CORE COURSE IN ENTREPRENEURSHIP

BUSINESS AND MANAGEMENT

MODULE

Business Modelling
Week 6. Part 2

Madina Nurguzhina
BUSINESS MODEL GENERATION
 BUSINESS MODEL

STRATEGY? CHANNELS? PROFIT? PRODUCT? TECHNOLOGY? PROCESS?

BUSINESS MODEL is:
• a shared visual language for business people to understand each other
• a tool that helps to generate ideas or trigger new ones
• a powerful visual story to back for your idea and pitch in front of investors
• a powerful enabler of focused discussion about business model elements
and how they fit together
• a technique that makes everyone in an organization understand its
business processes and move in the same strategic direction, and
potentially contribute to its further improvement
NINE BUILDING BLOCKS
BUSINESS MODEL CANVAS
NINE BUILDING BLOCKS
CUSTOMER SEGMENTS (CS)
 CUSTOMER SEGMENTS (CS)

We can put customers into separate segments if:

• Their needs require and justify a distinct offer
• They are reached through different Distribution Channels
• They require different types of relationships
• They have substantially different profitabilities
• They are willing to pay for different aspects of the offer
 CUSTOMER SEGMENTS (CS)
For whom are we creating value?
Who are our most important customers?
• Mass market with focus on one large group of customers
with broadly similar needs and problems
• Niche market when everything is tailored to the specific
requirements of a niche market
• Segmented when an organization serves Customer Segments
with slightly different needs and problems
• Diversified when an organization serves two unrelated Customer
Segments with very different needs and problems
• Multi-sided platforms (or multi-sided markets) when organizations
serve two or more interdependent Customer Segments
 PHOTOMOTO CS

Customer segments •Moms on the maternity

leave

• Moms on the maternity leave

•products
•Families who want to keep
their photo archive in
photobooks

• Families who want to keep their •Gifts to colleagues / friends

photo archive in photobooks

•Gifts to family members

• Gifts to colleagues / friends

• Gifts to family members
•them and discounts to
clients)
•Social networks
(Instagram, Facebook)

Here we are talking about

Niche Market with specific
requirements
VALUE PROPOSITION (VP)

•Moms on the maternity

leave
•Families who want to keep
their photo archive in
photobooks
•Gifts to colleagues / friends
•Gifts to family members
 VALUE PROPOSITION (VP)

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?
• Newness • Price
• Performance • Cost reduction
• Customization • Risk reduction
• “Getting the job done” • Accessibility
• Design • Convenience/usability
• Brand/status
 VALUE PROPOSITION (VP)
How can we deliver Value proposition?
• Newness when satisfy an entirely new set of needs that customers previously
didn’t perceive because there was no similar offering. This is often, but not
always, technology related.
• Performance which is traditional way to create value by improving product or
service performance.
• Customization – when we tailor products and services to the specific needs of
individual customers.
• “Getting the job done” when we add value simply by helping a customer get
certain jobs done.
• Design, Brand/status might add value as well.
• Offering similar value at a lower price, helping customers reduce costs, reduce
risk, making products and services available to customers who previously
lacked access to them, making things more convenient or easier to use
 PHOTOMOTO VP

Value propositions
Experience in using our easy-to-use
online editor, easy-to-navigate and
accessible website, this is
our NEWNESS
• Experience in using our online editor •Moms on the maternity
leave

• We help families to transform electronic •Families who want to keep

their photo archive in

All of us have terabytes of photos on photos that they see very rare to real photobooks

printed photos in photobooks that they

•Gifts to colleagues / friends

their electronic devices and there is •Gifts to family members

always this laziness factor to go and sit can look through every day together
to your computer and find the photos with all the family members Novel and stylish design
you want to look through. We help
those families to transform electronic • We provide unique design
photos that they see very rare to real
printed photos in photobooks that they • We offer prices for different segments Premium vs. Standard
can look through every day together photobooks
with all the family members sharing • You do not need to come to us
nice feelings. This is a good example physically, we work via whatsapp and
of “GETTING THE JOB DONE” mobile connection
• Online payment and delivery
to home
CHANNELS (CH)

