Edbd 1. Building A Business Model Sent November 13 2021

ENTREPRENEURSHIP
Dr. Jean Dautrey NEU Business School
BUILDING A BUSINESS MODEL

 After a money-making opportunity has
been identified, three important questions
need to be answered…
1. How will the new business create
value for customers?
2. How will it make a profit?
3. How will it differentiate itself from
competitors?
 An entrepreneur should be able to provide
concise answers to anyone who asks
these questions.
 A firm’s business model will address

these questions. In the most basic sense…
 A business model describes how an
enterprise proposes to make money
 A business model can also be defined
as a plan or recipe for how the firm
creates, delivers, and captures
value for its stakeholders…
 It represents the core aspects of
its business and…
 Describes how they fit together
and support one another
 The term “business model” first
came into popular use in the late
1980s…
 Thanks to digital innovations,
entrepreneurs and analysts found…
 They could easily “model” the
costs and revenues associated
with proposed business
 There are 2 general categories of business
models
1. Standard business models – used by
firms launching an entrepreneurial venture
or by existing firms
2. Disruptive business models – models
that do not fit the profile of a standard
model
Standard Business Models
 Many of the online business models
originally developed by off-line firms
were simply transferred to the
internet.
 For example, Amazon and eBay
adopted an existing business model
and…
 Build upon them to come up with a
new way of creating value
 Changes may occur in several ways:
 Incrementally expand the existing
model
 Revitalize an established model
 Take an existing model into new areas
 Add new models via acquisition
 Use existing core competencies to
build new business models
 Reinvent the business model
 While some business models are more
comprehensive than others, successful
business models have…
 A common set of attributes that fall into
four groups…
 Revenue sources
 Cost drivers
 Investment size
 Critical success factors
 The business model used in this
class is the model developed by
Baringer.
 Baringer’s business model includes…
 4 major categories
 12 parts
Core Strategy
Business Mission Basis of Differentiation
Target Customer(s) Product/Market Scope

Resources
Core Competencies Key Assets
Financials
Revenue Streams
•Sales of new bikes

•Repairing bikes
•Renting bikes
•Selling accessories
Cost Structure Financing/Funding

Operations
Product (or Service) Production Channels
Key Partners
Core Strategy
 A core strategy describes how the firm
plans to compete….
 Relative to its competitors
 Its primary elements are…
1. Business mission
2. Basis of differentiation
3. Target market
4. Product/market scope
1. Business Mission
 It describes why the firm exists and

what its business model is supposed to
accomplish…
 It articulates a business’s overarching
priorities and acts as its financial and
moral compass…
 It is the first box that should be completed in

the business model template
The business’s mission statement should….
• Define its reason for being
• Describe what makes the company
different
• Be risky and challenging but achievable
• Use a tone that represents the company’s
culture and values
• Convey passion and stick in the mind of
the reader
• Be honest and not claim to be something
that the company “isn’t”
Core Strategy
Business Mission
• To offer French antique lovers a wide range of beautiful,

authentic, carefully selected and restored time pieces and
unique accessories.
2. Basis of Differentiation
 It describes the points that differentiate the
firm’s product or service from competitors
and…
 Causes consumers to pick one
company’s products over another’s…
 It is what solves a problem or satisfies a
customer need
 It is best to limit the description to two to three

points
 The points of differentiation should
be….
 Easy to grasp and remember
 Refer to benefits (what a product
can do) rather than features
(e.g. technical merits) as those that
focus on features are less
compelling
Benefits or Features?
1. Relieves back pain by putting back-packs
on rollers
2. Is pulled like a suitcase rather than worn
on the back
3. Includes a sturdy aluminum frame
4. Is sturdy enough for either an adult or
child to sit on
5. Strikes the ideal balance between
functionality and “cool” for kids
6. Is available in six colors
Is pulled like a suitcase rather than worn on the
back
Benefits
Avoid hurting yourself by pulling your backpack
as a suitcase rather than wearing it on the back
Being able to pull your backpack as a suitcase
rather than wearing it on the back will spare
you back pain
Focus on features Focus on Benefits
• Is pulled like a • Relieves back pain by

