Business Model

Business Model

A Business Model describes how your organization creates, deliver and capture value. The Financial Times recently highlighted the importance of value: “the business model concentrates on value creation. It describes a company’s core strategy to generate economic value […] and provides the basic template on how the firm is going to make money.”

Having a clearly defined business model is important because it does the following:

- Serves as an ongoing extension of feasibility analysis. A business model continually askes the question, “Does this business make sense?”

- Describes why the network of participants needed to make a business idea viable, are willing to work together

- Articulates the company’s core logic to all stakeholders, including all employees.

The business model design is built around 9 building blocks or key frameworks which each have to be considered in turn for the ultimate design:

1. Customer Value Proposition (CVP)

- The value proposition building-block describes the bundle of products and services that create value for a specific Customer Segment. Important questions include: What value do we deliver to the customer? Which one of our customer’s problems are we helping to solve? Which customer needs are we satisfying? What bundles of products and services are we offering to each Customer Segment?

a. What are the Characteristics of an effective business model?

A business model describes how your organisation creates, delivers and captures value. In a recent Financial Times article, the importance of value was highlighted: “the business model concentrates on value creation. It describes a company’s core strategy to generate economic value and provides the basic template on how the firm is going to make money.” Having a clearly defined business model is also important for a number of reasons. The business model serves as an ongoing feasibility study, continually asking the question of “does this business make sense?” It also describes why the networks of participants who are needed to make the idea a viable one are willing to work together for a common objective. The business model also