•Experience in using our online editor

•We help families to transform
electronic photos that they see very
rare to real printed photos in
photobooks that they can look through
•Moms on the maternity
every day together with all the family leave
members
•We provide unique design •Families who want to keep
•We offer prices for different segments their photo archive in
•You do not need to come to us photobooks
physically, we work via whatsapp and
mobile connection •Gifts to colleagues / friends
•Online payment and delivery to
home •Gifts to family members
 CHANNELS (CH)

By using Channels we can:

• Raise awareness among customers about a company’s
products and services
• Help customers evaluate a company’s Value Proposition
• Allow customers to purchase specific products and services
• Deliver a Value Proposition to customers
• Provide post-purchase customer support
 CHANNELS (CH)

Through which Channels do our Customer Segments want

to be reached?
How are we reaching them now? How are our Channels integrated?
Which ones work best? Which ones are most cost-efficient?
How are we integrating them with customer routines?
• Sales force
• Web sales
• Own stores
• Partner stores
• Wholesaler
 CHANNELS (CH)

in-house sales force or a Web site

retail stores owned or operated

by the organization

wholesale distribution, retail via partners,

or partner-owned Web sites
 CHANNELS (CH)

Owned Channels have higher margins, but can

be costly to put in place and to operate

Partner Channels lead to lower margins, but

allow a company to expand its reach and
benefit from partner strengths
CHANNELS (CH)
PHOTOMOTO CH

Channels •Self-service
•Personal assistance (we talk
with each client) •Moms on the maternity
leave

• Web sales via my website

•Dedicated personal assistance
(our designers help to create
•Families who want to keep
design)
their photo archive in
•CRM system
photobooks

• Partnering with photographs and

•Conducting online workshops
for clients to create different •Gifts to colleagues / friends

mom stores (offering bonuses to

products
•Gifts to family members

them and discounts to clients)

• Social networks (Instagram,
Facebook) •Web sales via my website
•Partnering with
photographs and mom
stores (offering bonuses to
them and discounts to
clients)
•Social networks
(Instagram, Facebook)
 CUSTOMER RELATIONS (CR)

•Experience in using our online editor

•We help families to transform
electronic photos that they see very
rare to real printed photos in
photobooks that they can look through
•Moms on the maternity
every day together with all the family leave
members
•We provide unique design •Families who want to keep
•We offer prices for different segments their photo archive in
•You do not need to come to us photobooks
physically, we work via whatsapp and
mobile connection •Gifts to colleagues / friends
•Online payment and delivery to
home •Gifts to family members

Types of relationships that a company wants to •Web sales via my website

establish with each Customer Segment •Partnering with

photographs and mom
stores (offering bonuses to
them and discounts to
clients)
•Social networks
(Instagram, Facebook)
 CUSTOMER RELATIONS (CR)

Customer relationships may be driven by

the following motivations:
• Customer acquisition
• Customer retention
• Boosting sales (upselling)
 CUSTOMER RELATIONS (CR)

What type of relationship does each of our Customer

Segments expect us to establish and maintain with them?
Which ones have we established? How costly are they?
How are they integrated with the rest of our business model?
• Personal assistance
• Dedicated personal assistance
• Self-service
• Automated services
• Communities
• Co-creation
 CUSTOMER RELATIONS (CR)
• Personal assistance is based on human interaction. The customer can
communicate with a real customer representative to get help during the sales
process or after the purchase is complete
• Dedicated personal assistance involves dedicating a customer representative
specifically to an individual client
• Self-service is when a company maintains no direct relationship with customers.
It provides all the necessary means for customers to help themselves.
• Automated services is a more sophisticated form of customer self-service with
automated processes.
• Communities when companies are utilizing user communities to become more
involved with customers/prospects and to facilitate connections between
community members
• Co-creation when some companies are going beyond the traditional customer-
vendor relationship to co-create value with customers.
PHOTOMOTO CR

Customer
Relationships
•Self-service
•Personal assistance (we talk
with each client) •Moms on the maternity
•Dedicated personal assistance leave
(our designers help to create
•Families who want to keep
design)

• Self-service (clients use online editor)

their photo archive in
•CRM system
photobooks
•Conducting online workshops
for clients to create different •Gifts to colleagues / friends

