Session #7

Entrepreneurship

Vision and the Business Model

 Session #7

How do successful entrepreneurs create a

compelling business design for their ventures?
Session #7
 Value

Value delivered to the customer results in a satisfied

customer who will pay a reasonable price in return for the
product or service

Value is the worth, importance, or usefulness to the

customer

Value is the worth in monetary terms of the social and

economic benefits a customer receives from paying for a
product or service
 Creating Customer Value

Five values offered to customers

Product Performance, Quality, Features, Brand Selection,
Search, Easy to use, Safe
Price Fair, Visible, Consistent, Reasonable
Access Convenient, Location, Nearby, At hand, Easy to
Find, In a reasonable time
Service Ordering, Delivery, Return, Check-out
Experience Emotional, Respect, Ambiance, Fun, Intimacy,
Relationships, Community
 Value

Five key values ( product, price, access, service ,experience) are used to describe the value
proposition of a firm.

Crawford and Matthews (2001) have shown that:

• One value is selected to dominate the value proposition offered to the customer.
• A second value differentiates the offering,
• The remaining three values must meet the industry norm.

Crawford states that a venture should plan a good product offering to have a value score of
• 5-(Dominant)
• 4-(Differentiating)
• 3-(Norm), 3- (Norm), 3-(Norm)
Value
Primary and Secondary Values for leading
firms
Primary and Secondary Values for leading
firms
 Value Proposition
Value proposition defines company to the customer
The value proposition states who the customer is and describes the values offered to this
customer

Five key values ( product, price, access, service ,experience) are used to describe the value
proposition of a firm.

Amazon value proposition can be described as :

An easily accessible site that is convenient all of the time to provide a wide selection of
books, CDs and videos at a fair price to the busy , computer literate customer .

Starbucks value proposition can e described as

We provide a friendly, comfortable, well located place offering a wide range of fresh ,
customized quality coffee, tea and other beverages for the person who enjoys a good
experience and a good beverage .
 Unique selling proposition

Short version of a firm value proposition.

Used as a slogan or summary phrase to explain the key benefits of the firm’ offering
versus that of a key competitor.

HP

Excellent technical products with reliable service at a fair price.

FedEx

Positively , obsoletely overnight.

 Business Model

A good business design involves what your firm will and will not do and
how the firm will create a sound value proposition.

The business design answers three key questions

1. Who is the customer ?
2. How are the needs of the customer satisfied?
3. How are the profits captured and profitability protected?

The resulting outcome of the business design process is the business

model, which is the description of the business and how it will work in
economic terms.

A business model is a set of planned assumption about how a firm will

create value for its stakeholders.
 Elements of Business Model

Customer Selection Who is the customer?

Is our offering relevant to this customer?
Value proposition What are the unique benefits?
Differentiation and How do we protect our cash flow and relationships?
activities Do we have a sustainable competitive advantage?
Scope of product What is the scope of our product activities?
and activities What activities do we do, and what do we outsource?
Organization design What is the organization architecture of the firm?

Value capture for How does the firm capture some of the total value for profit?
profit
How does the firm protect this profitability ?
Value for Talent Why will good people choose to work here?
How will we leverage their talents
Dell Computer Business Model
Business Models of Two Airlines
Business Canvas Model