suitcase rather than putting back-packs
worn on the back on rollers
• Includes a sturdy • Is sturdy enough for
aluminum frame either an adult or
• Is available in six child to sit on
colors • Strikes the ideal
balance between
functionality and
“cool” for kids
Core Strategy
• Focus on original conversation pieces

from Eastern France that will
embellish any home.
• Offer attractive prices that makes it
possible to indulge in one’s passion
for French antiques.
• Provide fully-restored pieces to be be
used and enjoyed on a daily basis.
3. Target Market
 The target market is a place within a
larger market segment that
represents…
 A narrower group of customers with
similar interests
 Most new business do not start by selling to

broad markets
 Instead, they start by identifying an
emerging or underserved niche market
 The target market should be made
explicit
 It can be based on any relevant variable
as long as it identifies for a firm
 The group of like-minded customers
that it will try to appeal to and that are
the most likely to respond positively
to a firm’s product or service…
 The market target affects everything the firm
does
 The customer is the one who pays for the
solution…
 This may or may not be the end user of
the product or service being offered
 The customer determines all the other
components…
1. What the entrepreneur will offer
2. What the value proposition is
3. How the benefit will be delivered to the
customer
Core Strategy
Target Customers
Product/Market Scope
• Sophisticated customers from all over the country who value unique,
authentic, beautifully restored French antiques offered by a reputable dealer
at competitive prices.
4. Product/Market Scope
 Defines the products and markets on
which the firm will concentrate.
 Most firms start narrow and pursue
adjacent product and market opportunities
as…
 The company grows and becomes
financially secure (pursuing multiple
markets simultaneously is costly)
Core Strategy
• Authentic French antiques pieces over

one-hundred-year old and fully restored
Target Customers with care, including 18th century pieces.
• Wide range of furniture and accessories

covering various styles (Louis XV,
• Empire, Louis-PhilippeAuthentic French
Wide range of furniture and
antiques pieces over one-hundred-year
accessories covering various styles
old and fully restored with care,
(Louis XV, Empire, Louis-Philippe,
including 18th century pieces.
etc) fully restored with love and
• Wide range of furniturethand accessories
care. Includes rare 18 century
covering various styles (Louis XV,
pieces.
Empire, Louis-Philippe, etc).
• National audience.
• , etc).
Core Strategy

unique accessories.
• • Authentic
Focus on French
originalantiques pieces over
conversation
one-hundred-year old and any
pieces that will embellish fully restored
Target Customers with
home.care, including 18th century pieces.
• • Wide
Offerrange of furniture
attractive and makes
prices that accessories
it
covering
possible various
to indulgestyles (Louispassion
in one’s XV,
Empire,
for FrenchLouis-PhilippeAuthentic
antiques. French
• antiques
Provide pieces over one-hundred-year
fully-restored pieces to be
• old
Wide range
andandfully of furniture
restored and
used enjoyed onwith
a dailycare,
basis.
including 18 century pieces. styles
accessories thcovering various
• Wide(Louis XV, Empire,
range Louis-Philippe,
of furniture and accessories
• Sophisticated customers from all over the country who value unique, etc) fully restored with
covering various styles (Louis love and
XV,
at competitive prices care. Includes
Empire, rare 18 etc).
Louis-Philippe,
th
century
pieces.
• • , National
etc). audience.
Resources
 Resources are the inputs a firm uses to
produce, sell, distribute, and service
a product or service.
 A firm must have a sufficient amount of

resources to enable its business model to
work…
 For example, a patent to protect its basis
of differentiation
 At a deeper level a firm’s most important
resources, both tangible and intangible, must
be…
 Both difficult to imitate and hard to find a
substitute for
 The resources noted are the current resources

the firm possesses…
 Aspirational resources should be kept in mind
 Resources may also include factors such
as…
 Passion for a business idea
 A high level of employee morale
 The key idea is that to be competitive a

business must be particularly good at certain
things and…
 Those certain things must be supportive of
the business model
 A core competency is compelling
if it is difficult to imitate and
substitute.
 Few start-ups have core
competencies in more than two
or three areas.
1. Core Competencies
 A core competency is a specific factor or
capability that supports a firm’s business
model and sets it apart from its rival…
 It can be…
 Technical know-how
 An efficient process,
 A trusting relationship with
customers
 Expertise in product design, etc
Resources
Core Competencies Key Assets
• Knowing how to select pieces that appeal to the US market.