• Personal assistance (we talk with

products
•Gifts to family members

each client)
• Dedicated personal assistance (our
designers help to create design)
•Web sales via my website
•Partnering with
photographs and mom

• Conducting online workshops for

stores (offering bonuses to
them and discounts to

clients to create different products

clients)
•Social networks
(Instagram, Facebook)
 REVENUE STREAMS (RS)

•Self-service
•Experience in using our online editor
•We help families to transform •Personal assistance (we talk
electronic photos that they see very with each client)
We should answer for what value each
rare to real printed photos in
photobooks that they can look through
every day together with all the family
•Dedicated personal assistance
(our designers help to create
•Moms on the maternity
leave
members
design)
Customer Segment is truly willing to pay to
•We provide unique design
•We offer prices for different segments
•CRM system
•Conducting online workshops
•Families who want to keep
their photo archive in
•You do not need to come to us photobooks
define our Revenue Streams
physically, we work via whatsapp and
mobile connection
•Online payment and delivery to
for clients to create different
products •Gifts to colleagues / friends
home •Gifts to family members

•Web sales via my website

•Partnering with
photographs and mom
stores (offering bonuses to
them and discounts to
clients)
•Social networks
(Instagram, Facebook)

cash a company generates

from each Customer Segment
 REVENUE STREAMS (RS)

Two different types of Revenue Streams:

• Transaction revenues resulting from one-time
customer payments
• Recurring revenues resulting from ongoing paymentsto either
deliver a Value Proposition to customers or provide
post-purchase customer support
 REVENUE STREAMS (RS)
For what value are our customers really willing to pay?
For what do they currently pay? How are they currently
paying? How would they prefer to pay? How much does
each Revenue Stream contribute to overall revenues?
• Asset sales when selling ownership rights to a physical product.
• Usage fees generated by the use of a particular service. The more a
service is used, the more the customer pays.
• Subscription fees by selling continuous access to a service like in a
gym or Netflix
• Lending/Renting/Leasing, Licensing, Brokerage fees and so on.
• Advertising which results from fees for advertising a particular
product, service, or brand
 PHOTOMOTO RS

•Self-service
•Personal assistance (we talk

Revenue Streams
with each client) •Moms on the maternity
•Dedicated personal assistance leave
(our designers help to create
•Families who want to keep
design)
their photo archive in
•CRM system
photobooks
•Conducting online workshops
for clients to create different •Gifts to colleagues / friends

when clients use our • Directly from using our online editor
products
•Gifts to family members

website to create • Also for using designer’s services

photobooks and pay
online •Web sales via my website
•Partnering with

when customer pay for using designer’s services,

photographs and mom
stores (offering bonuses to
them and discounts to
when they do not want to create designs
clients)
•Social networks

themselves because they do not find time or they

(Instagram, Facebook)

are afraid of using online services and even of

•Directly from using our
online editor
making online payments. So for them it is easier to
•Also for using designer’s
services
make additional payments for the designer’s
services than to go online
KEY RESOURCES (KR)

•Self-service
•Experience in using our online editor
•We help families to transform •Personal assistance (we talk
electronic photos that they see very with each client)
rare to real printed photos in
photobooks that they can look through •Dedicated personal assistance •Moms on the maternity
every day together with all the family (our designers help to create leave
members
design)
•We provide unique design •Families who want to keep
•CRM system
•We offer prices for different segments their photo archive in
•Conducting online workshops
•You do not need to come to us photobooks
physically, we work via whatsapp and for clients to create different
mobile connection products •Gifts to colleagues / friends
•Online payment and delivery to
home •Gifts to family members

the most important assets required

to create, offer and deliver a Value
Proposition, reach markets, maintain
•Web sales via my website

relationships with Customer Segments,

•Partnering with
photographs and mom
stores (offering bonuses to
and earn revenues
them and discounts to
clients)
•Social networks
(Instagram, Facebook)

