A Business Model is… Simply a description or an account or a conceptual plan… PowerPoint Presentation
…of how a business will make a . profit. Some Business Model. Simple purchase. Subscription. Cable TV, Cellular phone plans, The Economist, The F.T.. Pay-as-you-go. Cellular phones, utilities. Razorblade. ID: 679759Embed code:
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Presentations text content in A Business Model is… Simply a description or an account or a conceptual plan…
A Business Model is…
Simply a description or an account or a conceptual plan…
…of how a business will make a
Some Business Model
Cable TV, Cellular phone plans, The Economist, The F.T.
Pay-as-you-goCellular phones, utilitiesRazorbladeRazors, inkjet printers, video gamesFremiumVMware, Sketchup, New Yorker, Boston GlobeWholesale
Microsoft, IBM, AT&T Comcast,Slide4
Sell razors ‘cheaply’ (below cost)
Create a ‘locked in’ customer base
Sell blades well above costSame model used by ink jet printer firmsKeurig coffee makerVideo game makers
Used by Amazon…
potential customer baseEfficient fulfillmentHigh volume bargaining power, low delivery and product costsExploiting the “long tail”‘go-to’ site -> customer baseVirtuous circleSlide6
Amazon’s Evolving Business Model
Diversification into related
into a generalized marketplaceMaking a marketProviding a platform for small sellersFire PhoneAmazon PrimeDevelopment of core competence inDistribution and fulfillmentIT
Spillover – Amazon Web ServicesSlide7
Auctions that don’t end
Very small price to bid
Revenue to ‘subsidize’ low purchase price from multiple non-winning bidders
Potentially low purchase price attracts lots of biddersSlide8
Bid for defense contract
Government finds prototype development
Use government R&D funding to develop new technology
Deploy new technology in other (civilian) business operationsSlide9
Every member of the marketing sales force
Buys product from the company
Keeps any profit from sales of product
Recruits othersGets a proportion of all revenues of people they recruitSometimes referred to as pyramid marketingSlide10
Bait and Switch
Offer small numbers of high value at low price
This will be sold at a loss
Once potential purchaser is in the store offer them something else
This will be sold at a profit to cover the ‘loss-leader’Slide11
Sell some big items at cost
Sell many smaller items at sizable markup
Advertise / market to create impression of discounterRandomly increase prices on certain goodsSlide12
Google’s Business Model
Initially just another search engine, (albeit a very good one).
Gradually beat out earlier rivals (Yahoo, Lycos, Excite,
, AltaVistsa, and AskJeeves)How to make money from search?Subscription, user fee?Search Top billingResult Click ThroughSlide13
Companies without viable Business Models
AskJeeves,TwitterWebVanPets.comUSX, Bethlehem SteelBear Sterns, Lehman Brothers, Merrill LynchIBM? Microsoft?
Lots of new business models have been made possible by the Internet
Amazon – a refinement of a old model
Google – a completely new business model
Top billingClick through Quibids.comCharging loosing bidders (penny auctions)edX (MOOCs)Slide15
Key elements of a business model
What’s the product or service?
Who will pay for it, why, and how much (the value proposition)?
How much it costs to make or deliver
How much is left (profit)Who are partners, suppliers, competitors, complementorsStructure and processesMarketing DistributionOperating / manufacturingSupply chain
Finance (sources of funds, returns to investors)
A Useful TemplateSlide17
(Level - Pilot)
Business Model –
Miller / Okumoto, Inc.
Client Interface Team
Who are the members?
What skills should they possess?
What level of experience?
Is this a dedicated group?
What skills should they possess?
Party data sources?
Party software products?
Client / Vendor Value Proposition
What is Client economic benefit?
What is Client strategic benefit?
What is Vendor benefit?
Vendor Interface Team
Are all levels represented?
Contact points, times, & events?
Level of satisfaction understood?
Internal support points covered?
Inside “sales team”
Unofficial communication channel
Client Team (labor + Overhead costs)
Solutions Team (labor + Overhead costs)
Outside partner(s) cost
Product development cost
Data base access fee?
Incremental Inquiry fee?
Aid in acquiring Mfg fees
1. Present in a P&L format 2. Contribution rate Objective: e.g. (break-even / slight profit / slight loss) ?
Key Processes – Activities
Account status reporting
Development of Mfg relationship
Relationship at every Client level?
Vertical development process
Other primary processes?Slide18Slide19