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Business Model Canvas

The Business Model Canvas is a strategic management tool that outlines key components of a business model, including customer segments, value propositions, channels, customer relationships, revenue streams, key resources, key activities, key partnerships, and cost structure. It provides a structured approach for businesses to identify their strategies, align operations, and innovate effectively. The document also includes a real-world example of Uber to illustrate the application of the canvas.

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15 views5 pages

Business Model Canvas

The Business Model Canvas is a strategic management tool that outlines key components of a business model, including customer segments, value propositions, channels, customer relationships, revenue streams, key resources, key activities, key partnerships, and cost structure. It provides a structured approach for businesses to identify their strategies, align operations, and innovate effectively. The document also includes a real-world example of Uber to illustrate the application of the canvas.

Uploaded by

kanz ul emaan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Business Model Canvas

1. Customer Segments

 Definition: The specific groups of people or organizations a business aims


to serve.
 Key Questions:
o Who are our most important customers?
o What are their needs, behaviors, and pain points?
 Examples:
o Mass Market: Coca-Cola targets everyone globally.
o Niche Market: Tesla initially targeted high-income individuals
interested in electric vehicles.
o Segmented Market: Netflix serves different segments like families,
teens, and movie enthusiasts with tailored content.

2. Value Propositions

 Definition: The unique value a business offers to solve customer problems


or meet their needs.
 Key Questions:
o What problem are we solving for customers?
o What makes our product/service unique?
 Examples:
o Innovation: Apple’s iPhone revolutionized smartphones with its user-
friendly design.
o Cost Reduction: IKEA offers affordable furniture through flat-pack
designs.
o Convenience: Amazon Prime provides fast delivery and a seamless
shopping experience.

3. Channels

 Definition: The ways a business delivers its value proposition to customers.


 Key Questions:
o How do we reach our customers?
o Which channels are most effective?
 Examples:
o Online Channels: Shopify enables businesses to sell products through
e-commerce platforms.
o Physical Stores: Walmart uses its vast network of retail stores.
o Social Media: Fashion brands like Zara use Instagram for marketing
and sales.

4. Customer Relationships

 Definition: The type of relationship a business establishes with its


customers.
 Key Questions:
o How do we interact with customers?
o How do we retain them?
 Examples:
o Personal Assistance: High-end brands like Louis Vuitton offer
personalized shopping experiences.
o Self-Service: Google provides tools like Google Search with minimal
human interaction.
o Community Building: Reddit fosters user-generated content and
discussions.

5. Revenue Streams

 Definition: The ways a business generates income from its customer


segments.
 Key Questions:
o How do we make money?
o What are customers willing to pay for?
 Examples:
o Sales Revenue: Toyota earns money by selling cars.
o Subscription Model: Spotify charges users monthly for access to
music.
o Advertising: Facebook generates revenue by selling ad space to
businesses.

6. Key Resources

 Definition: The most important assets required to make the business model
work.
 Key Questions:
o What resources are critical to our success?
o Do we own them, or do we need to acquire them?
 Examples:
o Physical Resources: FedEx relies on its fleet of delivery vehicles.
o Intellectual Resources: Google’s search algorithm is a key asset.
o Human Resources: Consulting firms like McKinsey depend on their
expert employees.

7. Key Activities

 Definition: The most important actions a business must take to operate


successfully.
 Key Questions:
o What activities are essential to deliver our value proposition?
o What do we need to do to maintain customer relationships?
 Examples:
o Production: Tesla focuses on manufacturing electric vehicles.
o Problem-Solving: Hospitals provide medical services to patients.
o Platform Management: Airbnb maintains its online platform for
hosts and guests.

8. Key Partnerships
 Definition: The network of suppliers, partners, and alliances that help the
business model function.
 Key Questions:
o Who are our key partners?
o What do they provide, and why are they important?
 Examples:
o Strategic Alliances: Starbucks partners with Barnes & Noble to sell
coffee in bookstores.
o Supplier Relationships: McDonald’s works with farmers to source
ingredients.
o Joint Ventures: Sony and Ericsson collaborated to produce mobile
phones.

9. Cost Structure

 Definition: The major costs involved in operating the business model.


 Key Questions:
o What are the most significant costs in our business?
o Are we cost-driven or value-driven?
 Examples:
o Fixed Costs: Netflix invests in content creation and licensing.
o Variable Costs: Uber’s costs increase with the number of rides
provided.
o Economies of Scale: Walmart reduces costs by buying in bulk.

Real-World Example: Uber

 Customer Segments: Riders (commuters, travelers) and Drivers


(independent contractors).
 Value Propositions: Convenient, affordable, and fast rides; flexible earning
opportunities for drivers.
 Channels: Mobile app, website, and partnerships with businesses.
 Customer Relationships: App-based self-service, customer support, and
loyalty programs.
 Revenue Streams: Ride fees, surge pricing, and Uber Eats delivery fees.
 Key Resources: Technology platform, driver network, and brand reputation.
 Key Activities: App development, driver onboarding, and marketing.
 Key Partnerships: Payment processors, map providers (Google Maps), and
vehicle leasing companies.
 Cost Structure: Driver incentives, app maintenance, legal and regulatory
costs.

How to Use the Business Model Canvas

1. Start with Customer Segments: Identify who your customers are.


2. Define Value Propositions: What unique value do you offer?
3. Map Channels and Relationships: How will you reach and engage
customers?
4. Identify Revenue Streams: How will you make money?
5. List Key Resources, Activities, and Partnerships: What do you need to
deliver value?
6. Analyze Cost Structure: What are your major expenses?

This structured approach helps businesses align their strategies, identify gaps, and
innovate effectively. Whether you're a startup or an established company, the
Business Model Canvas is a powerful tool for strategic planning.

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