UNDERSTANDING YOUR

BUSINESS MODEL &

DEVELOPING YOUR STRATEGY
 BUSINESS MODEL

 A business Model is a plan implemented by a company

to generate revenue and make a profit from operation.
The model includes components and functions of
business, as well as revenues it generate and expenses it
incurs.
 BUSINESS MODEL

 Business model consists of two components.

A. Revenue model
B. Cost model
 REVENUE MODEL

 A revenue model is a framework for

generating revenues. It identifies which revenue source
to pursue, what value to offer, how to price the value,
and who pays for the value. It is a key component of a
company's business model.
 COST MODEL

 Cost models are financial models used to determine the

cost for specific activities and processes.
 COST MODEL

 Cost model includes two categories.

A. COGS
B. Operating cost
 COGS

 Cost of goods sold (COGS) are the direct costs

attributable to the production of the goods sold by a
company. This amount includes the cost of the materials
used in creating the good along with the direct labor
costs used to produce the good.
 OPERATING COST

 Operating costs are expenses associated with the

maintenance and administration of a business on a day-
to-day basis. The operating cost is a component
of operating income and is usually reflected on a
company’s income statement .
 FIRST MOVER ADVANTAGE
 A first mover is a form of competitive advantage that a
company earns by being the first to enter a specific
market or industry. Being the first allows a company to
acquire superior brand recognition and customer loyalty.
 FIRST MOVER ADVANTAGE
 Key aspects of capturing a first mover advantage.

 You have to be first (or very early) into the market.

 You need to capture a large percentage of the market
quickly (which means fast growth)
 You need to create switching cost so the customer will
stick with you.
 SUPPLANTING THE FIRST MOVER
ADVANTAGE
Industry First Mover Current Leader
Social Networking Friendster Facebook
Web Browser Mosaic Microsoft Internet
Explorer
Word processing WordStar Microsoft word
software
Email Juno Yahoo Mail
Diet Soda No-Cal Diet Coke
Online Book Seller Book Stacks Unlimited Amazon
 FORMULATING A WINNING
STRATEGY
 Winning strategy include some combination of
attributes. Your business need to create some value for
which people are willing to play.

A. Better
B. Cheaper
C. faster
 THE PEOPLE ARE WHAT MATTERS
 Building and maintaining culture into three main
categories.

I. Values
II. Selection
III. structure
 VALUES

 Values are beliefs shared by all members.

 Value communicate what kind of work environment

founders want to create and what guidelines they use in
hiring future employees.
 SELECTION
 Its important to hire the right person for the first time.

 Every new person added to the company will reinforce

the values you’ve put in place, thereby helping to sustain
to company’s culture.
 STRUCTURE
 First you need to hire people who can ‘wear may hats’-
who can work on a prototype, contact vendors, create
budget and talk to customer as need arise.

 Second, early employees should be overqualified for the

tasks they will initially be doing.

 Third, need to create a flexible organization structure

where any employees during this startup phase can talk
freely to anybody.
 ENTRY STRATEGY

 Benchmarking
 Initial market test

 Creating a platform
 BENCHMARKING
 "Benchmarking is the process of measuring an
organization's internal processes then identifying,
understanding, and adapting outstanding practices from
other organizations considered to be best-in-class.
 BENCHMARKING
 By Benchmarking you will discover:
 Who performs the business process very well and has
process practices that are adaptable to your own
organization
 Who is the most compatible for you to benchmark with
 GROWTH STRATEGY

 Franchising
 Expanding your product mix

 Geographic expansion

 International growth
 INTERNATIONAL GROWTH

 Joint venture
 Technology licensing

 Outsourcing

 Exporting

 FDI

 Franchising

 Merger & Acquisition

 JOINT VENTURE

 A Joint Venture is a legal entity formed between two or

more parties to undertake economic activity together.
The parties agree to create a new entity by both
contributing equity, and they then share in the revenues,
expenses, and control of the enterprise
 TECHNOLOGY LICENSING

 Technology Licensing is an agreement whereby an

owner of a technological intellectual property (the
licensor) allows another party (the licensee) to use,
modify, and/or resell that property in exchange for a
compensation (consideration).
 OUTSOURCING

 Outsourcing allows business to handle key attributes of

their products while handing over the responsibility for
development and manufacturing to a subcontractor.
 EXPORTING
 An export is a function of international trade whereby
goods produced in one country are shipped to another
country for future sale or trade.
 FOREIGN DIRECT INVESTMENT

 Under this strategy, companies set up a physical presence

in the countries of interest, whether that is a sales office,
retail outlets, production facilities or something else.
 FRANCHISING
 Arrangement where one party (the franchiser) grants
another party (the franchisee) the right to use its
trademark or trade-name as well as certain business
systems and processes, to produce and market a good or
service according to certain specifications.
 MERGER & ACQUISITION
 Mergers and acquisitions (M&A) is the area of corporate
finances, management and strategy dealing with
purchasing and/or joining with other companies. In a
merger, two organizations join forces to become a new
business, usually with a new name.
 MERGER & ACQUISITION

 In an acquisition, on the other hand, one business buys a

second and generally smaller company which may be
absorbed into the parent organization or run as a
subsidiary.
THANK YOU