Laiza Cristella J.

Saray Independent Learning

BSA – 3 Entrepreneurial Mind

a. What is a business model?

- A business model is a company’s plan for making a profit. It is part of
your overall business strategy, and itdefines the goods and services the
company intends to offer, the target market it has chosen, and any costs
that are projected. Business models also assist employees in understanding
a company's future and investors in assessing organizations that catch their
attention.

b. What are the main components of business model? discuss each.

1. A high-level vision - The first component of your business model is a basic

description of your strategy. Your vision can be as short as a few sentences long and can
ultimately be part of your company's mission statement. When creating a vision, be sure
to clearly state the industry your business is in and use positive language.

2. Key objectives - Once you have established a vision for your company, determine
what your top quantifiable goals are and how you plan to evaluate them. Your objectives
can relate to your yearly sales revenue, operating costs, marketing strategies or staffing
decisions. If your business is relatively new, it may be best to set modest goals. If your
company is well-established, you can set more ambitious objectives, such as expanding
customer reach to other states or countries.

3. Customer targets and challenges - When devising a business model, it's important
to identify the types of customers who would be interested in your organization's
products or services. This component also includes creating a list of challenges your
target customers may face while consuming your company's offerings.

4. Solutions - A strong business model also includes a list of solutions for your customers'
issues. Try to ensure that these solutions are realistic by considering the resources you
have at your disposal.

5. Value - Value, as it relates to business models, refers to the central aspects of your
solutions that make them unique.

6. Pricing - Every business must establish a pricing model for its products or services. If
your company is new, try initially setting prices that are low enough to attract customers
but high enough to cover overhead expenses and operating costs. Other factors to
consider when setting prices include the quality of your products or services and your
profitability targets. Once you have reached your desired net profit margins, you can
start offering discounts and other special deals.
Laiza Cristella J. Saray Independent Learning
BSA – 3 Entrepreneurial Mind

7. Messaging - Your message must be clear and powerful in order to attract attention and
convince customers that your business's products or services are worth purchasing. This
message, which can be used in advertisements, must ideally reflect your company's
unique characteristics and include a call to action, such as "contact us today to receive a
quote for our comprehensive auto insurance policies." Your marketing department can
help you create and communicate an interesting message and slogan.

8. Go-to-market - A go-to-market strategy involves choosing the channels you want to

use to promote and sell your products or services. These vehicles can include social
media platforms, mobile app stores and paid search.

9. Growth opportunity - This component of your business model involves searching for
ways to help your company grow. Common examples of opportunities for growth
include mergers and acquisitions with other companies and partnerships with nonprofit
organizations for charity campaigns. The former opportunity can help improve the
efficiency of your business operations due to an increase in staff, while the latter may
lead to improved brand reputation.

10. Required investment - An investment is the resources you need to use your solutions
and how much they cost. Much like the price-setting process, it's always important to
make investment-related decisions carefully to avoid costly losses. Before taking an
investment opportunity, consider setting a budget and conducting a cost-benefit
analysis.

c. What are the benefits of using business models?

- Both new and existing businesses need to have effective business
models. They support new, emerging businesses in attract capital, hiring
skilled personnel, and inspiring leadership and employees. Well-
established companies should alter their business models on a regular
basis to stay ahead of emerging trends and problems.