• Producing a bee-wax-based patina that appeals to the US market
• Having knowledge regarding the development of styles of furniture that is of great interest to customers
• Generating word-of-mouth awareness of the business
• Developing a trusting relationship with customers
2. Key Assets
 Assets a firm owns that enable its business
model to work.
 All firms require financial assets to varying
degrees
 Can be physical, financial, intellectual, or
human
 Uber relies almost exclusively on
intellectual assets (provides a
technology-based platform that connects
people)
 Many companies rely heavily on
human assets
 In some cases, the success of a firm
hinges largely on a simple key
resource..
Resources
Core Competencies Key Key
Assets
Assets
• Network of reliable local

suppliers and top-notch
restorers.
• Solid working relationship
with a reliable and
competitive shipping
company that offers valuable
services.
• Secured warehouses both in
France and in the US.
Resources
Core Competencies KeyKey
Assets
Assets

restorers.
with a reliable and
services.

 Before discussing the “financial”
category of the business model…
 It is important to develop a good
understanding of the concept of
“intellectual property” and a
few basic legal concepts
The law identifies 3 kinds of property
1. Real property – land and things

permanently attached to the land
2. Personal property – items which
are movable and not a part of the
land
3. Intellectual property – patents,
copyright…
And two kinds of persons
 Natural persons - real human beings
as distinguished from legal persons (legal
personhood acquired at birth)
 Legal persons – corporations or limited

liability companies treated at law as if they
were persons. Legal personhood is acquired
when the company is incorporated
(registered) in accordance with the law
Every natural or legal person receives…
 An estate at birth in which there will
be more and more property as that
person grows. The estate includes…
 What you own (a watch, a car, a
house, a bank account…) and…
 What you owe (credit cards,
loans…)
The difference is your net worth
 So, if for example you set up a coffee
shop and register it as a legal person,
then…
 Any property used in relation to the
company will belong to that company’s
estate
 The debts incurred by that company can
only be paid with property taken from
the company’s estate
 The reason the law has created two
kinds of persons is to encourage
business risk taking…
 Since a person is not liable for the
debt of another person (unless
he/she agreed to it by contract)
 A natural person is NOT liable for
the debt of a legal person
 In other words, since your coffee shop
and you are two separate legal
entities (two separate persons)…
 Unless agreed upon, a creditor
cannot access the estate you have
as a natural person (e.g. the car you
own) to…
 Pay the loan on the car owned by the
company you own (the legal person)
Possession vs. Ownership
 Possession and ownership seem to be
one of the same, don’t they?
 A person can have possession of
something, but that does not mean that
they have ownership.
 So for example, if you borrow a pen
from me, sure you have possession, but
not ownership. WHY?
 To have possession means to
have direct physical control over an
object at a given time.
 To own means to have title to the

property (evidence of ownership).
Main types of Intellectual Property
Type of Key Features of this Type of Protection
Intellectual
Property
Patents Offers a 20-year monopoly
Copyrights Provides exclusive rights to creative

individuals for the protection of their
literary or artistic productions
Registered designs As protected by registration, is for the

outward appearance of an article and
provides exclusive rights for up to 15 years
Registered Is a distinctive name, mark or symbol that

trademarks is identified with a company’s products
Patents
 Patents are granted to individuals or
organizations that can lay claim to…
 A new product or manufacturing process
or…
 To an improvement of an existing product
or process, which was not previously known
 The granting of the patent gives the

