Business Models Session 3 e-Business Strategy

Business Models

Components of a business model
Many different conceptualizations of business models exist. They all have various degrees of resemblance or difference. The model conceptualization describes a business model as consisting of nine related business model building blocks. Thus, a business model describes a company's business:
value propositions: The company's offers which bundle products and services into value for the customer. A value proposition creates utility for the customer.
target customer segments: The customer segments a company wants to offer value to. This describes the groups of people with common characteristics for which the company creates value. The process of defining customer segments is referred to as market segmentation.
distribution channels: The various means of the company to get in touch with its customers. This describes how a company goes to market. It refers to the company's marketing and distribution strategy.
customer relationships: The links a company establishes between itself and its different customer segments. The process of managing customer relationships is referred to as customer relationship management.
value configurations: The configuration of activities and resources.
core capabilities: The capabilities and competencies necessary to execute the company's business model.
partner network: The network of cooperative agreements with other companies necessary to efficiently offer and commercialize value. This describes the company's range of business alliances.
cost structure: The monetary consequences of the means employed in the business model.
revenue model: The way a company makes money through a variety of revenue flows.
These 9 business model building blocks constitute a business model design template which allows companies to describe their business model.
Today, the type of business models might depend on how technology is used. For example, entrepreneurs on the internet have also created entirely new models that depend entirely on existing or emergent technology. Using technology, businesses can reach a large number of customers with minimal costs.

Business Models for Online Business
Specific for Business online, we should consider:
• Core Benefits and Proposition
The core benefit for company and buyers (customers) shall be well defined as company gets benefits for providing service access, information and transaction reversed to buyers to get all those deliveries as required.
• Online Offering
Company should Identify the scope of the offering, Identify the customer decision process and Map the offering to the customer decision process
• Key Resources
Company needs a strong brand name that signals both credibility and trust, reliable technology to facilitate bidding, an active community and strong back-office support.
• Revenue Model
The revenue model may include transactions, product sales and advertising.
• Key Threats
Online business becomes broaden around the world. Innovative value-added services on the part of competitors who offer alternative can easily threaten the profit stream.