Business model/Modelo de negocios
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How to define a business model (canvas)
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Business model/Modelo de negocios
- 1. Business Model Presentado por: Marcus A. Sullivan, MBA, CVA Sullivan Consulting, Inc
- 2. What is a Business Model ? Defines exactly what the company does and how it makes money. Reflects the company’s plan about what customers need and want and how much are they willing and able to pay. Identifies and targets market segments. Presents how the company engages and reaches out to potential clients. Finds key resources, activities and partners. It is part of the strategy and represents the core business functions. © 2013 Sullivan Consulting, Inc.
- 3. Why have a Business Model ? Serves as a platform to execute business strategies in an integrated, cost-effective and orchestrated way. Integrates strategy, operations and finance. Helps entrepreneurs optimize the way a business operates and how it adds value. Demonstrates how a company generates revenues, manages costs and turns sales into profits. Connects the value proposition with the action plan. © 2013 Sullivan Consulting, Inc.
- 4. How to Create a Business Model? A business model can be created by answering the following questions: What is the value proposition? Why should customers buy from us? What pains are we solving? Who are our customers? What are their needs? What is the best method to reach and maintain strong relationships with our customers, will it be cost effective? What key resources and activities will be required to sustain our value proposition? What are the expected revenues, costs and profits? © 2013 Sullivan Consulting, Inc.
- 5. Building a Business Model The Canvas business model is the most commonly used method. It is composed of 9 key building blocks: Value Proposition Customer Segments Customer Relationships Distribution Channels Revenue Streams Cost Structures Key Activities Key Resources Strategic Partners © 2013 Sullivan Consulting, Inc.
- 6. Business Model Canvas Key Partners Key Activities Manufacturers Suppliers Wholesalers Sales rep Vendors Presentations Meetings Phone Calls Emails Recruiting Acquisitions Key Resources Employees Investors Accountants Banks Suppliers Cost Structure Fixed Costs Overhead Costs Variable Costs Direct/Indirect Costs Value Proposition Customer Relationships Price Service Brand Status Customization Innovation Accessibility Usability Personalized Service Self-Service Customized Service Automated Service Channels Internet Advertising Collaborators Social Media Revenue Streams Commissions Contracts Sales © 2013 Sullivan Consulting, Inc. Customer Segments Hospitals Government PYMES Not-for-profit
- 7. Business Model Canvas Key Partners Manufacturers Suppliers Wholesalers Sales rep Vendors Key Activities Training Meetings Phone Calls Emails Recruiting Acquisitions How? Value Proposition Customer Relationships Price Service Brand Status Customization Innovation Accessibility Usability Personalized Service Self-Service Customized Service Automated Service What? Cost Structure Fixed Costs Overhead Costs Computer Software Advertising Hospitals Government Logisticians IT Companies Who? Key Resources Channels Investors Accountants Banks Suppliers Customer Segments Internet Advertising Television Social Networks Revenue Streams Commissions $$$ Contracts Sales © 2013 Sullivan Consulting, Inc.
- 8. Value Proposition What value do we offer our customers? Price Service Quality Branding Customization Innovation How does our value proposition stand out from competitors, is it hard to imitate? Are customers satisfied with the product/service, is it meeting expectations? How can we tailor the product/service to meet our customer’s needs? © 2013 Sullivan Consulting, Inc.
- 9. Differentiation in Value Proposition Differentiation from competitors is crucial to build and maintain a competitive position Business models are useless if they are easy to copy by competitors and the customer does not recognize the value proposition A differentiation strategy protects a company’s future and growth opportunities Value differentiation strategy involves all of the variables that affect the how, what and who in the business model © 2013 Sullivan Consulting, Inc.
- 10. Customer Segment Who are our customers? Business Consumer Government Not-for profit Academic What are their needs, demands and behavior as consumers? What motivates them to buy? How much are they willing to spend? What alternatives do they have? © 2013 Sullivan Consulting, Inc.
- 11. Customer Relationships What relationships with customers will achieve the highest perceived value? Personalized service Fast service High-quality service Automated service Innovative service What type of relationships do customers expect to have? What type of relationships better fit our customers needs as well as our business model? © 2013 Sullivan Consulting, Inc.
