Business Modelling

Dec 7-15, 2022.

Dr V V K Lakshmi
Asst Prof
Dept Of Mechanical Engineering
1. Personal Discovery

2. Solution Discovery

3. Business Model Design

4. Discovery Integration
Product Line Strategy
What is a “Product Line”?
• A group of related products all marketed under a single brand name that is
sold by the same company.
• Companies sell multiple product lines under their various brand names,
seeking to distinguish them from each other for better usability for
consumers.

https://www.investopedia.com/terms/v/valueproposition.a
sp
 MI X
U CT
ROD
a P
is is
Th
“A product mix is the total number of product lines and
individual products or services offered by a company”

https://www.productplan.com/glossary/product-mix-strateg
y/
1. Personal Discovery

2. Solution Discovery

3. Business Model Design

4. Discovery Integration
Business Models
 A Business Model…
“…describes the value an organisation offers its customers and
illustrates the capabilities and resources required to create,
market and deliver this value and to generate profitable,
sustainable revenue streams.”*
“A business model elucidates how an organization is linked to
external stakeholders, and how it engages in economic exchanges
with them to create value for all exchange partners.”#
*Osterwalder, A., Pigneur, Y., & Tucci, C. “Clarifying Business Models: Origins, Present and Future of the Concept.” Communications of
the Association for Information Systems, Volume 15 (2005)

#
Zott, C., & Amit, R. “Business Model Design and the Performance of Entrepreneurial Firms.” OrganizationScience, 18:2, 181–199 (2007)
 Business Models…
• A business model is an outline of how a company plans to make
money with its product and customer base in a specific market

• A business model explains four things:

• What product or service a company will sell
• How it intends to market that product or service
• What kind of expenses it will face
• How it expects to turn a profit
 Business Models…
• A business model is an outline of how a company plans to make
money with its product and customer base in a specific market
• A business model explains four things:
• What product or service a company will sell
• How it intends to market that product or service
• What kind of expenses it will face
• How it expects to turn a profit
• Essential elements of a business model include
• a unique value proposition
• a viable target market, and
• a competitive advantage
 Business Models - TYPES

• Subscription Model
• Bundling Model
• Freemium Model
• Razor and Blades Model
• Product to Service Model
• Leasing Model
• Crowdsourcing Model
 Business Models - TYPES

• Subscription Model
• Bundling Model
• Freemium Model
• Razor and Blades Model
• Product to Service Model
• Leasing Model
• Crowdsourcing Model
www.garyfox.com
 Business Models - TYPES

• Subscription Model
• Bundling Model
• Freemium Model
• Razor and Blades Model
• Product to Service Model
• Leasing Model
• Crowdsourcing Model
 Business Models - TYPES

• Subscription Model
• Bundling Model
• Freemium Model
• Razor and Blades Model
• Product to Service Model
• Leasing Model
• Crowdsourcing Model
 Business Models - TYPES

• Subscription Model
• Bundling Model
• Freemium Model
• Razor and Blades Model
• Product to Service Model
• Leasing Model
• Crowdsourcing Model
 Business Models - TYPES

• Subscription Model
• Bundling Model
• Freemium Model
• Razor and Blades Model
• Product to Service Model
• Leasing Model
• Crowdsourcing Model
 Business Models - TYPES
• Subscription Model
• Bundling Model
• Freemium Model
• Razor and Blades Model
• Product to Service Model
• Leasing Model
• Crowdsourcing Model
 Business Models - TYPES

• Subscription Model
• Bundling Model
• Freemium Model
• Razor and Blades Model
• Product to Service Model
• Leasing Model
• Crowdsourcing Model
 A Business Model…
“…describes the value an organisation offers its customers and
illustrates the capabilities and resources required to create,
market and deliver this value and to generate profitable,
sustainable revenue streams.”*
“A business model elucidates how an organization is linked to
external stakeholders, and how it engages in economic exchanges
with them to create value for all exchange partners.”#
*Osterwalder, A., Pigneur, Y., & Tucci, C. “Clarifying Business Models: Origins, Present and Future of the Concept.” Communications of
the Association for Information Systems, Volume 15 (2005)

#
Zott, C., & Amit, R. “Business Model Design and the Performance of Entrepreneurial Firms.” OrganizationScience, 18:2, 181–199 (2007)
 Business Model Design
• You start from the (Consumer) Value Proposition
• Without the CVP, it is very difficult to do business:
• How to make money?
• Who are the partners I will need?
• How will I organise my key operations?
• Who are the customers with whom I need to build
relationships?
• Ultimately, will all the elements of my business work
together to make it financially viable?
Business Model Process
 The Business Model Canvas

• Template used for developing a full business model

Value proposition
The second building block refers to Value Proposition. It means the values that your company or your service can bring to each
customer segment. Before filling in this building block, question yourself what problems you can solve for each customer segment
are as well as what needs you can satisfy. In other words, the value proposition means the reasons why customer segments buy
from you but not from others.
Each building block represents each key drivers and segments of a business. To fill in these blocks, you need to
answer the following questions:

● Customer segments: Who do you target as customers?

● Value proposition: What are your strengths to make customers buy from your business?
● Channels: Which channels do you use to deliver your products or services to the market?
● Customer relationships: What are your strategies to get, keep, and build up the relationships with your
customers?
● Revenue streams: How will you make money?
● Key resources: What are the special strategic resources that you own as well as a need?
● Key activities: What will your business do to deliver your value proposition?
● Key Partnerships: What are the non-key activities that you do to help your company focus more on your
key activities?
● Cost structures: What are the biggest costs that your business earns?

Src:resources/business-model-canvas-examples.html
 Business Model CANVAS - 1
• Customer Segments
• Describe the target customer
• Iterative Phase until you settle in on a set of target customers
• Value Proposition
• Your Customer Value Proposition
• Channels
• How to connect the value proposition with the target customer?
• Three different facets of making connections - communication,
sales and logistics
 Business Model CANVAS - 2
• Customer Relationships
• The nature of the relationship can follow directly from your
value proposition
• Revenue Streams
• Revenue streams define your Business Model
• They are not necessarily the price you charge for your product
• Key Resources
• What are the resources needed to create your Value
Proposition? – Technical, Human, Financial, Infrastructural…
 Business Model CANVAS - 3
• Key Partners
• Key Partners complement your resources and key activities as
required to deliver your value proposition. Why??
• Achieve market leadership by creating product solutions as quickly as
possible
• Achieve and sustain market leadership by differentiating your product or
service.
• Key Activities
• What is required to weave together your resources with those
offered by your partners to deliver the value proposition?
• Manage channels and relationships, and generate revenue.
 Business Model CANVAS – Example

• Ryanair
• LAN Airlines