CHAPTER THREE

DESIGNING BUSINESS MODELS

NADEEM AHMED
OBJECTIVES

■ Learn the importance of business models.

■ Understand the key components of
innovative business models.
■ Uncover value in supply chains.
■ Use databases to engage and lock-in
customers.
■ Compare licensing and franchising.
■ Learn about outsource services.
■ Understand network models.
■ Explore corporate partnering.
BUSINESS MODEL
 a framework for entrepreneurs to:
 Examine business plans
 Explore alternatives for company to
function & grow profitably
 Build barrier to ward off competitors
 describes how the different functions
within a company work harmoniously
together to build “more than the sum of
the parts.”
 BM shows company’s intention to create
value in the marketplace
BUSINESS MODEL
 BM includes:
 unique combination of products, services,
image, and distribution that your company
carries forward
 underlying organization of people
 operational infrastructure
FRAMEWORKS FOR CONSTRUCTING BUSINESS MODELS

Two Tools for Exploring Business Models

Model 1: The Five Component Model

Model 2: The Business Model Canvas

Model 1: The Five Component Model

1. Articulate the value proposition

2. Identify a market segment
3. Define the structure of the value chain in
which the firm operates, and define the
assets that are needed for the firm to function
in this environment.
4. Estimate the cost structure and profit potential
of delivering the product or service
given the value proposition and value chain.
5. Formulate the competitive strategy
 Model 2: The Business Model Canvas
1. We are part of a complex supply chain. Who are our key partners? Why do we need them and vice versa?
2. What is unique about what we can do better than others? What are our key activities? How do we
contribute to the value proposition?
3. What are the needs for each subgroup of customers? What value are they seeking?
4. What key resources do we need to perform our activities—human, intellectual, financial, and physical?
5. Who are our customers, and how do we contribute to the value proposition?
6. How do we relate to these selected customers?
7. How do we segment these customers, and which are the most valuable to us?
8. How do we get to these customers?
9. Where are the major costs? For our resources? For our activities?
 Every business exists within a network of
suppliers, customers, competitors, and other
companies, all vying to capture as much value
as possible. Ask how you can capture some of
the value that they currently provide, or add
more value for your customers through
innovation.
PREPARING THE MARKETING ANALYSIS AND PLAN

• CAPTURING VALUE IN THE SUPPLY CHAIN

• USING DATABASES TO CREATE VALUE
• LOCKING-IN CUSTOMERS
• LICENSING AND FRANCHISING
• OUTSOURCING RESOURCES
MODELS BUILT AROUND SOCIAL NETWORKS

• Web 2.016 technologies

• Social Networking Portals
• LinkedIn
• Facebook
• Twitter
• My Space
CORPORATE PARTNERING