Business Model

Extension to Chapter-2
A Business model describes the
rationale of how an organization
• Creates
• Delivers and
• Captures value
 Business Model Canvas
The Business Model Canvas was
proposed by Alexander Osterwalder
based on his earlier book: Business
Model Ontology.
It outlines nine segments which form the
building blocks for the business model in
a nice one-page canvas.
 A Business model
includes 9 basic building
bocks
 The Business Model Canvas
7
Key 2 Value 4 1
8 Key Activities
Partners Proposition
Customer
Relationships Customers
segment

6 Key 3
Resources Channels

9 Cost 5 Revenue
Structure Streams
 f

•For whom are we creating value?

•Who are our most important customers
•What value do we deliver to the customer ?
•Which one of our customer’s problems are we helping to solve ?
•Which customer needs are we satisfying?
•What bundles of products and services are we offering to each
customer segment?
•Through which channels do our customer segments want
to be reached?
•How are we reaching them now?
• How are our channels integrated?
•Which ones worth best?
•Which ones are most cost – efficient?
•Who are we integrating them with customer routines?
 What type of relationship does each type of our
customer segments expect us to establish and maintain
with them?
 Which ones have we established?
 How costly are they ?
 How are they integrated with the rest of our business
model?
For what value are our customers really willing to pay?
For what do they currently pay?
How are they currently paying?
How would they prefer to pay?
How much does each revenue stream contribute to
overall revenues?
What key resources do
• our value propositions require?
• our distribution channels?
• Customer Relationships?
• Revenue Streams?
What key activities do
 our value propositions require?
 Our distribution channels?
 Customer relationships?
 Revenue streams?
Who are our key partners?
Who are our key suppliers?
Which key resources are we acquiring from partners?
Which key activities do partners perform?
• What are the most important costs inherent in our
business model?
• Which key resources are most expensive?
• Which key activities are most expensive?
• “Get the business model
wrong, and there is
almost no chance of
success...”
(Teece, 2010)
 Individual Assignment-2 (10%)
Due Date: After 2 weeks

observation
Visit any local SME in Ethiopia. Through
and interaction with the
entrepreneur, describe the Business
Model of the SME and assess its
feasibility by making use of the business
model canvas.