2. Business Model
• Business model can make the huge diﬀerence between world-leading success and dismal failure.
• Example: Xerox 914, had a drastic fall as their ﬁrst dry-process, plain-paper copier was six times costly
than price of alternatives.
• This had them big failure.
• With their existing speed and convenience and developing a new business model (they leased it for $95 a
month and few cents per copy for copies in excess of 2000 a month), customers soon were making tens
of thousands of copies in the same period.
• This resulted into huge revenue generator.
3. Business Model Canvas
• To encourage such kind of thinking, “Alexander Osterwalder” developed a Business Model Canvas.
• BMC is a simple graphical template categorising the processes and internal activities of a business
into nine essential categories needed to get a business (or product) successfully to market.
• The categories in a canvas are:
1. Customer segments
2. Value propositions
4. Customer relationships
5. Revenue streams
• These categories represent the four major aspects of a business; customers, oﬀer, infrastructure and ﬁnancial viability.
4. The Nine Categories
1. Value Propositions
• It is the combination of products and services the company provides to its customers.
• Value propositions can be divided into two categories Quantitative and Qualitative.
2. Customer segments
• A company must identify who/which are the customers it tries to serve based on their diﬀerent needs and
• Customers can be segmented Mass Market, Segmented Market, Multi-Sided Market and so.
3. Key Activities
• The steps the team must complete to make it successful.
4. Key Resources
• The resources that are necessary to create value for the customer. These resources could be human, ﬁnancial,
• Identify through which channel you will reach your customers and vice versa?
• Which channels will work best?
• How much do they cost?
5. The Nine Categories
6. Customer Relationships
• Company must select the kind of relationship it will have with its customer segment.
• Customer Relationships can be Personal Assistance, Dedicated Personal Assistance, Self-Service,Communities
7. Key Partners
• Key partnerships are the network of suppliers and partners who complement each other in helping the company
create its value proposition.
8. Cost structure
• This deﬁnes the cost of running a business according to a particular model.
• Businesses can either be cost driven i.e. focused on minimizing investment into the business
• Or value driven i.e. focused on providing maximum value to the customer.
9. Revenue Streams
• The way a company follows to make revenue from each customer segment.
• Several ways includes Usage Fee, Subscription Fees, Lending/Leasing/Renting Brokerage Fees, Advertising and
6. The Business Model Canvas
Customer SegmentsValue PropositionsKey ActivitiesKey Partners
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The makers of Business Model Generation and Strategyzer
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What are the most important costs inherent in our business model?
Which Key Resources are most expensive?
Which Key Activities are most expensive?
is your business more
Cost Driven (leanest cost structure, low price value proposition, maximum automation, extensive outsourcing)
Value Driven (focused on value creation, premium value proposition)
Fixed Costs (salaries, rents, utilities)
Economies of scale
Economies of scope
Through which Channels do our Customer Segments
want to be reached?
How are we reaching them now?
How are our Channels integrated?
Which ones work best?
Which ones are most cost-efﬁcient?
How are we integrating them with customer routines?
How do we raise awareness about our company’s products and services?
How do we help customers evaluate our organization’s Value Proposition?
How do we allow customers to purchase speciﬁc products and services?
How do we deliver a Value Proposition to customers?
5. After sales
How do we provide post-purchase customer support?
For what value are our customers really willing to pay?
For what do they currently pay?
How are they currently paying?
How would they prefer to pay?
How much does each Revenue Stream contribute to overall revenues?
For whom are we creating value?
Who are our most important customers?
What type of relationship does each of our
Customer Segments expect us to establish
and maintain with them?
Which ones have we established?
How are they integrated with the rest of our
How costly are they?
Dedicated Personal Assistance
What Key Activities do our Value Propositions require?
Our Distribution Channels?
What Key Resources do our Value Propositions require?
Our Distribution Channels? Customer Relationships?
types of resources
Intellectual (brand patents, copyrights, data)
Who are our Key Partners?
Who are our key suppliers?
Which Key Resources are we acquairing from partners?
Which Key Activities do partners perform?
motivations for partnerships
Optimization and economy
Reduction of risk and uncertainty
Acquisition of particular resources and activities
What value do we deliver to the customer?
Which one of our customer’s problems are we
helping to solve?
What bundles of products and services are we
offering to each Customer Segment?
Which customer needs are we satisfying?
“Getting the Job Done”
Product feature dependent
7. Why use the Business Model Canvas?
• In startup or gaining traction mode, you need real clarity on your business model to make it success.
• Provides a simple, intuitive and ﬂexible tool that can be developed rapidly and applied ongoing to
iterate and refresh the business strategy.
• Provides a neat breakdown of the major considerations impacting the business.
• Gives a clear direction the organization is taking through its business model.
• Evaluate the exact position of where a company is standing.
• Set the target and decide how can we achieve it.
• Choose your competitors, learn about them and map their business models.
• Uncover the vital information about how other successful businesses have created their own spaces in
• Armed with this information, you’ll have deep insight into what customers want and what they are willing
to pay for.
• Then we can map a clear picture of how customers’ needs are met in our company.
9. Success Story
• The biggest Business Model success story is Apple.
• Apple was a game changer when it introduced the iPod to the world.
• Through iTunes, Apple integrated device, software and an online store into an experience that set the music industry
on its ear and that competitors have been hard pressed to match.
• Apple has lasting partnerships through the deals it negotiated with music producers so it could sell their music through