Graduate School of Business Entrepreneurship Moscow 2023

Entrepreneurship
Seminars 3 & 4

Elizaveta Krupenich
ekrupenich@hse.ru
Tg: @ekrupenich
Graduate School of Business Entrepreneurship Business Model 2

What is a
Business Model?
 Graduate School of Business Entrepreneurship Business Model 3

There is a good article about it!

 FOUR FACTOR VALUE MATRIX

NEED BARRIERS
What needs do my products or What barriers do my products or
services satisfy? services remove for my customers?

FREQUENCY SCALE
How often will my customers use What markets can I scale my
my products or services? products or services into?

à 16 types of business models

(ways to earn money)
 BUSINESS MODEL

1. Retail model

Supermarkets buying
food in bulk and then
reselling them to
customers through
retail outlets and
online.
 BUSINESS MODEL

2. Production and retail model

Producing goods in
order to retail them
goes hand in hand
often times. Think of
restaurants, bakeries,
car manufacturers, or
property developers.
 BUSINESS MODEL

3. Platforms

On a one-sided
market (App Store),
two-side (Ebay, P2P
cripto), multi-sided
(Amazon)
 BUSINESS MODEL

4. Global hyperlocal 2-sided markets

Gig economy. The supply

side is provided by
freelancers. The demand
side is created through
immediate and short-term
needs. Uber, Deliveroo,
TaskRabbit, and Airbnb.
 BUSINESS MODEL

5. Freemium model

Users get to use a

basic yet fully
functioning product or
service for free, but
must pay for a
premium version with
additional features.
 BUSINESS MODEL

6. Versioning model

Initially, the customer has the

choice between a free version and a
premium version. With the
introduction of a second, more
expensive premium version the
customer’s perception of the free
version shifts from “cost efficient” to
“low quality”
 BUSINESS MODEL

7. Subscription model

This model is very popular for

newspapers, streaming
services, water, electricity,
communication, gyms, etc.
The customer pays a fixed
amount for limited or unlimited
access to services or goods.
 BUSINESS MODEL

8. Advertising model

An advertiser pays the

platform to advertise to
the people using the
platform. This could be a
busy junction, a busy
public transport station, a
newspaper, or a website.
 BUSINESS MODEL

9. Social media

People use the social media

platform for free to socialise
with their friends. The platform
provider sells targeted
advertising to advertisers
showing ads to the users.
 BUSINESS MODEL

10. Affiliate model

A merchant pays someone a

cut of the revenue another
helps generating. If the user
clicks on the ad and converts
into a customer, the bloggers
receives an additional cut of
the revenue.
 BUSINESS MODEL

11. Auction model

Competitive auctioning is the

principal business model of Ebay
and auctioning houses. Potential
buyers bid competitively until the
highest bidder wins. Christie’s
and Sotheby’s are the biggest
player in the UK.
 BUSINESS MODEL

12. Data model

By providing online services

for free to users the providing
company is able to collect
user data in return which they
sell on to paying customers.
 BUSINESS MODEL

13. Merchant model

A merchant buys and sells

goods in large quantities
across various countries.
Typical customers are other
businesses. Examples are
sea containers, ship parts,
engines, the arms industry,
production facilities, etc.
 BUSINESS MODEL

14. Brokerage model

A broker has exclusive access

to commodities and sells them
by running competitive
auctions. They charge their
clients a maker or taker fee
(sell or buy fee) depending on
the transaction.
 BUSINESS MODEL

15. Professional services

Some of these services may be

regulated such as legal services,
financial services, financial advice,
accounting services, health care
services, etc. Examples are firms
such as McKinsey for management
consulting, Deloitte for accounting,
and BlackRock for asset management.
 BUSINESS MODEL

16. Support line / complementary model OR

This model entails purchasing an

item for a small fee but then
requires either a subscription to
required services such as
maintenance or buying disposable
items like printer cartridges. Cars
and petrol or torches and batteries
and battery chargers are good
examples here.
Graduate School of Business Entrepreneurship Business Model 21

Have you heard about

Business Model canvas?
BUSINESS MODEL
BUSINESS MODEL
Graduate School of Business Moscow 2023

LET’S START FROM THE

VALUE PROPOSITION!
BUSINESS MODEL
ACTIVITY MAP
 Graduate School of Business Entrepreneurship Business Model 27

GROUP TASK!