•Directly from using our

online editor
•Also for using designer’s
services
 KEY RESOURCES (KR)
What Key Resources do our Value Propositions
require? Our Distribution Channels? Customer
Relationships? Revenue Streams?
• Physical assets such as manufacturing facilities, buildings, vehicles,
machines, systems, point-of-sales systems, and distribution networks
• Intellectual resources such as brands, proprietary knowledge, patents
and copyrights, partnerships, and customer databases are increasingly
important components of a strong business model
• Every enterprise requires human resources, but people are particularly
prominent in certain business models
• Financial resources and/or financial guarantees, such as cash, lines of
credit, or a stock option pool for hiring key employees
PHOTOMOTO KR

Key Resources •Self-service

•Personal assistance (we talk
with each client) •Moms on the maternity

• Online platform •Dedicated personal assistance

(our designers help to create
leave
•Families who want to keep
design)
their photo archive in

• Data base of clients

•CRM system
photobooks
•Conducting online workshops
for clients to create different •Gifts to colleagues / friends
products
•Gifts to family members

• Partners: printshops and delivery

companies
• Team of designers
•Web sales via my website

• Marketing and sales team

•Partnering with
photographs and mom
stores (offering bonuses to

• IT team for technical support

them and discounts to
clients)
•Social networks
(Instagram, Facebook)

•Directly from using our

online editor
•Also for using designer’s
services
 KEY ACTIVITIES (KA)

the most important activities a company must

•Self-service
•Experience in using our online editor

do to create and offer a Value Proposition,

•We help families to transform
electronic photos that they see very
rare to real printed photos in
•Personal assistance (we talk
with each client)
•Moms on the maternity
photobooks that they can look through •Dedicated personal assistance

members reach markets, maintain Customer

every day together with all the family

•We provide unique design

(our designers help to create
design)
leave
•Families who want to keep
•CRM system
•We offer prices for different segments their photo archive in
Relationships, and earn revenues
•You do not need to come to us
physically, we work via whatsapp and
•Conducting online workshops
for clients to create different
photobooks
mobile connection products •Gifts to colleagues / friends
•Online payment and delivery to
home •Gifts to family members

•Online platform •Web sales via my website

For example, for software maker Microsoft, Key Activities include software development.
•Data base of clients
•Partners: printshops and
•Partnering with
photographs and mom
delivery companies stores (offering bonuses to
•Team of designers them and discounts to
clients)
•Marketing and sales team
For PC manufacturer Dell, Key Activities include supply chain management.
•IT team for technical
•Social networks
(Instagram, Facebook)
support

•Directly from using our

For consultancy McKinsey, Key Activities include problem solving. online editor
•Also for using designer’s
services
 KEY ACTIVITIES (KA)

What Key Activities do our Value Propositions require?

Our Distribution Channels? Customer Relationships?
Revenue streams?
• Production these activities relate to designing, making, and delivering
a product in substantial quantities and/or of superior quality. Production
activity dominates the business models of manufacturing firms
• Problem solving Key Activities of this type relate to coming up with new
solutions to individual customer problems
• Platform/network Business models designed with a platform as a Key
Resource are dominated by platform or network related Key Activities
PHOTOMOTO KA

Key Activities •Self-service

•Personal assistance (we talk
with each client) •Moms on the maternity
•Dedicated personal assistance leave

• Marketing and Sales

(our designers help to create
•Families who want to keep
design)
their photo archive in
•CRM system
photobooks

• Developing of new products

•Conducting online workshops
for clients to create different •Gifts to colleagues / friends
products
•Gifts to family members

• Managing Photomoto.photo online

platform
• Managing CRM system •Web sales via my website
•Partnering with
photographs and mom
stores (offering bonuses to
them and discounts to
clients)
•Social networks
(Instagram, Facebook)

•Directly from using our

online editor
•Also for using designer’s
services
 KEY PARTNERSHIPS (KP)

