Business Model— a firm’s plan or recipe for how it creates, delivers, and captures value for its

stakeholders.
➢ A firm’s business model is integral to its ability to succeed both in the short and long
term.
➢ The proper time to develop a business model is following the feasibility analysis stage
and prior to fleshing out the operational details of the company.

General Categories of Business Model

1) Standard Business Models

➢ The first category is standard business models.
➢ Standard business models describe existing plans or recipes firms can use to determine
how they will create, deliver, and capture value.
➢ There are a number of standard or common business models, which are shown on the
next two slides.
2) Disruptive Business Models
➢ The second category is disruptive business models.
➢ Disruptive business models, which are rare, are ones that do not fit the profile of a
standard business model.
➢ They are impactful enough that they disrupt or change the way business is conducted in
an industry or an important niche within an industry.
➢ The next slides depict four business models that were disruptive when they were
introduced.
Business Model parts
➢ consists of four main interlocking parts that together create ‘the business’. Without
these four parts, there is no business, no company, no opportunity.
➢ These are as follows:
1. The Offering. 2. The Customers. 3. The Infrastructure. 4. The Financial Viability.

1. The Offering
• Identifies potential customers
• Lists resources required
• Customer Value Proposition (CVP)

2. The Customer
• Determine target market
• Plan to reach the target market
• Plan to maintain relationships with the market segment

3. The Infrastructure
• People
• Technology
• Products
• Suppliers
• Facilities
• Cash
• (resources needed to deliver the CVP)

4. Financial Viability
• Discusses revenue
• Outlines cost structure
• Addresses CVP

Customer Value Proposition (CVP)

➢ thinking about your business from the customer’s viewpoint rather than from an
organizational perspective.
❖ value proposition— is a clear statement of the tangible results a customer gets from
using your products or services
❖ most important part of your business model,
 ❖ be truly effective, it needs three qualities:
• It must offer better value than the competition.
• It must be measurable in monetary terms.
• It must be sustainable.

❖ four problems that prevent them from getting a job done. These problems include:

Different Types of CVPs and Customer Segments

❖ Types of Value Propositions!

• All-benefits (focus on the product)
• Points-of-difference (focus on competition)
• Resonating-focus (focus on the customer)
 ❖ Defining Your Target Customer
• Who are your customers?
• For whom are you creating value?
• Why would customers buy from you?

❖ Types of Customer Segments

• Mass market
• Niche market
• Segmented market
• Diversified market

Business Model Canvas (BMC)

➢ It is a type of visual plan that depicts the business on one page by filling in nine blocks of
business model:
1. Customer Segments.
2. Customer Value Proposition.
3. Channels.
4. Customer Relationships
5. Key Activities.
6. Key Resources.
7. Key Partners.
8. Revenue Streams.
9. Cost Structure.