Business Model Development

A business model consists of 9 building blocks and you need to explore them all in details before preparing your own business model. For that purpose please read Business Model Generation handbook written by Alexander Osterwalder & Yves Pigneur available at http://bit.ly/1eutgmG (Retrieved April 18, 2016).

 

STUDENT ACTIVITY

Watch the following TED Talk delivered by Bill Gross The single biggest reason why startups succeed available and think about your business idea before you start developing your business. Discuss your business idea and your strategy with your professors, colleagues, friends, potential users, entrepreneurs and family and try to use the feedback you get for improvements.

 

 

Picture 1 The Business Model Canvas

Source: (Retrieved, June 25, 2016 from: https://en.wikipedia.org/wiki/Business_Model_Canvas#/media/File:Business_Model_Canvas.png)

 

 

1.      Business idea

 

Your business idea is very important and for sure a unique one. However, an old quote from German physicist Albert Einstein may help you in the process of explaining your idea ‘If you can’t explain it simply, you don’t understand it well enough’. Talk about your idea with other students, professors, family, friends, potential users, and other entrepreneurs. If you cannot explain your idea clearly and simply it seems that at least you do not understand it well enough. Try to explain your idea as a short ‘elevator story’ – ‘elevator pitch’ as that is something you need to learn how to do, because you will have to do that often when presenting your idea to (potential) investors, partners, customers etc. At least one team member needs to be able to ‘tell’ or ‘sell’ your idea. You can find some useful advice on how to create your elevator pitch in the article ‘6 Tips for Perfecting Your Elevator Pitch’ (Peters, Retrieved, April 21, 2016 from: http://bit.ly/1MZkJ2B). Also, keep in mind that your idea will be developed as your business model/plan develops and during the process it could be modified in different directions.

 

STUDENT ACTIVITY:

Take your time and prepare your business idea for future development through the business model. Think about the business you would like to start and be ready to explore the elements of business models for that idea in the following steps. While working on it, watch some of YouTube videos, as an example of good practice of presenting a business idea.

 

Think about your potential business idea. Discuss it with your teachers, colleagues, friends, potential users and family about the strategy and try to use feedback you get for improvements. Be aware that during the business development process you will rethink your idea many times, and the first one maybe will not be your last one.

 

ASSIGNMENT 1!!! Write it down, as a short explanation, no more than 250 words and submit it as your 1^st assignment.

 

 

2.      Customer segments

 

You have already discussed customer segmentation and targeting in the Marketing module. Now it is time to refresh your memory and think about the target segment you will serve with your business project/idea. Think about who you will serve, who will buy your products or services? Businesses or individual customers, and/or both categories? What are they buying from you? What specific need(s) are your product(s) or services meeting? Do not forget that you are always selling a solution, and product or services are continuously changing. For better understanding of customer segmentation you can read Scridon’s (2008) paper Understanding Customers – Profiling and Segmentation available at https://doaj.org/article/9b283724d70d457da4cdead433865851

 

(Clarification – Example: At first telecommunication companies sold telephones and even payphones. Over time, these machines evolved and added features such as secretary, speed dial, caller ID etc… Now, they are selling mobile phones and other related services… What has remained the same, however, is the fact that they have been enabling people to communicate with each other – they have been connecting people!)

 

Think about your potential customer segment. Discuss it with your professors, colleagues, friends, potential users, other entrepreneurs and family about the strategy and try to use the feedback you get for improvements. Don’t forget to explore similar businesses and learn from them, take good elements and improve what can be improved in your own business.

 

ASSIGNMENT 2!!![1] Explain your target customer segment using no more than 500 words and submit it as your 2nd assignment.

[1] Don’t be afraid if you change it as you progress through the course as all the changes will be updated when you submit your final assignment.

 

 

3.      Value propositions

 

‘Today’s smart marketers don’t sell products; they sell benefit packages. They don’t sell purchase value only; they sell use value.’ (Kotler, Retrieved, April 21, 2016 from http://bit.ly/29q9IJJ). Most of future businesses will be launched to resolve some existing problems. Therefore, it is important for companies to discover the need people want to satisfy, to find a way to attract future customers with something special, to grab their attention, arouse their desire, and convince them to buy company’s products or services. You are all familiar with (big) companies such as Facebook, Apple and their iPhone, etc. who are in that ‘Changing the World’ category. However, only a small number of new businesses fall in the same category.