•Marketing and Sales •Experience in using our online editor

•Self-service

•Developing of new •We help families to transform •Personal assistance (we talk
electronic photos that they see very with each client)
products rare to real printed photos in
photobooks that they can look through •Dedicated personal assistance •Moms on the maternity
•Managing every day together with all the family (our designers help to create leave
members
Photomoto.photo online design)
•We provide unique design •Families who want to keep
platform
network of suppliers and partners created to optimize
•Managing CRM system
•We offer prices for different segments
•You do not need to come to us
•CRM system
•Conducting online workshops
for clients to create different
their photo archive in
photobooks
physically, we work via whatsapp and

company's business model, reduce risk,

mobile connection
•Online payment and delivery to
home
products •Gifts to colleagues / friends
•Gifts to family members

or acquire resources

•Online platform •Web sales via my website

•Data base of clients •Partnering with
•Partners: printshops and photographs and mom
delivery companies stores (offering bonuses to
•Team of designers them and discounts to
clients)
•Marketing and sales team
•Social networks
•IT team for technical
(Instagram, Facebook)
support

•Directly from using our

online editor
•Also for using designer’s
services
 KEY PARTNERSHIPS (KP)

We can distinguish between four different types of

partnerships:
• Strategic alliances between non-competitors
• Coopetition: strategic partnerships between competitors
• Joint ventures to develop new businesses
• Buyer-supplier relationships to assure reliable supplies
 KEY PARTNERSHIPS (KP)

Who are our Key Partners? Who are our key suppliers?
Which Key Resources are we acquiring from partners?
Which Key Activities do partners perform?
• Optimization and economy of scale
• Reduction of risk and uncertainty
• Acquisition of particular resources and activities
 KEY PARTNERSHIPS (KP)
• Optimization and economy of scale. Usually partnerships or buyer-supplier
relationships are designed to optimize the allocation of resources and activities.
It is not always rational for a company to own all resources or perform every
activity by itself. There is often a need for outsourcing or sharing infrastructure.
And partnerships based on such optimization and economy of scale are usually
formed to reduce costs
• Reduction of risk and uncertainty. Partnerships can help reduce risk in
uncertainty and competitive environment. It is quite often that competitors form
a strategic alliance in one area while competing in another
• Acquisition of particular resources and activities. Few companies own all the
resources or perform all the activities described by their business models.
Rather, they extend their own capabilities by relying on other firms that provide
these particular resources or perform certain activities. Such partnerships can
be motivated by needs to acquire knowledge, licenses, or access to customers
 PHOTOMOTO KP

Key Partnerships
•Self-service
•Printshops •Personal assistance (we talk
with each client) •Moms on the maternity
•Delivery company leave
•Dedicated personal assistance
•Designers and (our designers help to create
•Families who want to keep

• Printshops
design)
Photographers their photo archive in
•CRM system
photobooks
•Cooperation to develop •Conducting online workshops
new products for clients to create different •Gifts to colleagues / friends

•Printbox (franchiser) • Delivery company products

•Gifts to family members

• Designers and Photographers

• Cooperation to develop new products
•Web sales via my website

• Printbox
•Partnering with
photographs and mom
stores (offering bonuses to
them and discounts to
clients) Franchiser
•Social networks
(Instagram, Facebook)

For premium photobooks it is COOPETITION,

•Directly from using our

for standards it is sort of strategic alliance online editor

•Also for using designer’s
services
since our printshops do not sell standards at all
 COST STRUCTURE (CS)

•Marketing and Sales •Experience in using our online editor

•Self-service

•Printshops •Developing of new •We help families to transform •Personal assistance (we talk
electronic photos that they see very with each client)
•Delivery company products rare to real printed photos in
photobooks that they can look through •Dedicated personal assistance •Moms on the maternity
•Managing every day together with all the family (our designers help to create leave
•Designers and members
Photomoto.photo online design)
Photographers •We provide unique design •Families who want to keep
platform •CRM system
their photo archive in
“No frills” airlines, like in 3-minute video you may watch on
•We offer prices for different segments
•Cooperation to develop •Managing CRM system •You do not need to come to us •Conducting online workshops
photobooks
for clients to create different
new products physically, we work via whatsapp and
mobile connection products •Gifts to colleagues / friends
•Printbox (franchiser) •Online payment and delivery to

Moodle, for instance, have built business models entirely

home •Gifts to family members

around low Cost Structures

•Online platform •Web sales via my website
•Data base of clients •Partnering with
•Partners: printshops and photographs and mom
delivery companies stores (offering bonuses to
•Team of designers them and discounts to
clients)
•Marketing and sales team
•Social networks
•IT team for technical
(Instagram, Facebook)
support