‘patentee’ a monopoly for 20 years
 The monopoly granted is to make,
use or sell the invention for a
fixed period of time from…
 The date the patent
application was first filed
 Typically 20 years (but may be
lower in some countries)
Trademarks
 A trade mark is any sign that
can be represented
graphically and is…
 Capable of distinguishing
goods or services of one
firm from those of other
firms
 Trademarks offer one of the few
methods of differentiating a
company’s products/services (e.g.
Coca-Cola)
 Trademarks are closely associated with…
 Business image
 Goodwill
 Reputation
 The public rely on many trademarks
as indicating….
 Quality
 Value for money and
 Origin of goods
 Four key principles associated with the
use of trademarks…
1. Be a sign capable of being
represented graphically
2. Be distinctive of goods or services
of other firms
3. Not be deceptive
4. Not cause confusion with previous
trademarks
 The registration of a trademark is
for a period of 10 years from the
date of registration…
 May be renewed indefinitely
for further 10-year periods
 Infringement occurs when a
business…
 Uses a trademark that is
similar or…
 Takes unfair advantage of or
is detrimental to another
trademark
Registered Designs
 The design protected by registration
is the outward appearance of a
good
 Only the appearance given by its
actual shape, configuration,
pattern or ornament can be
protected…
 Not any underlying idea
 The registered design lasts for a
maximum of 15 years…
 Initially the proprietor is granted
the exclusive right to a design
for a fixed term of 5 years
 This can be renewed for
additional 5-year terms
 For example, if a company designs a new
kettle that is different from any other
kettle, it could register the kettle…
 This would prevent other kettle
manufacturers from simply copying
the design
 Since the kettle does not offer any advantage
in terms of use…
 A patent cannot be obtained but a good
design is also worth protecting
Copyright
 For the author of creative material
to obtain copyright protection…
1. It must be in a tangible form so
that it can be communicated or
reproduced
2. It must also be the author’s
own work and thus the product of
his/her skill or judgment
 Concepts, principles, processes
or discoveries are…
 Not valid for copyright protection
until
 They are put in a tangible form
(writing, drawing….)
 Knowledge is public domain
(ideas are not copyrightable)…
 Only the compilation of ideas
is protected
 It is the particular way that an
idea is presented that is valid
for copyright
Copyright is recognized by…
 The symbol © and gives legal rights
to creators of certain kinds of material
so that…
 They can control the various ways in
which their work may be exploited
 Copyright protection is automatic…
 There is no registration or other
formality
Now back to business models!
Financials
 This is the only section that describes
how the firm earns money – thus it
is extremely important…
 It addresses three key questions…

1) What are the size and importance
of the revenue streams that the
business model can generate?
2) What costs most affect the model,
and what is their size and
importance to the model? (in other
words, what are the cost drivers for
the business?)
3) How much capital is required to
execute the business model and what
is the timing of the cash needs?
1. Revenue Stream
 It describes the way in which the firm

makes money…
 Some have a single revenue stream,
 Other several primarily to leverage the
value they create for their customers…
 For example, a restaurant offering a
catering service, take-outs, and/or
selling products at the counter (e.g.
bottled barbecue sauce)
 A bicycle shop may for example…
o Sell accessories - revenue
stream 2
o Offer bicycle repair - revenue
stream 3
o Sponsor local races - revenue
stream 4
 Some businesses make money via one
time customer payment…
 Some receive recurring revenue by
selling a subscription service
 Others, such as providers of online games,
offer the basic game for free and generate
most of their revenue from a small number
of users who purchase premium products
(e.g. special weapons…)
Table 1- Most Common Revenue Streams
Revenue Description
Stream
Advertising Revenue generated from advertising a particular product or service
in a newspaper, magazine, website, or in some other manner.
Commissions Revenue generated by bringing two parties together to complete a
sale. The money typically comes from taking a small percentage of
the sale price (e.g. eBay).
Download fees Revenue generated by allowing a user to download a digital
product, such as a smartphone app, an e-book, or a software.
Licensing Revenue generated from charging for the use of a protected
intellectual property, such as software product.
Matchmaking Revenue generated by matching someone who wants temporary
access to an asset or competency with someone who owns an
asset or has a competency and is willing to make it available
(peer-to-peer networks, e.g. Airbnb, Uber).
Product sale Selling a physical good such as a product in a retail store or on a
website.
Renting/Leasing Revenue generated by renting or leasing an asset such as a rental
car, a copy machine, or a piece of specialized machinery.
Service Sale Selling a service such as a meal in a restaurant or a car repair.
Subscription Selling a subscription such as Netflix for streaming of content.
Service
Financials
Revenu e S treams
•Selling antique furniture and accessories (revenue stream 1)

