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Business Model Canvas

Prof. Ayesha Farooq

Department of Business Administration
Aligarh Muslim University

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 POWER Business Models

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Definition of a Business Model

Canvas The 9 Building Blocks

The Business Model Canvas Template

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Business Model
Describes the rational of how an
It is starting point for any good discussion or meeting
organization
It must be understood by everyone
The concept must be simple, relevant and understandable
Creates
The concept allows to easily describe and manipulate
business models
Delivers

Captures

VALUE

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Customer segments Mass Market

Niche Market
Heart of any business model

Company may group them into distinct segments with

common characteristics Segmented

Diversified
Organization with a diversified customer

Multi-sided platforms (or multi-sided markets)

Organizations serving two or more interdependent services
7 eg. Credit card company ( credit card holders and merchants
accepting credit cards
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Value Propositions Newness

Performance

Reason why customers turn to one company over other Customization

Comprise of selected bundle of products or services

“Getting the job done”
It is an aggregation or bundle or benefits that a company

offers customers Design

Brand/Status

Price

Cost reduction

Risk reduction

Accessibility
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Convenience/Usability
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Channels

Communication, distribution and sales channels comprise a company’s interface with customers

Customer touch points

Play important role in customer experience

Raise awareness among customers, help them in evaluating company’s value proposition, purchase specific

products and services, deliver value proposition and provide post- purchase customer support

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Channels

Channel Types Channel Phases

Sales force
Direct
Own

Web sales

Own stores
Awareness Evaluation Purchase Delivery After sales

Partner stores
Indirect
Partner

Wholesaler

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Customer Relationships
Personal assistance

Relationship of company with its customers

Dedicated personal assistance
Helps in customer acquisition, customer retention and boosting sales

Self-service

Automated services

Communities

Co-creation

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Asset sale
Revenue Streams
Usage fee
Revenue streams are arteries of a business

Each revenue stream may have a different pricing mechanism Subscription fees

There are two types of revenue streams

1. Transaction revenues resulting from one-time customer Lending/Renting/Leasing

payments

2. Recurring revenues resulting from ongoing payments to Licensing

either deliver a Value proposition to customers or provide

post purchase customer support Brokerage fees

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Pricing Mechanisms

Fixed Menu Pricing Dynamic Pricing

Predefined prices are based on static variables Prices change based on market conditions

List price Fixed prices for individual products, services, Negotiation Price negotiated between two or more partners
or other Value Propositions (bargaining) depending on negotiation power and/or
negotiation skills

Product feature Price depends on the number or quality of Yield Management Price depends on inventory and time of purchase
dependent Value Proposition features (normally used for perishable resources such as
hotel rooms or airline seats)
Customer segment Price depends on the type and characteristic of Real-time-market Price is established dynamically based on supply
dependent a Customer segment and demand

Volume dependent Price as a function of the quantity purchased Auctions Price determined by outcome of competitive
bidding

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Key Resources Physical

Allow company to create and offer a value proposition,

Intellectual
reach markets, maintain relationships with customer

segments and earn revenues

Human

Financial

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Key Activities
Production
They are required to create and offer a value

proposition, reach markets, maintain customer

relationships and earn revenues

Problem solving

Platform/Network

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Optimization and economy of scale

Key Partnerships
They help to optimize the business model, reduce risk

and acquire resources

Reduction of risk and uncertainty
There are four types of partnerships

1. Strategic alliances between non-competitors

2. Cooperation: Strategic partnerships between

competitors

3. Joint ventures to develop new business Acquisition of particular resources and activities

4. Buyer-supplier relationships to assure reliable

supplies
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Cost Structure Cost-driven

Value-driven
This helps in creating and delivering value, maintaining

customer relationships and generating revenue all incur

costs.

Fixed

Variable cost

Economies of scale

Economies of scope

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9 building blocks

01 02 03
Customer Segments Va l u e P r o p o s i t i o n Channels

An organization serves one or It seeks to solve customer Value propositions are delivered
several Customer Segments problems and satisfy customer to customers through
needs with value propositions communication, distribution, and
sales channels

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Customer Revenue Streams Key Resources
Relationships
Revenue streams result from Key resources are the assets
Customer relationships are
value propositions successfully required to offer and deliver the
established and maintained with
offered to customers previously described elements
each customer segment

07 08 09
Key Activities Key Partnerships Cost Structure

… by performing a number of Some activities are outsourced The business model elements
Key activities and some resources are acquired result in the cost structure
outside the enterprise
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Game Changers in
your Generation?

World Open Source LAMP Cloud

Wide Software Stack Computing
Web

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Seven Faces of Business Model Innovation

01 02 03
The Senior The Intrapreneur The Entrepreneur
Executive
Focus: Establish a new business Focus: Help exploit the latest Focus: Address unsatisfied
model in an old industry technological developments with customer needs and build new
the right business models business models around them

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The Investor The Consultant The Designer
Focus: Invest in companies with Focus: Help clients question Focus: Find the right business
the most competitive business their business models, and model to launch an innovative
models envision and build new ones product

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The Conscientious
Entrepreneur

Focus: Bring about positive

social and economic change
through innovative business
models
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THANK YOU

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