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The evolution of Business Plans: Business Model Canvas (BMC)
Presentation
Difference between a Business Plan and Business Model Canvas
Introduction to Business Models
Value Creation
Business Model Canvas
What is a Business Plan?
A business plan is a formal statement of a set of business goals, the
reasons why they are believed attainable, and the plan for reaching those
goals
What does it contain?
Executive summary, business description/overview, market research,
operations, plan, financial plan, and project management, marketing plan
etc.
What are the differences between a Plan and a Business Model Canvas
• Outside versus Inside the Building.• Input versus Output Focus• Lean Development versus Product Development• Change versus Fortify• Chasing Customers versus Chasing Funding• Financial Projections versus Metrics
Business Model Definitions
Magretta (2002) “at heart, stories — stories that explain how enterprises
work”.
Teece (2010)” A business model articulates the logic and provides data and
other evidence that demonstrates how a business creates and delivers
value to customers.”
Osterwalder & Pigneur (2010) “ it describes the rationale of how an
organization creates, delivers and captures value”.
Value Creation
What is value?Value creation?
Value Created Through…
Newness Price
Performance Cost Reduction
Customization Risk Reduction
Getting the job done Accessibility
Design Convenience
Brand/Status Usability
Customer Value
http://www.lginnotek.com/company/creation.jsp
Value Value is created anytime an action is taken for which the benefit
exceeds the cost or anytime an action is prevented for which the cost
exceeds the benefit
Organization Customer
Products
Revenue
Feedback
Personal
Service
Sense of
Community
Loyalty
Proposed Venture
How & where the business acquires cash from customers
How it uses the cash
How product and services flow from suppliers & the firm to clients
How does the firm connects (sales & marketing) with the customer
Business Model Canvas Explained
Source:
Osterwalder, A., & Pigneur, Y. (2010). Business model generation: a handbook for visionaries, game changers, and
challengers. John Wiley & Sons.
Customer Segments(different group of people or organizations an enterprise aims to reach and serve)
Customer Types
Segments defined by:
• Customer needs
• Reach
• Relationships
• Profitability
• Willingness to pay
BMC Value Proposition (bundle of products and services that creates value)
BMC Channels(how customer communicates with and reaches its customer segments to deliver value proposition)
BMC Channels(how customer communicates with and reaches its customer segments to deliver value proposition)
AIM: to make this as smooth as possible
Channel Phases
Direct (e.g. Sales Force, Web Sales)
Indirect (Own Store/Franchising, Partner Stores Wholesaler)
Channel phases
- Awareness
- Evaluation
- Purchase
- Delivery
- After sales
https://www.cleverism.com/selecting-managing-channels-business-model-
canvas/
Customer Relationships(Type of relationship a company establishes with specific customer segments
Customer Relationship Types Personal Assistance (e.g. call centers)
Dedicated persona assistance (e.g. private banking HNIs)
Self-service (e.g. online banking)
Automated services (e.g. customer rating/review)
Communities (e.g. http://inthemix.junkee.com/).
Co-Creation (e.g. Youtube. com)
Revenue Streams(Cash a company generates from each customer segment (transaction vs. recurring revenue)
Revenue Models Asset sales (cars)
Usage fees (mobile phone provider)
Subscription Fee (gym)
Lending/renting/leasing (car rental)
Licensing (patent royalties)
Broker fee (credit cards)
Advertising (media industry)
https://www.cleverism.com/revenue-streams-in-business-model-canvas/
Internal BMC Canvas elements
Key Resources(The most important assets required to make a business model work)
Resource Types
Human Capital
Social Capital
Intellectual Capital
Physical
Finance
https://www.cleverism.com/key-resources-building-block-in-business-
model-canvas/
Key Activities(The most important things a company must do to make its business model work)
Key Business Activities Production
Problem Solving
Platform/network e.g. Eharmony
https://www.cleverism.com/key-activities-block-business-model-canvas/
Key Partners(network of partners or suppliers that make the business model work)
Partner Types
Strategic alliance between non competitors
Coopetition, as alliances between competitors
Joint ventures for developing new products
Buyer-supplier relationships to assure reliance supplies
Cost Structure(cost incurred in operating a business model)