•Restoring antiques (revenue stream 2)
•Interior Design consulting (revenue stream 3)

2. Cost Structure
 Describes the firm’s most important
costs incurred to support its business
model
 It costs money to…
 Establish a basis for differentiation
 Develop core competencies
 Acquire or develop key assets
 Form partnerships, etc
 The firm needs to determine the
role of costs in its business...
 Businesses can be identified as…
 Cost-driven or…
 Value-driven
 Cost-driven businesses focus on
minimizing costs wherever
possible
 If the firm strategy is to sell its
products or services well below
the price charged by its
competitors, cost containment
is necessary (e.g. AirAsia)
 Value-driven businesses focus on
offering a high quality product
(or experience) and personalized
service…
 Not on driving costs lower and
lower relative to rivals’ cost
structures
 It is also important to understand the
nature of a business’s costs
 Fixed costs remain the same within
a specific range despite the volume of
goods or services provided
 Variable costs vary proportionally
with the volume of goods or services
produced
 If the business involves large fixed costs
and small variable costs (high operating
leverage) as is, for example, the case with
a firm developing smart apps…
 A large amount of money will be
needed up front to fund the initial
development but…
 Not so much downstream to fund
ongoing sales
 In contrast, a business such as a sub
sandwich shop may have low fixed costs
and high variable costs (low operating
leverage)…
 The initial cost to set it up may be
modest but…
 The cost of labor and ingredients needed
to prepare and serve them may be high
relative to the prices charged
 This type of business may need a
smaller up-front investment but…
 May require a line of credit to
fund its ongoing operations
Financials
Revenu e S treams
•Value-driven business
•Low operating leverage
•Long cash conversion cycle
•Major categories of costs:
inventory, transportation,
warehousing, restoration
 All firms follow a ‘working capital cycle’
in which they…
• Purchase inventory
• Hold it for a time
• Sell it and receive cash
 This process is known as the…

Cash Conversion Cycle (CCC)
 The CCC focuses on the length of time
between…
 When a company makes payments to its
creditors and…
 When a company receives payments from
its customers.
3. Financing/Funding
 This is the amount of funding the firm
relies on to bring its business model to life
 Most businesses incur costs before they
generate revenue as…
 They need to purchase inventory,
acquire customers…
 This typically necessitates an infusion
of up-front capital for the business to
be feasible
 Some entrepreneurs are able to draw
from personal resources to fund
their business
 In cases where the business is simple,
it may be funded from its own profit
from day one but…
 In many cases, an initial infusion
of funding is required
 Three categories of cost to consider
1. Capital costs – real estate, equipment,
vehicle,…
2. One-time expenses – legal expenses
to launch the business, website design…
3. Provisions for ramp-up expenses –
many businesses require a ramp-up
period (fitness centers, take a few months
to reach membership goals)
Financials
Revenu e S treams
•Personal resources
•Initial loan
•Credit line
•Profit from operations
Financials
Revenue Streams

•Low operating leverage •Personal resources
•Initial loan
•Major categories of costs: •Credit line
Operations
 Operations are both integral to a
firm’s overall business model and…
 Represent the day-to-day
heartbeat of a firm
 Three primary elements…
1)Product or service
2)Channels
3)Key partners
1. Product (or Service) Production
 The focus is on how a firm’s product or
service are produced
 If a firm sells physical products, they
can be…
 Manufactured in-house or
 Outsourced
 The in-house/out-house decision has a major

impact of all aspects of a firm’s business model
 In-house production will require the firm
to…
 Develop core competencies in
manufacturing
 Procure key assets related to the
production process
 Make substantial up-front investment
 If the firm outsources, a critical aspect of
its business model will be…
 Its ability to locate a suitable contract
manufacturer or outsource provider…
 It is often difficult to find one that will
take a chance on a start-up
 The type of arrangement, location, etc, are

