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Monday, August 18, 2014

Intel Rock Star 0-18

Best Buy Case Study 08-18


Best Buy Case Study

The Challenge of Change

Typically companies devote the majority of their resources to optimizing current business models especially by applying and improving incrementally on existing capabilities. This is because business models are ultimately based on a common understanding among individuals—company managers, employees and investors—of what business they are in and how they create value. Shifting these mental models to evolve business models remains a powerful barrier to innovation.

But, just because business model innovation requires a mental leap and requires potentially painful shifts within a company doesn’t mean it isn’t possible or necessary. In fact, when it comes to survival, some established companies will shift their models, and will do so quickly.

In 2012, the world’s largest electronics retailer, Best Buy, announced that it would begin a transition to a new model, initially requiring the elimination of 50 stores, the creation of 100 new smaller stores, and a focus on mobile device sales. The business model shift, from big-box retail to “Connected Stores,” was precipitated by swiftly declining sales and competition from online retailers. The experiment with smaller, more mobile-focused stores began immediately and was brought online in a span of only 18 months. Whether Best Buy’s experiment is a commercial success or not, its effort is evidence of how quickly a company can shift market position and approach when conditions require it.

Sunday, August 17, 2014

9 Blocks of the Business Model Video 08-18

Revenue Stream 08-18




Revenue Stream

      The cash a company generates from each customer segment
      For which value is each customer segment truly willing to pay?
      Revenue streams for different segments may have different pricing mechanism
     Fixed price list
     Bargaining
     Auction
     Market dependant
     Volume dependant
     Yield dependant on inventory
      For what do customers currently pay?
      How are customers currently paying?
      How would they prefer to pay?
      How much does each customer revenue stream contribute to overall revenues?
Ways to generate Revenue Streams:
     Asset Sale: Selling ownership rights of products
     Usage fees: phone services, hotels
     Subscription fees: Access to service, annual fees, gyms, mobile..
     Lending/renting/leasing: Temporary rights to use
     Licensing: Permission to use protected intellectual property in exchange for licensing fees

Key Partnerships 08-18




Key Partnerships

      Network of suppliers and partners that make business model works

      Partnerships and alliances are made to:

     Optimize business model

     Reduce risk and uncertainty

     Acquire resources

      Types of partnerships:

     Strategic alliance between none competitors

     Coopetition: Strategic partnership between competitors

     Joint-Venture: Develop new business

     Buyer-supplier relationships to assure reliable supplies

      Who are our key partners?

      Who are our key suppliers?

      Which key resources are we acquiring from partners?

      Which key activities do partners perform?


Please read the main article about innovative business Models  Here


Customer Segment 08-18




Customer Segment

      Defines the different groups of people that company aims to reach and serve

      Without profitable customers NO company can survive

      Distinct segment = Common needs = Common behavior = Better service

      The question is WHICH segment to serve and which to ignore???

      Customer groups represents different segments, if their needs require and justify distinctive offers

      They are reached through different channels

      They require different kind of relationships

      They have substantially different profitability

      They are willing to pay for different aspects of the offer
       
      Types of segments:


o   Mass Market: FMCG, B2C

o   Niche Market: B2B, specific requirements

o   Segmented Market: By size or industry

o   Diversified Market: Diversified customer business model

o   Multi-Sided Platform: Credit cards companies

Please read the main article about innovative business Models  Here

Cost Structure 08-18




Cost Structure


      Describes all costs incurred to operate a business model

      Can be easily calculated after defining

     Key activities

     Key resources

     Key partnerships

      What are the most important costs inherent in our business?

      Which key resource are most expensive?

      Which key activities are most expensive?

      Is our business model Cost Driven .vs. Value Driven?

      Cost driven business model

     Focus on minimizing cost

     Use low price value proposition

     Maximum automation

     Extensive outsourcing

      Value driven business model

     Focus on value creation

     Premium value proposition

     High degree of personalized services

      Cost structures can have the following characteristics:

     Fixed cost: Constant cost despite volume of production

     Variable cost: Proportional cost with output volumes

     Economies of scale: Cost advantages as output expands and average cost per unit drops

     Economies of scope: Cost advantages due to large scope


Please read the main article about innovative business Models  Here