1. Divide in your project teams (3-6 students)

2. Open the file with your business model
3. Create a new section for Value Proposition (Product) and describe it
in detail: the name, composition, packaging, colors, service, benefits for
client, differences from the competitors, etc.

7-8 minutes
Graduate School of Business Moscow 2023

LET’S LOOK AT THE

CLIENTS’ SIDE!
BUSINESS MODEL
 DEMOGRAPHIC CRITERIA

Criteria Demographic criteria

Age Under age of 6, 6 - 12, 13 - 19, 20 - 29, 30 - 39, 40 - 49, 50 - 59, 60 - 65, 65+
Sex Male, Female
Family size 1, 2, 3, 4 and more people
Life cycle of aYoung single(s), young married, no children; young married, children under 6 years
family old; young married, children under 6 years old and over; middle-aged, married with
children; older, married, no children; older, single, etc.
Profession/ People of mental and physical labor; managers, officials, and business owners;
occupation people of creative professions; workers and employees; industrial and agricultural
workers; pensioners; students; housewives; the unemployed, etc.
Education level Primary, secondary, secondary specialty, incomplete higher education, higher
education, MBA, etc.
Income level Less than 12 thousand rubles, 12-25 thousand rubles, 25-50 thousand rubles, 50-
100 thousand rubles, 100-250 thousand rubles, etc.
 GEOGRAPHIC CRITERIA

Criteria Geographic features

Geographic Country (Russia, Ukraine, Belarus, etc.) or region of the Russian Federation
location (Moscow, Leningrad, Yaroslavl, Vladimir, Ivanovo regions, etc.)
Geographic Capital, regional centers, district centers, small towns, villages
location
The size of urban Urban settlements with up to 5 thousand residents, 5-10 thousand, 10-20 thousand,
settlements 20-50 thousand, 50-100 thousand, 100-500 thousand, 500-1000 thousand
(number of residents, cities with a population of millions
inhabitants)
Type of location City, suburb, countryside
and population
density
Climate South, North
 PSYCHOGRAPHIC CRITERIA

Criteria Psychographic features

Personality type Extrovert, introvert, ambivert (and
other typologies)

Personal Secretive or outgoing, mostly alone or

characteristics in company, systematic or chaotic,
etc.

Preferences Holidays in the mountains or the sea,

winter or summer, city or nature, etc.

Life style Sports and nutrition, cyber sports and

gaming, office worker, creative person
etc. Don’t need Need consulting
advice services
 BEHAVIORAL CRITERIA

Criteria Behavioral features

Benefits seeking Quality of products, service, economy, prestige
Frequency of Regular, repetitive, special
purchases
Customer type Non-consumer, former consumer, potential consumer, first-time consumer
Readiness to Uninformed, aware, informed, interested, willing, intending to buy
perceive the
product
Intensity of Low demand, moderate demand, high demand
consumption
Degree of None, weak, average, strong, absolute
commitment and
loyalty
 AN EXAMPLE OF A CONSUMER PROFILE

Customer Student at the Moscow Campus of HSE University

Criteria Description
Demographic Age of 18-22 years, male, student, lives separately Sasha
from his family, not married, no children, has
incomplete higher education, low income
Geographic Came from the regional capital, lives in the suburbs
(Dubki), studies in Moscow
Psychographi Extrovert, sociable, cheerful; likes sports and board
c games
Behavioral Benefit seeking - Savings
Aware of the product, previously consumed, repeat,
moderate consumer with average commitment and
loyalty to the product
 Graduate School of Business Entrepreneurship Business Model 35

GROUP TASK!

Create a new section for Target audience (Clients), determine 3 main

target audience segments and describe it in detail using demographic,
geographic, psychographic and behavioral criteria

10 minutes
BUSINESS MODEL
MARKETING AND SALES CHANNELS
CUSTOMER JOURNEY MAP (CJM)
 Graduate School of Business Entrepreneurship Business Model 39

GROUP TASK!

Determine the main channels of communications with the target

audience segments (they might differ) and describe the character of
these communications (customers relations)

7-8 minutes
Graduate School of Business Moscow 2023

LET’S LOOK AT THE

INTERNAL PROCESSES!
BUSINESS MODEL
VALUE CHAIN
VALUE CHAIN
 Graduate School of Business Entrepreneurship Business Model 44

GROUP TASK!