•Directly from using our

online editor
•Also for using designer’s
services
 COST STRUCTURE (CS)
Two broad classes of business model Cost Structures:
cost-driven and value-driven (many business models
fall in between these two extremes):
• Cost-driven business models focus on minimizing costs wherever
possible. This approach aims at creating and maintaining the
leanest possible Cost Structure (WalMart, Southwest)
• Value-driven when some companies are less concerned with
the cost implications of a particular business model design,
and instead focus on value creation (Premium Value Propositions
and a high degree of personalized service of luxury brands, luxury
hotels
 COST STRUCTURE (CS)
What are the most important costs inherent in our business model? Which Key
Resources are most expensive? Which Key Activities are most expensive?
• Fixed costs – costs that remain the same despite the volume of goods or services
produced (salaries, rents, and physical manufacturing facilities). Some businesses,
such as manufacturing companies, are characterized by a high proportion of fixed costs
• Variable costs – costs that vary proportionally with the volume of goods or services
produced
• Economies of scale – cost advantages that a business enjoys as its output expands.
Larger companies, for instance, benefit from lower bulk purchase rates. This and other
factors cause average cost per unit to fall as output rises
• Economies of scope – cost advantages that a business enjoys due to a larger scope of
operations. In a large enterprise, for example, the same marketing activities or
Distribution Channels may support multiple products.
 PHOTOMOTO CS

Cost Structure
•Self-service
•Printshops •Personal assistance (we talk
with each client) •Moms on the maternity
•Delivery company leave
•Dedicated personal assistance
•Designers and (our designers help to create
•Families who want to keep

• Marketing and sales

design)
Photographers their photo archive in
•CRM system
photobooks
•Cooperation to develop •Conducting online workshops
new products for clients to create different •Gifts to colleagues / friends

•Printbox (franchiser) • Fee for technical support products

•Gifts to family members

• Cost of products
• Cost of delivery services
•Web sales via my website

• Cost of designer services

•Partnering with
photographs and mom
stores (offering bonuses to
them and discounts to
clients)
•Social networks
(Instagram, Facebook)

•Marketing and sales •Directly from using our

online editor
•Fee for technical support
•Also for using designer’s
•Cost of products
services
•Cost of delivery services
•Cost of designer services
 BUSINESS MODEL OF PHOTOMOTO

•Marketing and Sales •Self-service

•Printshops •Developing of new •Experience in using our online editor
•Personal assistance (we talk
products with each client) •Moms on the maternity
•Delivery company •We help families to transform electronic
leave
photos that they see very rare to real •Dedicated personal assistance
•Managing printed photos in photobooks that they can
•Designers and look through every day together with all the
(our designers help to create
•Families who want to keep
Photomoto.photo online design)
Photographers platform
family members
their photo archive in
•We provide unique design •CRM system
photobooks
•Cooperation to develop •Managing CRM system •We offer prices for different segments
•Conducting online workshops
new products •You do not need to come to us physically, for clients to create different •Gifts to colleagues / friends
we work via whatsapp and mobile
products
connection •Gifts to family members
•Printbox (franchiser) •Online payment and delivery
to home

•Online platform
•Web sales via my website
•Data base of clients
•Partnering with
•Partners: printshops and photographs and mom
delivery companies stores (offering bonuses to
•Team of designers them and discounts to
clients)
•Marketing and sales team
•Social networks
•IT team for technical
(Instagram, Facebook)
support

•Marketing and sales •Directly from using our

online editor
•Fee for technical support
•Also for using designer’s
•Cost of products
services
•Cost of delivery services
•Cost of designer services
Thank you
 REFERENCES

• Osterwalder, A. and Pigneur, Y. Business Model Generation, John Wiley & Sons
• Ries E., The Lean Startup, Portfolio Penguin
• Byers T., Dorf R., and Nelson A., Technology Ventures: From Idea to Enterprise (4th
Edition), McGraw-Hill.
• Mullins, J., The New Business Road Test: What entrepreneurs and executives should do
before writing a business plan. (3rd Edition), Pearson UK.