- 12. Distribution Channels What channels can we use to better reach our customers? Internet Direct Brokers Social Media How can we make our product/services more accessible to customers? What channels are the most effective? Which is the most efficient way? © 2013 Sullivan Consulting, Inc.
- 13. How can we Generate Value? Value The Customer Value Value Proposition Target Market (highly specialized) Customer Relationships (Trust and loyalty) © 2013 Sullivan Consulting, Inc. Distribution Channels (access and fast response)
- 14. Key Resources What key resources are involved in the value proposition? Company assets (equipment, machinery) Intellectual (technology, R&D) Human (employees, advisors, investors) Financial (capital) What resources are critical to sustain the value proposition? How can we improve performance? What additional resources do we need to add value? Are these justifiable (ROI)? © 2013 Sullivan Consulting, Inc.
- 15. Key Activities What activities sustain our value proposition? Management Operations Sales and marketing Training Innovation (technology, R&D) How efficient are the activities, can we eliminate, reduce or add new activities? What activities differentiate us from our competitors? How can we improve activities to deliver more value to our customers? © 2013 Sullivan Consulting, Inc.
- 16. Key Partners Who are our partners and collaborators ? Advisors and consultants Investors Suppliers Distributors Advertising agencies What key activities, services and resources do our key partners provide us with? Which partnerships and strategic alliances can be established and add the most value? Can we leverage on key partners to improve our competitive positioning? © 2013 Sullivan Consulting, Inc.
- 17. Revenue Streams How are we generating revenue? Direct sales transactions Brokerage fees Licensing fees Franchising fees Freemium How much are customers willing to pay? How sustainable and profitable are we? How are competitors generating revenues? How do they prefer to pay? © 2013 Sullivan Consulting, Inc.
- 18. Cost Structure What cost are involved in delivering value to customers? Fixed cost COGS Operating costs Financing Commissions What activities/resources are the most expensive and can they be reduced? How competitive are we? How are costs compared to our competitors’? © 2013 Sullivan Consulting, Inc.
- 19. Value through Differentiation Innovation - developed the world’s largest search engine using keywords and links arranging information to users based on degree of relevance. Accessibility - provides users with free internet applications and tools such as, Google Earth, Maps, Books, Gmail Google Chrome and Desktop Search. Usability - to create a revenue model by using targeted adds that don’t interfere with the web-search experience. © 2013 Sullivan Consulting, Inc.
- 20. Value through Differentiation Design – simple, versatile, clean, interactive easy to use, and fun Innovation – Mac OS and software’s, Mac laptops, IPod, IPhone, tablets, App Store, ITunes Brand/status – managed to stay on top of current trends Price – focus on a low-price model Cost reduction – create value using a reduced cost structure. Accessibility – high performance and punctuality to maximize flight rotation Usability – crowded airplanes to increase profitability © 2013 Sullivan Consulting, Inc.
- 21. Value through Differentiation Customize Service – name your own price option for customers providing them trade-off opportunities Self Service – internet based travel booking agency Optimizing Channels – puts mayor travel suppliers in contact with customers Self Service – e-commerce, Internet, fulfillment and logistics platform Optimizing Channels – direct to customer online model offering over 40 categories of merchandise © 2013 Sullivan Consulting, Inc.
- 22. Value through Differentiation Accessibility – positioned strategically with great variety Low-cost model – cut down on company costs to deliver competitive low prices Accessibility – free social media interactive platform Customization – able to create your own personal profile Usability – excellent advertising and marketing tool for business owners and entrepreneurs © 2013 Sullivan Consulting, Inc.
- 23. Canvas Business Model © 2013 Sullivan Consulting, Inc.
- 24. Summary A business model is an essential tool that defines how a company delivers value to its customers and generates profits The business model canvas is a useful method which helps understand , create and manage a sustainable business model Value differentiation is an important factor to give your model a competitive edge All segments in the business model must interrelate in order to generate value to its customers © 2013 Sullivan Consulting, Inc.
- 25. Marcus A. Sullivan, MBA, CVA Sullivan Consulting, Inc. Centro Internacional de Mercadeo Torre II, Suite 402 Guaynabo, PR 00968 787.708.6800 www.sullivanconsultingpr.com © 2013 Sullivan Consulting, Inc.