Building Up Business Model

8/13/2019 Building Up Business Model

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Building up business model• Business model is description what a company offers its

customers, how it reaches them and relates to them,through which resources, activities and partners itachieves this and finally, how it earns money.

• Business model describe the products and servicesoffered for sale, business infrastructure to produce andsell these products and services, the customers that thecompany targeted to buy these products and services,

and financial performance and profit the companyexpects to achieve.• Our business model should answer the question of how

our venture will make money



Business model can be defined around 7 main areasBuilding blocks

• Value proposition of our offer to market (The offer)

• Client segmentation for our value proposition

• Channel design to communicate and distribute our valueproposition and reach customer.

• Key resources needed

• Key activities to implement our (BM)

• Revenue model design

• Cost structure resulting from our (BM)



Value proposition of our offer to market (The offer)

Value proposition is:

• Analysis the offer in terms of the opportunity, market, The

instruments and resources needed, and The risk involved• Description of products and services the business offers and why

customers would buy them.

• Describes the problem of customers are experiencing and how theproducts and services offered to help solve that problem.

• Describes how the characteristics and features of products andservices that help solve customers’ problems.



• Does our value proposition still cater well enough to our

clients’ needs?

•

Do we know how our customers perceive our valueproposition?

• Are our competitors offering similar value propositionsat similar or better prices?

•

How well are our customers served by othercompetitors?



Client segmentation for our value proposition-Who are our customers

Customer segmentsBusiness model building

Our group of customers with distinctcharacteristics

Description

List the customer groups we are serving Regroup

them in terms of different needs and ways of

reaching them or as to profitability.

objective



• Do we know our customers and theirneeds good enough?

• Are some customer groups likely to defectsoon?

• Do we regroup different customer

segments well enough



Channel design to communicate and distribute ourvalue proposition and reach customer.

Communication and distribution channelsBusiness model building

The channels through which we communicate with our

customers and through which we offer our value

propositions

Description

Identify the channels through which we offer our value

propositions to each customer segment

Objective



• Do we have a well thought-throughcommunication and distribution channel design?

• How well do we reach our clients?

• Do we know how successful our channels are interms of customer acquisition?

• How well are our different channels integrated?• Do we know how cost efficient are our channels

are?• Do we use the right channels for the right

clients (e.g. in terms of profitability)?



Key resources needed

Key recoursesBusiness model building

The key resources we need to make our business

Model function

Description

•What are the key resources we rely our businessmodel

•How does each of these resources relate to ourvalue propositions and their corresponding customersegment, channels and relationship

Objective



Key activities to implement our (BM)

Key activitiesBusiness model building

The most important activities that have to be performed

to run our business model

Description

•What are the main activities we operate to run ourbusiness model?

•On which key resources do they rely?

•To which value propositions, channels or relationships dothey contribute?

Objective



Revenue model design

Revenue modelBusiness model building

The streams through which we earn our revenues from

our customers for value creating and customer facing

activities

Description

• What are our revenue streams?

• What are the revenue streams from each customersegment and value proposition?

• How much is each revenue stream’s contribution to overallrevenues in terms of percentages?

Objective



Cost structure resulting from our (BM)

Cost structureBusiness model building

The costs we incur to run our business modelDescription

•What are the most important cost positions in our businessmodel?

•Can the cost positions be easily connected to a businessmodel building block?

•Can costs be calculated for each customer segment?

Objective



Business model flow

The opportunitySolution offered to customer

Description of product & services

The market

Assessing the external validity and consistency of the opportunity

The instruments and resources needed

Assessing the external validity and consistency of the opportunity

Marketing

Plan

Business

Operations

Management team

& HR

Financial

Resources

The risk the core assumptions



From theory to practiceSEDCO Business Model

Infotrix Value proposition to market (why customers will purchase Infotrix:

1- the only solution which available in the market covered, CVM, DS, Selfservice and customer feedback (cover all customers needs)

2- Recent years, the concepts of mass customization and customer co-creation have gained

importance. This approach allows for customized products and services (customization)

Documents

Building Up Business Model