The evolution of Business Plans: Business Model Canvas (BMC)

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3 The evolution of Business Plans: Business Model Canvas (BMC)

4 Presentation Difference between a Business Plan and Business Model Canvas Introduction to Business Models Value Creation Business Model Canvas

5 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.

6 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

7 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.

8 Value Creation What is value? Value creation?

9 Value Created Through Newness Performance Customization Price Cost Reduction Risk Reduction Getting the job done Design Brand/Status Accessibility Convenience Usability

10 Customer Value

11 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 Products Personal Service Sense of Community Organization Loyalty Customer Feedback Revenue

12 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

13 Business Model Canvas Explained Source: Osterwalder, A., & Pigneur, Y. (2010). Business model generation: a handbook for visionaries, game changers, and challengers. John Wiley & Sons.

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15 Customer Segments (different group of people or organizations an enterprise aims to reach and serve)

16 Customer Types Segments defined by: Customer needs Reach Relationships Profitability Willingness to pay

17 BMC Value Proposition (bundle of products and services that creates value)

18 BMC Channels (how customer communicates with and reaches its customer segments to deliver value proposition)

19 BMC Channels (how customer communicates with and reaches its customer segments to deliver value proposition) AIM: to make this as smooth as possible

20 Channel Phases Direct (e.g. Sales Force, Web Sales) Indirect (Own Store/Franchising, Partner Stores Wholesaler) Channel phases - Awareness - Evaluation - Purchase - Delivery - After sales

21 Customer Relationships (Type of relationship a company establishes with specific customer segments

22 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. Co-Creation (e.g. Youtube. com)

23 Revenue Streams (Cash a company generates from each customer segment (transaction vs. recurring revenue)

24 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)

25 Internal BMC Canvas elements

26 Key Resources (The most important assets required to make a business model work)

27 Resource Types Human Capital Social Capital Intellectual Capital Physical Finance

28 Key Activities (The most important things a company must do to make its business model work)

29 Key Business Activities Production Problem Solving Platform/network e.g. Eharmony

30 Key Partners (network of partners or suppliers that make the business model work)

31 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

32 Cost Structure (cost incurred in operating a business model)