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Group 2 - Module 2.1 - 3BSBA FM2
Group 2 - Module 2.1 - 3BSBA FM2
basic components. Essential elements of a business model include a unique value proposition, a
viable target market and a competitive advantage. Without those elements, you don’t have a way
of generating revenue. Business models aren't just about income you also need to consider
production costs and other factors in order to see the full picture. What goes into creating a
business model?
Here are the 10 components you'll want to keep in mind:
Value proposition: A feature that makes your product attractive to customers.
Target market: A specific group of consumers who would be interested in
the product.
Competitive advantage: A unique feature of your product or service that
can’t easily be copied by competitors.
Cost structure: A list of the fixed and variable expenses your business
requires to function, and how these affect pricing.
Key metrics: The ways your company measures success.
Resources: The physical, financial, and intellectual assets of your company.
Problem and solution: Your target customers’ pain points, and how your
company intends to meet them.
Revenue model: A framework that identifies viable income sources to
pursue.
Revenue streams: The multiple ways your company can generate income.
Profit margin: The amount your revenue exceeds business costs.
2. Bundling model
Exactly like it sounds, the bundling business model involves companies selling two or
more products together as a single unit, often for a lower price than they would charge selling the
products separately.
This type of business model allows companies to generate a greater volume of sales and
perhaps market products or services that are more difficult to sell. However, profit margins often
shrink since businesses sell the products for less.
Examples: Businesses that use the bundling model include AT&T, Adobe
Creative Suite and Burger King, as well as other fast-food companies that offer value
meals or deals.
3. Freemium model
The freemium business model has gained popularity with the prevalence of online and
Software-as-a-Service (SaaS) businesses. The basic framework goes like this: a software
company hosts and provides a proprietary tool for their users to freely access, such as an app or
tool suite. However, the company withholds or limits the use of certain key features that, over
time, their users will likely want to use more regularly. To gain access to those key features,
users must pay for a subscription. You can see how Spotify follows this model — it gives users
free and open access to its entire database of music while sprinkling in ads between songs. At
some point, many users opt to pay a recurring monthly fee for the premium service so they can
stream music without interruption.
Examples: Spotify, LinkedIn, Skype and MailChimp are all businesses that use
the freemium model.
metal together instead of purchasing a welding machine yourself. In essence, this example shows
how the product to service business model works.
Companies that follow this type of business model allow customers to purchase a result
rather than the equipment that delivers that result.
Examples: Companies that use the product to service model include Zipcar,
Uber, Lyft and LIME.
6. Leasing model
Under a leasing business model, a company buys a product from a seller. That company
then allows another company to use the product they purchased for a periodic fee. Leasing
agreements work best with big-ticket items like manufacturing and medical equipment.
Examples: U-Haul, Enterprise and Rent-a-Center are all examples of companies
that use the leasing model.
7. Crowdsourcing model
Crowdsourcing involves receiving opinions, information, or work from many different
people using the internet or social media. These types of business models allow companies to tap
into a vast network of talent without having to hire in-house employees.
Some traffic apps, for example, encourage drivers to report accidents in real-time for the benefit
of other app users.
Examples: Wikipedia, YouTube, IMDB and Indiegogo are all examples of
businesses using the crowdsourcing model.
8. One-for-one model
As the name suggests, the one-for-one business model means that a company donates one
item to a charitable cause for every item that is purchased. This model appeals to the charitable
nature and social consciousness of customers to encourage them to purchase a product or service,
while also allowing both the business and the customer to actually engage in philanthropic
efforts.
Blake Mycoskie, the founder of TOMS, pioneered this form of social entrepreneurship.
Examples: In addition to TOMS, SoapBox, Smile Squared and Warby Parker are
all companies that use this type of business model.
9. Franchise model
Of all the different types of business models, the franchise model is perhaps the one that
people are most familiar with — after all, we each see and likely visit franchise businesses often
in our daily lives.
In short, a franchise works like this: A franchise is an established business blueprint that
is simply purchased and reproduced by the buyer, the franchisee. The franchiser, or original
owner, works with the franchisee to help them with financing, marketing, and other business
operations to ensure the business functions as it should. In return, the franchisee pays the
franchiser a percentage of the profits.
Examples: Starbucks, Domino's, Subway, McDonald's and the UPS Store are all
common examples of the franchise model.
Reyes, Alyssa Marie
Malabanan, Ma. Jhara Mae B.
Bartolome, Kathlene D.
Lucido, Eldrin J.
3BSBA-FM2
Reference:
https://www.nerdwallet.com/article/small-business/what-is-a-business-model?
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