Business model defined
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Transcript of Business model defined
The Business Model is the Battle Plan for your Business Strategy
Matthew [email protected]
Business Model Defined A business model describes the rationale of how an
organization creates, delivers, and captures value economic, social, or other forms of value
The process of business model construction is part of business strategy.
Further on Business Models
Whenever a business is established, it always either explicitly or implicitly employs a particular business model: that describes the the way in which the value:
Is created, Is delivered, and Is captured.
The essence of a business model is that it defines the manner by which the business enterprise:
delivers value to customers, entices customers to pay for value, and converts those payments to profit: T
Thus it reflects management’s hypothesis about: what customers want, how they want it, and how an enterprise can organize to:
best meet those needs, get paid for doing so, and make a profit
6 Main Areas of a Business to Be Addressed in the Business Model1. Customers
1. Who are they?2. What do they want?
2. Production3. Offer
1. Price2. Features3. Payment
4. Infrastructure5. Financial Viability
1. Is this profitable?1. Theoretically 2. Actually
6. Reporting/Monitoring1. Are we tracking in real time the right metrics to Manage our
company?
The Business Model is the Battle Plan for: Business Strategy Business Strategy deals with initiatives
involving utilization of resources, Enhancement of the business against their external
environments. It entails specifying the organization's
mission, (beliefs) vision (guesses about the future) and objectives,
By: Developing policies and plans,
often in terms of projects and programs, allocating resources to implement the policies and plans,
projects and programs. Giving orders (direction) to line managers
A Dashboard/Balanced Scorecard is often used to evaluate the overall performance of the business and its progress towards objectives.
Stakeholders
Business Strategy needs to start with stakeholders’ expectations and use a modified balanced scorecard which includes all stakeholders.
Stakeholders
Stakeholders
Balanced Scorecard (Dashboard) The basic idea in creating the scorecard was to
integrate: financial and non-financial metrics
into a single system in which they did not compete with one another for
management airtime.
Prior to this the financial and non-financial results were reviewed in separate meeting agenda items. Whichever came first on the agenda was perceived as the higher priority.
By combining them this unproductive tension was greatly reduced
A Score Card
Scorecard
Scorecard/Dashboard
Business Strategy
Strategic management provides overall direction to the enterprise
In the field of business administration it is useful to talk about "strategic alignment" between the organization and its environment or "strategic consistency."
"there is strategic consistency when the actions of an organization are consistent with the expectations of management,
and these in turn are with the market and the context."
Strategic management includes not only the management team but can also include the Board of Directors and other stakeholders of the organization.
Strategic Management Strategic management is an ongoing process that
evaluates (1. To ascertain or fix the value or worth of 2. To examine and judge carefully); and
controls and directs (exercises authoritative or dominating influence over); the businesses in which the company is involved;
assesses its competitors and sets goals and strategies to:
meet all existing and potential competitors; Maintain and expand profitability
reassesses i.e. regularly to determine: how it has been implemented and whether it has succeeded or needs replacement by a new strategy to meet:
changed circumstances, new technology, new competitors, a new economic environment., or a new social, financial, or political environment.”
Lamb, Robert, Boyden Competitive strategic management, Englewood Cliffs, NJ: Prentice-Hall, 1984
Building Blocks of Business Model1. The value proposition of what is offered to the market;2. The segment (s) of clients that are addressed by the value
proposition;3. The communication and distribution channels to reach
clients and offer them the value proposition;4. The relationships established with clients;5. The key resources needed to make the business model
possible;6. The key activities necessary to implement the business
model;7. The key partners and their motivations to participate in
the business model;8. The revenue streams generated by the business model
(constituting the revenue model);9. The cost structure resulting from the business model.
Another Business Model Model