PLUMS

1. CHAPTER 6
A TAXONOMY /CLASSIFICATION OF BUSINESS
MODELS
• Explore 7 major business models
• Analyse the components to know which
business model will succeed
• what about open source?

2. Summary of Business Model
Taxonomy
1. Commission
2. Advertising
3. Mark-up
4. Production
5. Referral
6. Subscription
7. Fee-for-service

3. 1. COMMISSION-BASED
• Fee that is levied/charged on a transaction by
third party
• Rely on commissions as a basis of business
• E.g. buying land through a broker. E*Trade
• eBay, company receive commission based on
amount of sale

6. 2. ADVERTISING-BASED
• The owner of website provides to end users subsidized
or free content, services or even product that attract
end-user visitors
• Refers to advertising as a source of revenue for itself,
charging advertisers fees for banners, permanent
buttons, & pop-up windows
• Yahoo!, Excite@Home & AltaVista
• Yahoo! Starts as search engine became personalized
portal. Hence attract large volume of visitors & user
which will be charge to the advertiser premium price.

10. Top 5 search engine

11. 3. MARKUP-BASED
• Refers to value added in sales than production
• Used by wholesalers & retailers
• Company bought finished goods from
manufacturer & sold them to the public or to
other firm
• Amazon. COM
• Key here is distribution efficiency/marketing
muscle

12. Markup-model example
PRODUCT XBought from
Manufacture
Price RM50
Sold product
To customer
Price RM100
Markup Profit
RM50

13. Amazon comes in.

14. 4. PRODUCTION-BASED
• Manufacturer tries to reach customers or end
user through the Internet
• This can save cost, & serve the customer better
• Hardware & software supplier uses this model

15. Variant of the model
1. Manufacturer-direct- manufacturer sells
directly to end user- DELL
2. Content producer- firms produce
entertainment, information, art & sell to
customer-SONY
3. E-Procurement-companies tender & procure
goods & services over the Web-FORD

16. 5. REFERRAL-BASED
• Firms rely on fees steering visitors to another
company
• A percentage of revenue of the eventual sale but
can also be a flat fee, fees collected if order been
made- ‘PORN’ sites
• ‘Affiliate model’
• Lead-generator-company collect data about
customers & uses the data to steer business
towards customers

20. 6. SUBSCRIPTION-BASED
• Company charges a flat rate on a periodic basis
that qualifies user service
• User pays subscription fee whether or not
service is actually used
1. ISP-provides internet access
2. Last-Mile Operator-local loop, local phone
company
3. Content operator-info & entertainment offered to
user-CNN

22. 7. FEE-FOR-SERVICE-BASED
• Firms pay as the service goes, fees charge as the
user used their service
• Pay only for service used
• Customers paying ASP for renting application

24. Variants/alternatives
1. Service provider-makes money by selling services
than products
2. B2B service provider-support business by selling
service to other business
3. Value chain service provider-FEDEX
4. Value chain integrator-exploiting integration create
value chain-EDS
5. Collaboration platform provider
6. ASP
7. Audience broker- collect information on consumers &
uses info to help advertisers (double-click)

25. Which model to use?
Firm should try to understand the strength
of its components of the business model
against its competitors to determine which
business model is viable. (table 6.2 pg 113)
CHAPTER 4
1. PROFIT SITE
2. CUSTOMER VALUE
3. SCOPE
4. PRICE
5. REVENUE SOURCES
6. CONNECTED
ACTIVITIES
7. IMPLEMENTATION
8. CAPABILITIES
9. SUSTAINABILITY
10. COST STRUCTURE