBN: 978-1-292-25533-0
reddit.com/r/Entrepreneur
lnvestopedia.com

A. LESSON PREVIEW/REVIEW
Introduction
Welcome back Future New Venture Capitalists!
Today we will encounter a few of Jhe many business models that exist in the world. We
mentioned in the previous module that we will be discussing the business models. Some of this you
are already aware of, you just don't know how to explain.

8. MAIN LESSON
Content Notes
Business Models

As we mentioned before, business models are firm's plan or recipe for how it creates, delivers, and
captures value for its stakeholders. Business models are foundational to a firm's ability to succeed,
both in the short and long term, especially when it is the first one to introduce a new product or
service to customers.
Business Model and IT

Thir. doc111ncn 1 1� t11e rrnpcrt,r nf' PIii

 Course Code: ITE 351 - New Venture Creation
PHINMt\ EDUCATION Module #7 STUDENT ACTIVITY SHEET

Name: ------------------------ Class number: ---

Section: ----- Schedule: --------------- Date: -----

IT industry managed to pave a way for a better income in business models. From the rise of
advertisements we see almost anywhere in the internet, and increase of subscription type of access
to internet contents. Economy through IT has never been better.
List of Business Models

Here we have a list of business models. Most of these are actually applicable to IT, or better yet used
in the IT industry.

1. Advertising

From the name itself it gains income from advertisements or ads. Before, ads can be found only on
the newspapers, billboards, and television, now you can see them almost anywhere on the internet.
Companies pay advertisers such as Youtube to advertise their product or service, from there Youtube
gains income.
2. Affiliate
The affiliate model uses links embedded in content instead of visual advertisements that are
easily identifiable. For example, if you run a movie review website, you could embed affiliate links to
Amazon within your reviews that allow people to buy the movie you are reviewing. Amazon will pay
you a small commission for every sale that you refer to them.
3. Brokerage
Brokerage businesses connect buyers and sellers and help facilitate a transaction. They
charge a fee for each transaction to either the buyer or the seller and sometimes both. You gain
income from a portion of the sales. A very good example of this are real estate agencies, or the
business of selling house and lots,
4. Concierge/Customization
Some businesses take_ existing products or services and add a custom element to the
transaction that makes every sale unique for the given customer. For example, there are
customization happening at a larger scale with products like Nike's custom sneakers.
5. Crowdsourcing
If you can bring together a large number of people to contribute content to your site/business,
then you're crowdsourcing. Crowdsourcing business models are most frequently paired with
 Course Code: ITE 351 . New Venture Creation
P!-flNMA EDUCATION Module #7 STUDENT ACTIVITY SHEET

Name: --------------------- --
Section: -----Schedule: ---------------- Date.

advertising models to generate revenue, but there are many other iterations of the model. A good
example of this are Patreon users.
6. Disintermediation
Disintermediation is when you sidestep everyone in the supply chain and sell directly to
consumers, allowing you to potentially lower costs to your customers and have a direct relationship
them as well. If you want to make and sell something in stores, you typically work through a series of
middlemen to get your product from the factory to the store shelf. Dell is a good example of this.
Where you can directly buy parts of a desktop computers from them to be used by you.
7. Fractionalization
Instead of selling an entire product, you can sell just part of that product with a fractionalization
business model. A good example of this is Disney Vacation Club where they sell just part or one of
their vacation home for a limited time for weeks every years.
8. Franchise
Franchising is common in the restaurant industry, but you'll also find it in all sorts of service
industries from cleaning businesses to staffing agencies. In a franchise business model, you are
selling the recipe for starting and running a successful business to someone else.
A very good example of this is Jollibee or 7-11 where they sell all you need to run your own Jollibee
or 7-11 branch.
9. Freemium
With a freemium business model, you're giving away part of your product or service for free
and charging for premium features or services. Freemium isn't the same as a free trial where
customers only get access to a product or service for a limited period of time. Instead, freemium
models allow for unlimited use of basic features for free and only charge customers who want access
to more advanced functionality, A very good example of these are recent mobile apps where you can
gain an advantage if you spend real money.
10. Leasing
Leasing might seem similar to fractionalization, but they are actually very different. In
fractionalization, you are selling perpetual access to part of something. Leasing, on the other hand, is
 1' e od : I f.: 351. ,.w '/ nt (P r:, .. r;-,it 0

�irii!i..
,,rn �.•. 1rit 1 (\·11ti M ct-11e 1 1o_t1 r..r 11rr :.H

I rn
Sert,on ___ Sch ,d1 ,1c,_

like renting. At the end of a lease agreement 1 a customer needs to return the product that 'rL/ r,-;r J

renting from you. A very good example of these are rent-a-car businesses.
11. Low-touch
With a low-touch business model, companies lower their prices by providing 'fewer serti-:es
The low-touch business model means that customers need to either purchase additional services or
do some things themselves in order to keep costs down. A good example of these is !KEA, where you
buy a producUfumiture, but you are the one who assembles it.
12. arketplace
Marketplaces allow sellers to list items for sale and provide customers with easy tools for
connecting to sellers. The marketplace business model can generate revenue from a variety of
sources including fees to the buyer or the seller for a successful transaction, additional services for
helping advertise seller's products, and insurance so buyers have peace of mind. The marketplace
model has been used for both products and services. The best example for these is our e-commerce
websites: Lazada, and Shopee.
13. Pay-as-you-go
Instead of pre-purchasing a certain amount of something, such as cell phone minutes or loads,
customers -get charged for actual usage at the end of a billing period. The pay-as-you-go model i
most common in-home utilities. A very good example of this is our water companies, where � e are
billed for our usage of water.
14. Razor blade
The razor blade business model is named after the product that essentially invented the m del:
self a durable product below cost to increase volume sales of a high-margin, disposabl m�
of that product. The add-on is continuously bought for profit. From th name it�elf, very
example Is shaving blade companies such as Gillette.
15. Reverse razor blade
Flipping the razor blade model around, you can offer a high-m .rgin product and prom te s I �
of a !ow-margin companion product. The Initial purcha e is the big I wh re omp ny mak s
most of its money. Th add-ons are just there to k ep customers u Ing th fniti lly · pensiv product.
 Course Code: ITE 351 "New Venture Creation
PHINMt\ EDUCATION Module #7 STUDENT ACTIVITY SHEET