important details to provide
 If a firm provides a service rather than a
physical product…
 A brief description of how the service
will be produced should be provided
 For example, the following description is
an acceptable one as…
 It provides a great deal of information
how the elements of the business
need to be configured
“Rover.com will connect dog owners and dog
sitters via a website. The dog sitters will be
screened to ensure a quality experience.
Customer support will be provided 24/7 to
troubleshoot any problems that occur. Pet
insurance is provided that covers any
medical bills that a dog has while in the care
of a Rover.com sitter”
Operations
Channels
Channels
Product (or Service)
Production
Channels
Key Partners
• All the pieces found during regular trips to France are stored in a warehouse and then dispatched to a few restorers who bring
them back to life before they are eventually shipped to the US and kept in a warehouse (use only home-made bee wax).
• Each shipment contains enough pieces of furniture and accessories to last for at least 9 months; hence the high inventory
costs.
• Each piece sent to the US is personally checked by the owner before it is deemed ready for shipping.
2. Channels
 Channels describe how the firm delivers
its product or service to its customers…
 Directly, through intermediaries or a
combination of both (brick and click)
 For example, SuperJam sells directly via
its website and through supermarkets
throughout the country…
 It uses distributors and wholesalers to
get its jam into stores
 For services, hotels, for example, sell
their services (typically rooms) through
their websites and telephone
reservation services and also through
intermediaries (travel agents, tour
operators…)
 A firm’s selection of channels affects other

aspects of its business model
 Some firms employ a sales force that
calls on potential customers to try to
close sales
 This is an expensive strategy but
necessary in some instances as..
 It may be the only realistic solution
(e.g. medical equipment that needs to
be demonstrated to be sold)
Operations
Channels
Channels
Production
• Finding genuine
• Owner’s antiques shop in a village

famous for its antiques dealers (more
than 40).
• Website essentially for potential
customers to determine whether they
should take a trip to the village.
Channels
Key Partners
3. Key Partners
 Start-ups typically do not have
sufficient resources (or
funding) to perform all the
tasks needed to make their
business model work…
 So they rely on partners to
perform key roles…
 In most cases, a business does not
want to do everything itself
because…
 The majority of tasks needed
to product or deliver service are
outside a business’s core
competencies or areas of
expertise
 The first partnerships that many businesses
forge are with suppliers…
 Traditionally, firms maintained an arm’s
length relationship with suppliers and
viewed them almost as adversaries…
 Today, firms are moving away from this
approach and developing more
cooperative relationships with suppliers
and focusing on supply chain
management
 Most common types of relationships
include…
 Joint ventures
 Networks
 Consortia
 Strategic alliances
 Trade associations
Operations
Channels
Channels
Production
• Finding genuine
Channels
Key Partners
• Friends (for sources)

• Restorers
• Suppliers of goods for restoration
• Some antiques dealers in the
U.S.
Operations
Channels
Channels
Production

famous for its antiques dealers
(more than 40)
customers to determine whether
• they should
Friends take a trip to the village
(for sources)
• Restorers Channels
Key Partners
• Some antiques dealers

• Restorers
U.S.
costs.
Full Illustration
Core Strategy

unique accessories.
• • Authentic
Focus on French
originalantiques pieces over
conversation
one-hundred-year old and any
pieces that will embellish fully restored
Target Customers with
home.care, including 18th century pieces.
• • Wide
Offerrange of furniture
attractive and makes
prices that accessories
it
covering
possible various
to indulgestyles (Louispassion
in one’s XV,
Empire,
for FrenchLouis-PhilippeAuthentic
antiques. French
• antiques
Provide pieces over one-hundred-year
fully-restored pieces to be
• old
Wide range
andandfully of furniture
restored and
used enjoyed onwith
a dailycare,
basis.
including 18 century pieces. styles
accessories thcovering various
• Wide(Louis XV, Empire,
range Louis-Philippe,
of furniture and accessories
• Sophisticated customers from all over the country who value unique, etc) fully restored with
covering various styles (Louis love and
XV,
at competitive prices care. Includes
Empire, rare 18 etc).
Louis-Philippe,
th
century
pieces.
• • , National
etc). audience.
Resources
Assets
Assets

restorers.
with a reliable and
services.

