Business Models Brian Mennecke MIS 503. Why Business Models Matter? What, at their heart, are business models? –What is one of the most important questions

Business Models

Brian Mennecke

MIS 503

Why Business Models Matter?• What, at their heart, are business models?

– What is one of the most important questions that needs to be answered when telling this story?

• What is the storyline or plot that a business model must follow? • What are the two parts to the story?

– What else is there?• What do profits tell us about a business model?

• How do you test a business model? – Are there any business models that appear to be successful yet don't pass one or both of

these tests?– What was wrong with Sears' and Pricelines' models?

• What do you need to understand to make a business model work? – What needs to come first?– What is the importance of strategy in the development and use of a business model? – What key question in terms of strategy needs to be answered?

Why Business Models Matter?• What, at their heart, are business models? (stories)

– What is one of the most important questions that needs to be answered when telling this story? (who are the customers & what do they value?)

• What is the storyline or plot that a business model must follow? (how do we make money?)

– What are the two parts? (1-making it, 2-selling it) – What else is there? (profits)

• What do profits tell us about a business model? (whether it works)

• How do you test a business model? (narrative test and numbers test)– Are there any business models that appear to be successful yet don't pass one or both of

these tests?– What was wrong with Sears' and Pricelines' models? (no clear differentiation)

• What do you need to understand to make a business model work? (strategy – relation to the competition)

– What needs to come first?– What is the importance of strategy in the development and use of a business model? – What key question in terms of strategy needs to be answered? (how will you do better than

the competition?)

Why Business Models Matter?

• It’s all in the story– Does it make sense?– Can we make money doing it?– What’s the competitive landscape like?

How to Write a B-Plan

• The nuts and bolts of writing a prospectus


• What are the 4 main factors– The People– The Opportunity– The Context– Risks and Rewards


• Without the right team, nothing else matters:– What are the investors going to want to know

about the team?• What do they know?• Whom do they know?• How well are they known?



• The Opportunity– What are the two important questions?

• Is the market large?• Is it fast growing?

– Is it going to be “structurally attractive?”


• The Opportunity– What are some of the questions to ask about

money?• When will it need to buy resources?• When will it need to pay for them• How long will it take for customers to show up?• How long until they give us money?• Capital equipment costs per $ of sales?


• The Opportunity– What are some of the questions to ask about

competition?• Current competitors?

– Their position, strengths, weaknesses?

• What will their response be?• What will our response be?



• How is business like chess?


• The Context – What is the importance of context?– What should a business plan include related

to context?• Awareness of context• What are the potential changes in context and their

effects?• What is to be done when context changes?• What can be done to effect context?


• Risk and Reward– What do good business plans do? Why?

• Recognize context is a moving target

– What comes at the end?• The exit strategy

Objective-Based Typology of E-Business Models

• What’s the point of this article?


• What are the two dimensions?– Relational Objectives– Value Based Objectives

• What do these terms mean?


• Where does this take us?


• What is the value of this “model” and others like it?

Documents

Business Models Brian Mennecke MIS 503. Why Business Models Matter? What, at their heart, are business models? –What is one of the most important questions