Create a new section for Value Chain, determine main stages in the
internal production process and describe them using Value Chain model
proposed by M.Porter

15 minutes
BUSINESS MODEL
 TYPES OF RECOURSES

Physical Investments in means of production (equipment, real

recourses estate, production assets; long-term)

Intellectual Investments in intangible assets (R&D, know-how,

recourses brand development, etc.)

Investments in financial instruments (shares, bonds,

Financial other securities and bank deposits, assets of other
recourses companies)

Human Investments in the development of human capital

recourses (categories of employees, from training and development)
 Graduate School of Business Entrepreneurship Business Model 47

GROUP TASK!

Create a new section for Resources, define the main resources from the
4 categories: physical, intellectual, financial and human recourses

7-8 minutes
BUSINESS MODEL
 KEY PARTNERS

If you have this:

NO own
transport logistics

Use that:
 KEY PARTNERS

If you have this: If you have this:

NO own NO own
transport logistics website and sellers

Use that: Use that:

 KEY PARTNERS

If you have this: If you have this: If you have this:

NO own NO own NO own
transport logistics website and sellers manufacture

Use that: Use that: Use that:

 Graduate School of Business Entrepreneurship Business Model 52

GROUP TASK!

Determine what resources are still needed and through which partners
they can be obtained

7-8 minutes
Graduate School of Business Moscow 2023

LET’S CALCULATE THE

FINANCIAL PART!
BUSINESS MODEL
 FIX AND VARIABLE COSTS

FIX COSTS VARIABLE COSTS

Costs of the company, the size of which
does not directly depend on the volume of
production
• Property taxes
• Management salary
• Salary of administrative staff
(accounting, HRM)
• Rental payments
• Maintenance of storage facilities
• Equipment depreciation
• Cleaning of production, offices, etc.
Costs of the company, the size of which
depends on the volume of production
Direct (directly related to the cost of products
or services):
• Materials, raw materials, resources
• Salary of employees (part-time)
Indirect (associated with production, but
cannot be posted to the direct cost per unit of
product or service):
• Electricity costs
• Salary of employees (time-based)
 STAFF COSTS

Staff costs:
1. Salary (labor costs + personal income tax)
2. Insurance (social) contributions (30%):
Pension insurance (22%)
Insurance for temporary disability (2.9%)
Health insurance (5.1%)
3. Other expenses:
Incentive payments (bonuses, allowances, processing fees, taxis)
Compensatory nature (fare, telephone)
Additional expenses (VHI, payment for a gym, training)
Travel expenses (compensation for travel, accommodation, expenses)
Indirect costs (equipment of the office and workplace, corporate services)
Other expenses (gifts, Christmas sets for children, merch, etc.)
 TAXES IN RUSSIA

ОСНО УСН (Д) УСН (Д-Р) ПСН

• For large companies • For SMEs • For SMEs • For IE

• Possibility of • Payment of 1 tax • Payment of 1 tax • For limited types of
accounting for VAT instead of 3 instead of 3 activities
in expenses (excluding VAT) (excluding VAT) (household
• Full bang. • Tax rate • Tax rate services, retail,
accounting (book of from 1% to 6% from 5% to 15% education, online
income and depending on depending on services)
expenses for IE) the region, the region, • Fix. rate 6% of
• Payment of 20% type of activity type of activity potential income,
VAT, 2% property and income and income payment 1 time per
tax, 20% income tax received received year / by parts
 Graduate School of Business Entrepreneurship Business Model 58

GROUP TASK!

Create a new section for Cost structure and determine main categories
of costs (FC and VC, incl. staff costs and taxes)

15 minutes
BUSINESS MODEL
 REVENUE STREAMS

• Income from selling goods

• Income from selling complementary goods
• Income from provision of services
• Income from subscription sales
• Income from advertising
• Income from the broker commission

and other 16 types of business models

 Graduate School of Business Entrepreneurship
Business Model 61

GROUP TASK!

Create a new section for Revenue streams, determine main channels of

receiving money from consumers and specify its differences

7-8 minutes
 Graduate School of Business Moscow 2023

Prepare a business model

of your own business idea
and upload it to Padlet
Graduate School of Business Entrepreneurship Introduction 63

Okaaay, let’s have

a fallback option