Financials
Revenue Streams

•Low operating leverage •Personal resources
•Initial loan
•Major categories of costs: •Credit line
Operations
Channels
Channels
Production

famous for its antiques dealers
(more than 40)
customers to determine whether
• they should
Friends take a trip to the village
(for sources)
• Restorers Channels
Key Partners
• Some antiques dealers

• Restorers
U.S.
costs.
Table 2 – Standard Business Models
Name Disruptive Business Model and Description Entrepreneuri
al Firms Using
this Model
Advertising Business model based on providing advertisers Google,
Business Model access to highly targeted customer niches. YouTube
Auction Business Currently synonymous with eBay, the auction eBay, uBid.com
Model business model has been around since 500BC.
The idea is to provide a platform for individuals
and businesses to sell items in an auction
format.
Bricks and Clicks A business model by which a company Apple, J. Crew
Business Model integrates both offline and online presences.
Franchise A business model in which a company that has Panera
Business Model a successful product or service (franchisor)
licenses its trademark and method of doing
business to other businesses (franchisees).
Freemium A business model in which a company provides Dropbox,
Business Model a basic version of its service for free, and Evernote
makes money by selling a premium version of
the service.
Low-Cost A well-established business model that relies on AirAsia, Warby
Business Model driving down costs and making money by Parker
servicing a large number of customers.
Table 2 – Standard Business Models
Name Disruptive Business Model and Description Entrepreneuri
al Firms Using
this Model
Manufacturer/ A business model in which a manufacturer both Tesla Motors
Retailer produces and sells (online, offline or both) a
Business Model product.
Peer-to-Peer A business model in which a business acts as a Airbnb,

Model matchmaker between individuals with a service Getaround
to offer and others who want the service.
Razor and This business model involves the sales of Printers and Ink
Blades dependent goods for different prices – one good Cartridges,
Business Model (a razor) is sold at a discount, with the Gillette
dependent good (blades) sold at a considerably
higher margin.
Subscription A business model where the customer pays a Blue Apron,

Business Model monthly, quarterly, or yearly subscription fee to Netflix
have access to a product or service.
Traditional A business model calling for a firm to sell its Amazon, Whole
Retailer products or services, made by others, directly to Foods Market
Business Model consumers at a markup from the original price.
Can be sold online or offline.
Disruptive Business Models
 Disruptive models are the models that
do fit the profile of a standard
business model and are…
 Impactful enough that they
disrupt or change the way business
is conducted in an industry or…
 An important niche within an
industry
 There are two types of disruptive
business models..
1. New market disruption
2. Low-end market disruption
1. A new market disruption addresses a
market that previously was not served
 Example, Google and its AdWords program,
which allows an advertiser to buy
keywords on Google’s home page, so…
 When the words “organic snacks” are
typed into the Google search bar, ads
paid by companies that have organic bars
to sell will show
2. Low-end market disruption is possible
when the firms in an industry continue to
improve products or services to the
point where they are actually better than a
sizable portion of their clientele needs or
desires…
 This “performance oversupply” creates a
vacuum that provides an opportunity
for simple, typically low-cost business
models to exist..
 Table 2 describes actual disruptive
models used by four different
companies…
 Dell
 Google
 Salesforce.com
 Uber
Table 3 - Four Disruptive Business Models
Company Disruptive Business Model and Standard Business
Description Model that Was
Disrupted
Dell • Direct-to-consumer sales model, which • Computers that were
allowed consumers to customize their assembled, shipped to a
computers. store, and then sat on
shelves until somebody
• Introduced the notion of buying the bought them.
computer first over the phone and then • No customization was
via the Web. The customer would possible because the
configure the computer and pay for it computer was
before the computer was assembled. assembled before the
Delivery via UPS or FedEx. customer bought it.
Google AdWords (online advertising product) • Traditional barrier
advertising, provided by
•Introduced text advertising, which companies such as
appears to the right or the top of organic Yahoo. Some services
search results, which when clicked takes required a minimum
the searcher to an advertiser’s website or $10,000 ad buy for a
landing page. The text ads could be bought company to advertise on
for as little as $1, Google’s initial the internet.
customers were SMEs that could not afford
Yahoo’s service.
Company FourBusiness
Disruptive Disruptive
ModelBusiness
and Models
Standard Business Model
Description that Was Disrupted
Salesforce.com • SaaS (Software as a Service) provider • Traditionally installed