 

Even it is a undeniable fact that most of new products and services will not change the world. It is highly likely that the products or services you will offer to the customers already exist. However, there is room for improvements; maybe your company will offer new products/services to the market and customers with a new added value. One such example is u:Plug (http://www.uplug.me/). The mobile power jack/charger as itself already existed and the u:Plug team improved the existing product.

 

Think about what specific value propositions you can offer to customers; be aware of their needs and the ways your business can help them to satisfy that need. Examples about Value Proposition creation are available on the Internet, so check them before you create your own. Download the Value Proposition Canvas available at http://bit.ly/29wjpSC and use it to think about the values you can offer to customers (Retrieved, April 21, 2016).

 

 

STUDENT ACTIVITY:

Take a look at the following You Tube video Value Proposition. Also, you can find more videos related videos with this topic if you search on You Tube.

 

STUDENT ASSIGNEMNT:

Think about specific Value Proposition you will offer to the world and write it down as a preparation for your final assignment. Discuss it with your teachers, colleagues, friends, potential users and family about the strategy and try to use feedback you get for improvements.

 

ASSIGNMENT 3!!! Write it down, as a short explanation, no more than 250 words and submit it as your 3^rd assignment.

 

 

4.      Distribution Channels

 

Selection of a way or ways how companies product or services will meet customers is highly dependent of the product/services characteristic, depends on it what company selling to them, what problem or need products and services will resolve. And even if new company is selling the same product as other do, company’s distribution strategy can be different. Just remember for example Amazon when they started selling books on Internet, while all other sellers do that in store, or Dell, they do the same with computers.

 

Your distribution strategy is also dependent of strategic positioning and pricing of your products (see Marketing part of this course), keep in mind that you cannot sell the same product in hypermarkets and exclusive stores at the same time.

 

STUDENT ACTIVITY

Watch the following You Tube video on Business Model Canvas Distribution Channels. Also, you can find more videos related with this topic if you search on You Tube.

 

STUDENT ASSIGNEMNT:

Think about specific Distribution Channels you will have and write it down as a preparation for your final assignment. Discuss it with your teachers, colleagues, friends, potential users and family about the strategy and try to use feedback you get for improvements.

 

ASSIGNMENT 4!!! Write it down, as a short explanation, no more than 500 words and submit it as your 4^th assignment.

 

 

5.      Customer Relationships

 

Customers are the main reason why any business exist, kings and queens of your business, without them you will never reach your business goals. So be aware that establishing and maintaining of your customer relations is key success factor for any business you plan to have. At the beginning it is hard for you to have professional Customer relationships department but anyway, you need to find a way how to please them. It is usual that the owner or key management person is in contact with the customers, for many reasons:

 

• get to know early adopters and get to know their needs,
• see the problems first
• get information about the possibilities for improvement (especially take care about your beta users)
• survey customers all the way
• try to answer to all complains
• resolve problems as soon as possible
• take care about post sale service
• take care about possible complains
• listen to the customers feedback
• establish customer data base.

 

STUDENT ASSIGNEMNT:

Read some related scientific articles about the Customer Relationship Management for better understanding of the field. Suggestion: Chen and Popovich (2003): Understanding customer relationship management (CRM) People, process and technology Business Process Management Journal, 9(5), pp. 672-688. (Retrieved, April 21, 2016 from: http://bit.ly/29zC1VN)

Think about Customer relationship model you will employ/use for your business and write it down as a preparation for your final assignment. Discuss the strategy with your professors, colleagues, friends, users, other entrepreneurs and family and try to use their feedback to improve your customer care strategy.

 

ASSIGNMENT 5!!! Explain the Customer relationship model you will use using no more than 500 words and submit it as your 5th assignment.

 

6.      Revenue Streams

 

It is usual that you have one ‘core’ business and you make revenue from it. But, it is possible to see many startups with excellent ideas, but without idea how to make money from that idea or project.

 

Explore your idea deeply, clarify how other similar businesses make revenue and try to apply the best way of revenue stream on your business, if you see more possibilities, improvements or innovative ways to earn money for your company simply go ahead and implement it

 

It is possible to generate revenue from other activities than is companies ‘core’ business, for example if the company have more capacity for something than they are able to use, explore the opportunity for producing products/services for others and make money from it. Or if the company have extra office space/any other resources it is possible to rent it, make some extra money from it, and even enjoy to work in kind of ‘co-working’ space, what can be even advantage, and chance for future development and cooperation. One of the possibilities is in renting of rent a specific part of your equipment sometimes. In revenue generation you can be creative as much as it is possible since it is legal. It is important to clarify this, otherwise your idea could be excellent, but if nobody wants to pay for it that will not work in practice.

