Professor : Luis Torras
Head Business Policy Department.
EADA Business School
WHY BUSINESS MODELS MATTER
The mechanism by which a business intends to generate revenue and profits
The unique added-value an organisation offers customers .
How organisations target different customer groups, product markets and geographic markets
Mechanisms to generate revenue (sales, licensing, franchising, leasing)
Proportion of fixed, variable and mixed costs within the organisation
The interlinked set of activities required to design, procure, produce, market and distribute a product or service
Source: Magretta,Joan, 2002
Who is the customer?
What does the customer value?
How do you make money in this business?
New business model serves to:
1.- design a new product for an unmet need ( traveller´s checks)
2.- find a better way of making, selling, distributing an existing product or service (eBay, DELL)
Through variations on the generic value chain
Activities associated with making
Activities associated with selling
The business model consists of a :
A COMPELLING, COHERENT NARRATIVE WITH THE POTENTIAL TO BECOME A PROFITABLE BUSINESS
Failure Narrative Test:
Priceline Webhouse Club
BUSINESS MODEL AND STRATEGY
Planing tool that focusses attention on how all the elements of the system fit into a working unit
Strategy becomes a key element when you run into competition. A successful strategy explains how you do better than your rivals.
Successful business models
are difficult to replicate
They are not the same