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• Business model


  A firm's plan for how it creates, delivers, and captures value for its stakeholders
• The proper time to develop a business model is following the feasibility analysis stage and prior to fleshing out the operational details of the company
• A firm's business model is integral to its ability to succeed both in the short and long term
• General categories of business models

  • Standard business models
  • Disruptive business models
• Standard business models


  • Depict existing plans or recipes firms can use to determine how they will create, deliver, and capture value
• Disruptive business models


  • Rare, do not fit the profile of a standard business model, impactful enough that they disrupt or change the way business is conducted in an industry or an important niche within an industry
• Disruptive business models


  • Direct-to-consumer computer sales
  • Online text ads on search engines
  • Software as a service (SaaS)
  • Cloud-based service to connect riders and people willing to provide rides
• Business model innovation


  The art of enhancing advantage and value creation by making simultaneous—and mutually supportive—changes both to an organization's value proposition to customers and to its underlying operating model
• Value chain


  The process view of organizations, the idea of seeing a manufacturing (or service) organization as a system, made up of subsystems each with inputs, transformation processes and outputs
• Primary activities in Porter's value chain framework

  • Inbound logistics
  • Operations
  • Outbound logistics
  • Marketing and sales
  • Service
• Industry value chain


  A physical representation of the various processes involved in producing goods (and services), starting with raw materials and ending with the delivered product (also known as the supply chain)
• Business concept blind spot

  An overly narrow focus that prevents a firm from seeing an opportunity that might fit its business model
• Three business concept blind spots

  • How we pick new ideas to invest in
  • Where we invest in new ideas
  • Why we invest in new ideas
• Barringer/Ireland business model template


  A visual framework or template that lays out the common set of attributes of a successful business model
• Core strategy


  • Describes how the firm plans to compete relative to its competitors, includes business mission, basis of differentiation, target market, and product/market scope
• Business mission


  Describes why the business exists and what its business model is supposed to accomplish
• Basis of differentiation


  The points that differentiate the firm's product or service from competitors
• Barringer/Ireland Business Model Template


  A framework for describing the key elements of a business model
• Components of the business model template

  • Core Strategy
  • Resources
  • Financials
  • Operations
• Core Strategy


  How the firm plans to compete relative to its competitors
• Business Mission


  • If carefully written and used properly, it can articulate a business's overarching priorities and act as its financial and moral compass
  • A well-written mission statement is something that a business can continually refer back to as it makes important decisions in other elements of its business model
• Basis of Differentiation


  The points that differentiate a product or service from competitors, which causes consumers to pick one company's products over another's
• It is best to limit a company's basis of differentiation to two to three key points
• Make sure that your points of differentiation refer to benefits rather than features
• Target Market


  A segment within a larger market that represents a narrow group of customers with similar interests
• Product/Market Scope


  The products and markets on which a company will concentrate, usually starting with a narrow scope and expanding over time
• Core Competencies


  Specific factors or capabilities that support a firm's business model and set it apart from rivals, such as technical know-how, efficient processes, trusting customer relationships, or expertise in product design
• Resources


  The inputs a firm uses to produce, sell, distribute, and service a product or service
• Key Assets


  The assets that enable a firm's business model to work, including physical, financial, intellectual, and human assets
• Types of Key Assets

  • Physical assets (e.g. physical space, equipment, vehicles, distribution networks)
  • Intellectual assets (e.g. patents, trademarks, copyrights, trade secrets, brand, reputation)
  • Financial assets (e.g. cash, lines of credit, investor commitments)
  • Human assets (e.g. founders, key employees, advisors)
• Financials


  The component of a business model that describes how the firm earns money
• Revenue Streams


  The ways in which a firm makes money, which can include a single stream or multiple streams
• Cost Structure


  The most important costs incurred to support a business model, including whether the business is cost-driven or value-driven, the nature of the costs, and the major cost categories
• Financing/Funding


  The amount of funding needed to bring a business model to life, which can come from personal resources, profits, or external sources
• Operations


  The day-to-day activities and processes that support a firm's business model
• Product (or Service) Production

  How a firm's products and/or services are produced, whether in-house, by a contract manufacturer, or via an outsource provider
• Supply-chain Channels


  How a firm delivers its product or service to customers, either directly, through intermediaries, or a combination
• Key Partners


  The important roles that external partners play in supporting a firm's business model
• The business model canvas is a strategic planning tool used by managers to illustrate and develop their business model
• Elements of the business model canvas

  • Value Propositions
  • Customer Segments
  • Key Activities
  • Key Partners
  • Channels
  • Revenue Streams
  • Cost Structure
  • Key Resources
  • Customer Relationships