 

STUDENT ASSIGNEMNT:

Research different companies and try to find out how they make money. Find similarities with your business, think about the possibility to use the explored revenue models for your business.

 

Think about Revenue Streams model you will use for your business and write about it down as a preparation for your final assignment. Discuss possible revenue sources with your professors, colleagues, friends, family and other entrepreneurs and try to use the feedback you get to improve your revenue stream model.

 

ASSIGNMENT 6!!![1] Explain the Revenue streams model using no more than 500 words and submit it as your 6^th assignment.

[1] Don’t be afraid if you change it as you progress through the course as all the changes will be updated when you submit your final assignment.

 

 

7.      Key Resources

 

Resources you will need for starting and doing your business are strongly correlated with company’s specific business, and on the early beginning it is more than important to be very rationale with resources you will employed. Sometimes it is possible to organize business in different ways, to rent or outsources some relevant resources while you will not be able to have it.

 

STUDENT ASSIGNEMNT:

Think about Key Resources you need to have for your business and write it down as a preparation for your final assignment.

 

Discuss it with your teachers, colleagues, friends and family about the strategy and try to use feedback you get for improvement of key resources model you will employed.

 

ASSIGNMENT 7!!! Write it down, as a short explanation, no more than 250 words and submit it as your 7^th assignment.

 

 

8.      Key Activities

Key activities are strongly connected with companies ‘core’ business, think deliberately about what activities company need to perform with the aim to deliver product/services, moreover, what activities are important for delivering of value propositions you promise to your customer segment.

 

STUDENT ASSIGNEMNT:

Think about Key Activities you will performing for your business and write it down as a preparation for your final assignment. Discuss it with your teachers, colleagues, friends and family about the strategy and try to use feedback you get for improvement of key activities you planed to perform in your business model.

 

ASSIGNMENT 8!!! Explain the Key Activities of your business using no more than 300 words and submit it as your 8^th assignment.

 

 

9.      Key Partnership

As it is everything mentioned before, key partnerships are strongly connected with companies ‘core’ business. Deliberately think about partnership you need to make with the aim to enrich your business and values for customers. Some partnership may make your value propositions much better for the customers.

 

Young companies are not always able to offer all by themselves, so some partnerships are results of necessity, while others are make intentionally. Be aware that most of the companies around the globe offer to the world some product/services from its ‘core’ business and the rest of the accompanied services is result of different partnerships from others, with the aim to use economy of scale from ‘core’ business. Think about companies ‘core’ business and activities, and clarify what part of it will be performed as the companies ‘core’ business and activities, and what will be rent, outsourced etc. through the partnerships.

 

STUDENT ASSIGNEMNT:

Think about Key Partnership you need to make for your business and write it down as a preparation for your final assignment.

 

Discuss it with your professors, colleagues, friends, other entrepreneurs and family about the strategy and try to use feedback you get for improvement of key partnership you planed to make in your business model.

 

ASSIGNMENT 9!!! Explain the Key Partnership you need to make using no more than 300 words and submit it as your 9^th assignment.

 

 

10. Cost Structures

 

As it was discussed before every company has its activity and those activities, offices, machines, software, licenses, employees, production (of product or services), distribution, promotion, partnerships etc. influenced cost structure of the company. So it is more than important to think about: what costs will company have, cost timeline (when they need to be paid). Cost structure is a kind of reality check for the business, if the costs projection showed higher costs than it is possible to make revenues it is the alarm that company need to rethink about the way they planned to conduct business, try to find alternatives for cost reduction or ways to increase revenue.

 

STUDENT ASSIGNEMNT:

Think about Cost Structures you will have in your business and write it down as a preparation for your final assignment. Compare planned cost structure with planned Revenue Stream.

 

Discuss it with your teachers, colleagues, friends and family about the strategy and try to use feedback you get for improvement of cost structure you planed to make in your business model.

 

ASSIGNMENT 10!!! Explain the Cost Structure of your business using no more than 250 words and submit it as your 10^th assignment.