of customer relationships management CRM software, which
(CRM) software. required large licensing
• First company to offer CRM software as fees, provided by
a SaaS product, making CRM vendors such as Siebel
affordable to small companies for the Systems and PeopleSoft.
first time. By moving CRM to the cloud,
it also enabled salespeople to access
their CRM service anywhere they had
an internet connection.
Uber • Quickly connects riders with the • Local taxis and town-car
owners of private cars who are willing services
to provide rides.
• First company to provide riders with
an app that connects them with the
owners of private cars willing to
provide rides.
• Advantages include: cleaner cars,
avoiding the frustration of trying to
hail a cab, direct billing via Uber so no
money changes hands, and Uber
knows the location of nearest driver so
pickup time is often reduced.
Why Do Business Models Fail?
 Flawed logic
 Limited strategic choices
 Imperfect value creation and
capture assumptions
 Incorrect assumptions about the
value chain
 Lack of fit
YOUR JOB
Slide 1
List the three opportunities you
identified and briefly explain why you
selected them.
For everybody
Slide 2
Name the opportunity which you have
determined to be the most promising
and briefly explained the reasons for
your choice
Slides 3, 4, 5 and 6.
Business Model using the required
format as shown below
Core Strategy
Target Customers Product/Market Scope

Resources
Assets
Assets
Financials
Revenue Streams

Operations
Channels
Channels
Production
Channels
Key Partners
Slide 7: Pledge
I hereby…………………………………….. declare
that I have neither copied and pasted any
particular business plan whatsoever from a
website nor committed plagiarism of any
kind in completing the Business Model
assignment.
Hanoi……………………., 2021
DUE November 20, 2021 by
7.00pm (19.00)
When I receive your email, it should read as follows:

Group number Name Number on the
list
Group 4 Thuy Dung Anh 12
PowerPoint format (Word)

THANK YOU FOR YOUR ATTENTION!

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ENTREPRENEURSHIP

Dr. Jean Dautrey NEU Business School

BUILDING A BUSINESS MODEL

 A firm’s business model will address

Target Customer(s) Product/Market Scope

•Sales of new bikes

Cost Structure Financing/Funding

 It describes why the firm exists and

 It is the first box that should be completed in

• To offer French antique lovers a wide range of beautiful,

 It is best to limit the description to two to three

• Is pulled like a • Relieves back pain by

• Focus on original conversation pieces

 Most new business do not start by selling to

• Authentic French antiques pieces over

• Wide range of furniture and accessories

• To offer French antique lovers a wide range of beautiful,

 A firm must have a sufficient amount of

 The resources noted are the current resources

 The key idea is that to be competitive a

• Knowing how to select pieces that appeal to the US market.

• Network of reliable local

• Network of reliable local

• Knowing how to select pieces that appeal to the US market.

1. Real property – land and things

 Legal persons – corporations or limited

 To own means to have title to the

Copyrights Provides exclusive rights to creative

Registered designs As protected by registration, is for the

Registered Is a distinctive name, mark or symbol that

 The granting of the patent gives the

 It addresses three key questions…

 It describes the way in which the firm

•Selling antique furniture and accessories (revenue stream 1)

Cost Structure Financing/Funding

Cost Structure Financing/Funding

•Major categories of costs:

 This process is known as the…

Cost Structure Financing/Funding

•Selling antique furniture and accessories (revenue stream 1)

Cost Structure Financing/Funding

 The in-house/out-house decision has a major

 The type of arrangement, location, etc, are

 A firm’s selection of channels affects other

• Owner’s antiques shop in a village

• Friends (for sources)

• Owner’s antiques shop in a village

• Friends (for sources)

• To offer French antique lovers a wide range of beautiful,

• Network of reliable local

• Knowing how to select pieces that appeal to the US market.

•Selling antique furniture and accessories (revenue stream 1)

Cost Structure Financing/Funding

• Owner’s antiques shop in a village

• Friends (for sources)

Peer-to-Peer A business model in which a business acts as a Airbnb,

Subscription A business model where the customer pays a Blue Apron,

Salesforce.com • SaaS (Software as a Service) provider • Traditionally installed

Target Customers Product/Market Scope

Cost Structure Financing/Funding

When I receive your email, it should read as follows:

PowerPoint format (Word)

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