Ge Presentation Business Model...

Business Model:
A business model refers to the framework through which a business creates

value, delivers it to customers, and captures value in return, usually in the form
of revenue. It outlines how a company operates, makes money, and sustains
its competitive advantage in the market. Understanding business models is
essential for both entrepreneurs and managers, as it helps in planning, strategy
development, and decision-making.
Why are Business Models Important?
1. Clarity and Focus: A well-defined business model provides clarity on the purpose and operations
of the business. It serves as a roadmap that aligns all aspects of the business towards a common
goal, ensuring that resources and efforts are directed strategically.
2. Strategic Planning: Business models play a crucial role in strategic planning. They enable
businesses to formulate, communicate, and execute effective strategies by providing a clear
understanding of how the company intends to create and capture value in the market.
3. Resource Allocation: By identifying key activities, resources, and partnerships, a business model
facilitates efficient resource allocation. This ensures that the company invests its time, money, and
talent in areas that are essential for its success, minimizing wastage and maximizing impact.
4. Innovation: Business models encourage innovation by fostering a deeper understanding of

customer needs and market dynamics. Companies that continuously innovation their business
models are better positioned to adapt to changing market conditions and stay ahead of the
competition.
Types of Business Models
1. E-commerce Mode or marketplace model: In this model, businesses conduct their operations
online, selling products or services through a digital platform. This can include online retailers,
marketplaces, and direct-to-consumer brands that leverage the internet to reach a global audience.
(e.g., Amazon, Airbnb).
2. Subscription Model: The subscription model involves charging customers a recurring fee for
access to a product or service. This can include subscription boxes, streaming services, and software-
as-a-service (SaaS) businesses, providing a steady and predictable stream of revenue. (e.g., Netflix,
Spotify).
3. Freemium Model: The freemium model offers basic services for free while charging for premium
features. This strategy aims to attract a large user base with free offerings and then monetize a
subset of those users who opt for additional, premium features or services. (e.g., LinkedIn, Zoom).
4. Franchise Model: The franchise model allows individuals or entities to operate under the brand
and business model of the parent company. This can be seen in industries such as fast food, retail,
and services, where franchisees benefit from an established brand and operational framework.
5. B2B (Business-to-Business) Model: In the B2B model, businesses sell products or services to other
businesses. This can involve manufacturers selling to wholesalers, service providers catering to
corporate clients, or technology companies offering solutions for other enterprises.
6. Direct Sales Model: Companies sell directly to consumers without intermediaries.
7. On-Demand Model: Customers can access a service when needed, without long-term
commitments.
Creating Value Propositions
A value proposition is the core of a business model—it defines what makes a product or service
attractive to customers by addressing their needs or solving their problems.
1. Conventional Industry Logic
● Definition: This approach follows established industry standards, focusing on incremental

improvements to existing products or services.
● Characteristics:
o Focuses on competition within the existing market.
o Emphasizes optimizing efficiency and improving features.
o Involves small, evolutionary changes rather than radical innovations.
2. Value Innovation Logic
● Definition: This approach emphasizes creating new value for both the company and its
customers by challenging industry norms. It seeks to redefine the market and create a blue
ocean—In simple terms, a blue ocean is a new market or space where there’s little or no
competition. It’s like finding an area where no one else is doing business yet, so you don’t
have to fight with other companies. Instead of competing with others, you create something
new or different that attracts customers in a unique way. It’s the opposite of a "red ocean,"
where companies are competing heavily for the same customers. In a blue ocean, you’re
free to grow because there’s less or no competition.
● Characteristics:
o Disrupts industry standards and focuses on differentiation and low cost

simultaneously.
o Seeks to eliminate unnecessary features while introducing innovative solutions.

o Aims to create new demand rather than compete for existing market share.
● Example: Apple’s iPhone redefined the smartphone industry by combining features like
touch screens, internet connectivity, and apps, creating a new category of value.
Customer-Focused Innovation
Customer-focused innovation centres on understanding the customer’s needs and pain points to
create products and services that deliver better solutions than competitors. This approach is key in
developing a competitive advantage and ensuring long-term customer satisfaction.
Key Aspects:
1. Customer Insights:
o Gathering deep insights into customer behaviour, preferences, and challenges.
o Tools like surveys, focus groups, and customer interviews help businesses align their
offerings with customer needs.
2. Empathy Mapping:
o A tool used to better understand the customer’s emotional and functional needs by
visualizing their thoughts, feelings, and experiences.
3. Iterative Feedback:
o Using continuous feedback loops to improve products and services. Prototypes, beta
testing, and customer reviews help refine innovations.
4. Co-Creation:
o Engaging customers in the development process to create products that are more
aligned with their needs.
Example :Amazon Prime. Amazon identified a key pain point for customers—long shipping times—
and responded by creating a membership service that offers free, fast delivery, alongside other
benefits like access to streaming services and exclusive deals.
This innovation was directly focused on improving the customer experience, addressing their needs
for convenience and faster service. As a result, Amazon not only enhanced customer satisfaction but
also increased customer loyalty and engagement, driving long-term business growth.

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Business Model:

A business model refers to the framework through which a business creates

Why are Business Models Important?

4. Innovation: Business models encourage innovation by fostering a deeper understanding of

Types of Business Models

6. Direct Sales Model: Companies sell directly to consumers without intermediaries.

Creating Value Propositions

1. Conventional Industry Logic

● Definition: This approach follows established industry standards, focusing on incremental

o Focuses on competition within the existing market.

o Emphasizes optimizing efficiency and improving features.

o Involves small, evolutionary changes rather than radical innovations.

2. Value Innovation Logic

o Disrupts industry standards and focuses on differentiation and low cost

o Seeks to eliminate unnecessary features while introducing innovative solutions.

o Gathering deep insights into customer behaviour, preferences, and challenges.

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