Name: ------------------------ Class r1umr/J

Section: -----Schedule: --------------- DFJtn.

This is very common in Apple products where people buy newer iPhones, and stays because of the
apps.
16. Reverse auction
A reverse auction business model turns auctions upside down and has sellers present their
lowest prices to buyers. Buyers then have the option to choose the lowest price presented to them.
You can see reverse auctions in action when contractors bid to do work on a construction project.
You also see· reverse auctions anytime you shop for a mortgage or other type of loan. A good
example of these are contractual house building.
17. Subscription
Subscription business models are becoming more and more common. In this business model,
consumers get charged a subscription fee usually monthly, or yearly to get access to a service. While
magazine and newspaper subscriptions have been around for a long time, the model has now spread
to software and online services and is even showing up in service industries. A good example of
these are Netflix, Youtube, and Google services.
18. Access to Excess
Similar to Brokerage, but instead of simply connecting buyers and sellers, you're connecting
(and helping create) an excess supply of a service, with buyers.
A very good example are Grab Taxi, and AirBNB

From the list above, there are a lot of options for us IT on what is our business model. We can make
apps that are freemium, subscription, and the most common advertisements. In a later module we will
be discussing how companies, small, big, or even Youtubers exactly gain income from
advertisements.

Skill-building Activities
Identification: Identify what business model 1, mentioned

-------1. Users/Consumers/Customers are charged a certain period of time to gain

access to the service.

T ii� d()cument .\ t.he (iropcrlr rif' PUJNMA E.D iC 'IO.N ·

 Cour od .: lT _ 3 1 . N w V �ntur<? t:rr:a io
M dul #7 S U EtlT AC f '/IT'( )H T

Name: -----
Section. ---- c-lK ulc' --- ).

_______2. The consumer is allowed to use the product for free, but if they wish to r,a 19 c 11
access to the system they need to pay.

_______3. The add-ons to the product are continuously paid to make use of the full prodt..-:

_______4. providing information given from another business/company to promote thei'"

product, and you gain profit by sharing this information.

_______5. You simply help a business in selling a product, and you gain a portion of 'he
sales.

Essay
1. Compare and Contrast Leasing and Fractionalization

2. Can toys that needs assembly be considered a Low-Touch business model? Explain.

Check for Understanding

Project Update: Business Models
Identify what business model(s) you will use for your project Enumerate th m nd plain why yoL,
chose these business model. And explain the process on how to does the busin ss m del can
provide your business profit. Do take note that you can use more than 1 bu iness model.
 Course Code: ITE 351 • New Venture Creation
PHlNMt\ EDUCATION Module #7 STUDENT ACTIVITY SHEET

Name: _______________________ Cl;,ss r ,um�J',r --

Section: _____ Schedule: ______________ Date:

Example:
Advertising. The app for monitoring and managing employee performance has banner ads while
working. And it has video ads after compiling ang generating a daily/weekly/monthly reports.
Freemium. The user can buy the app to remove the ads and use an ad free version of the system.
Plus it opens a few features such as exporting the reports as an excel rather than a PDF file.

C. LESSON WRAP-UP
FAQs
1. Can you have more than 1 business models, or all?
More than 1 business model yes, for example Youtube, it can has advertisements, and the same
time ask you if you pay for a subscription.

Thinking about Leaming

a) Mark your place in the work tracker which is simply a visual to help you track how much work you
have accomplished and how much work there is left to do.
Period 1 Period 2 Period 3
1 2 3 4 5 6 7 8 9 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2
0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6
. .
b) Think about your learning by filling up "My Learning Tracker". Wnte the learning targets, scores,
learning experience for the session and deliberately plan for the next session.
Date Learning Target/Topic Scores Action Plan
What's the What module# did you do? What were What contributed to the quality or
date What were the learning targets? your scores your performance today? What wi/1
today? What activities did you do? in the you do next session to maintain
activities? vour Df3rformance or imnrove it?
 Course Code: ITE 361 - New Venture Creation
PlilNMA EDUCt\TION Module #7 STUDENT ACTIVITY SHEET

Name: ----------- C la'., s nu 'Tl [J", r

Section: _____Schedule: _______________ Da,rj·

KEY TO CORRECTIONS
Skill Building Activities
Identification
1. Subscription
2. Freemium
3. Razor Blade
4. Advertisement
5. Brokerage

Essay
1. Fractionalization lets the user use the product for every set period of time, such as a pa.rt of a
resort in a specified months in a year, in other words for those months you qwn that part of a resort.
As for leasing, you are borrowing a product or object such as a car paying it in the amount of time
used 'and returning it in the end.
2. In a way yes, because you are selling a toy that still needs to be assembled to make it the actual
toy that it is supposed to be. It can also be a no, because assembling the toy is considered to be the
most fun part of the product.