Chapter 4

Operation
Feasibility Analysis

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 I- Key Resources
• This section describes the most important assets
required to make a business work.

• Key resources can be physical, financial,

intellectual, or human.
What are the key resources in your operation?

• Key Resources can be owned, leased, or acquired

from key partners.
 II- Operations
• Product (or Service) Production
– This section focuses on how a firm’s products and/or
services are produced.
– For example, if a firm sells a physical product, the
product can be manufactured or produced in-house, by
a contract manufacturer, or via an outsource provider.
• This decision has a major impact on all aspects of a
firm’s business model.

– If a firm is producing a service rather than a physical

product, a brief description of how the service will be
produced should be provided.
 III- Key Partners

– Start-ups, in particular, typically do not have

sufficient resources (or funding) to perform all the
tasks necessary to make their business models
work, so they rely on key partners to perform
important roles.

– Companies increasingly create alliances to optimize

their business models, reduce risk, or acquire
resources.
• The Key Partnerships section describes the
network of suppliers and partners that make the
business model work.

• Who are your partners? Who do you need to

make your company go?

• Who is critical to getting you launched and

keeping you moving forward?
 IV. Channels
• The Channels section describes how a company
communicates with and reaches its Customer
Segments to deliver its product or service to its
customers.

• Communication, distribution, and sales Channels

comprise a company’s interface with customers.

• Channels are customer touch points that play an

important role in the customer experience.
Your Channels?
• How do you communicate your product/results to
your customer segments to show that you deliver
your value proposition?

• What are your touch points, your interface with

‘customers’?

– Businesses either sell direct, through

intermediaries (such as distributors and
wholesalers), or via a combination of both.
 Distribution Strategies
Exclusive Allowing a
distribution gives The object of product to be sold
a specific retailer, intensive at a moderate
or authorized distribution is to number of sales
dealer, the sole make a product outlets, but not
right to sell a available at as all, in a particular
product in a many sales outlets geographical area
particular as possible. is called selective
geographical area. distribution.
18.2: In the Mix: Where Will You Sell?
 How will you Transport & Store Products?
• Transportation is used to move a product from one
point to another along a distribution channel.
• The cost of shipping, as well as the speed at which
the product needs to be delivered, are two key
factors that affect transportation choices.
• The type of shipping container used during shipment
needs to be chosen to provide security and reduce
damage.

18.2: In the Mix: Where Will You Sell?

 V. Customer Relationships
• What type of relationship doe our Customers
expect us to establish and maintain with them.

• Categories of Customer Relationships

• Personal Assistance: human interaction via point of
sale, call centers, email, …

• Self-service: no direct relationship. Company

provides the means for customers to help
themselves.
• Automated Service: more sophisticated form of self-
serve; automated services tailored to individuals.

• Communities: many firms utilize user communities

to help each other, interact, and expand knowledge
base.

• Co-creation: Many now go beyond the traditional

customer-vendor relationship to co-create value
with customers. Amazon invites customer reviews;
others invite customers to design products; youtube
solicits content.
 Your Relationships

• You identified your customers but what kind of

relationships do you maintain with them?

• How do you communicate with them?

• How much information / product do they want?

• How close do they want to be? High-touch or

more distant relationship?
 VI- Pricing
• The price of your product should ultimately be based
on two main things: your target market and keeping
your company profitable.

• Your product or service price should be low enough

that customers buy from you rather than the
competition.

• At the same time, your product’s price must be high

enough for your company to earn a profit
Sample Pricing Objectives

• Build or Maintain an Image

• Increase Sales Volume (Quantity)
• Obtain or Expand a Market Share
• Maximize Profits

18.3: Name Your Price

Pricing Strategies

Demand-Based Competition-Based
Pricing is a strategy Pricing focuses on
that focuses on what the
customer demand. competition charges.

Cost-Based Pricing is
based on what it
costs your business
to provide it.
18.3: Name Your Price
 Allowing for Price Adjustments—Markups

A markup price occurs when a retail store buys a product

from a wholesaler and adds an amount to the wholesale cost
in order to make a profit.

Wholesale Cost × Markup Percentage = Markup Amount

Wholesale Cost + Markup Amount = Markup Price (Retail Price)

18.3: Name Your Price

 Allowing for Price Adjustments—Markdowns

• A markdown price is set when a retailer wants to reduce

the price of a product.

Retail Price × Markdown Percentage = Markdown Amount

Retail Price – Markdown Amount = Markdown Price (“Sale”

price)

18.3: Name Your Price