business plan by raj sankar

8/10/2019 Business Plan by Raj Sankar

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Business Model

Raj Shankar

ichiban Group


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Purpose of A Business

The main purpose of a business is to create value


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Purpose of A Business

The main purpose of a business is to create value


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What is a Business Model?

A Business Model is a link between social domain where economic rentsare generated and creative domain where products and services are

conceptualized- Craig S. Fisher and Babette E. Bensoussan

A Business Model is a core logic of value creation

Details how the business will make money


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Business Model & Business Plan- Key Differences

Business Plan

Provides a section wisedetails of your business

The business plan is drawn

up based on your businessmodel

It is more literary in termsand does not reflect the

practical shape that abusiness would take inreality

Business Model

Ascertains how a businessworks in reality

Creates an opportunity map

for your business idea

It gives different shapes toa single business idea andmore practical in terms


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Why should we model before the plan?

Profitability is designed from the inside of the business

Most industries are moving from single dominant models

to multiple models

Allows clear visualization of Cost and Price Equilibrium

Studies the economics of business and viability of thebusiness


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Functions of a Business Model

Value Creation Enterprise exist because they create value

Success of the enterprise is predicated on how many consider thevalue generated useful

Customers are willing to pay a price based on how important they

consider this value

Value Capture How much of earnings that the enterprise can retain to carry on and

deliver this value?

What are the broad margins that an enterprise can earn throughconducting the business?


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Ubiquitous Business Model The Barter System

Exchange of goods between two people is one of the old models

The Kirana Stores

They have certain credit cycles built into products

The Razor Blade Model (Gillette)

The Reverse Razor Blade Model (i-Tunes)


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Business Model Double Ellipse


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Double Elipse

Value Creation :Businesses exist only when they create value

Value

Proposition

Customer : Businesses need someone to feel the usefulness of the value

Resources : Businesses will use resources to create this value that the customers find useful

The value that the business offers needs to be communicated to the customerCommunication

Channels

The product needs to be made available to the customer for purchase

Distribution

Channels

To deliver the value the organization has to execute some activities

Activities

Management

To coordinate the activities one would need appropriate level of management

resources and controls


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Business Influencer

Customer Resources

DistributionChannels

Communication

Channels

Activity

Management

Price

Ellipse

Cost

Ellipse

Value

Proposition

Industry

Competition


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Attributes

Customer

Value Proposition

Resources

Communication channels

Distribution channels

Activity Management

Influencers

Industry

Competition


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Value Proposition Value proposition is defining the value being created and

delivered to the customer

From customers perspective What will it help the customer achieve

Should be narrow

Should identify with one of the three value discipline


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Communication Channels

Communication channels are used to inform the

customer about the proposed value that is beingdelivered by the service or the product so that they canmake a well informed purchase

Points of aggregation

Cost of communication Level of customer maturity


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Distribution Channels

Distribution channel should consider how the product or

service can be delivered: Number of levels

Need for partners

Supply chain costs


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Resources

These are the resources needed for delivering the value

Nature of resource (man / material / ip / infrastructure etc) Partners

Is the resource differentiated?

Resource criticality

Access / Owned / Leased


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Activity

To create value the resources have to be involved in

executing certain activities Functional Activities ( S&M / HR / Accounts etc)

Operational Activities (Manufacturing / Customer relationshipmanagement / purchase / infrastructure management etc)

Strategic Activities ( Outsourcing / Partnering etc)


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Management

Management means positions, designation, utilisation of

resources to deliver value, overseeing of activities,involvement in activities, etc

Structure

Over heads Board / Advisory


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Business Model- Interpretation

Business design is a constant state of stretching and

skewing between the two ellipses - the price ellipse andthe cost ellipse


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Benefits of a Business Model

BusinessModelBusinessModel

Articulate thevalue

proposition

in a clearmanner

Articulate thevalue

proposition

in a clearmannerIdentify the

marketsegments

profitable tooperate

Identify themarket

segmentsprofitable to

operate

Structurethe value

chain

Structurethe value

chainEstimatethe cost

structure,revenue

and profitmodels

Estimatethe cost

structure,revenue

and profitmodels

Positionthe firm

within theoverall

ecosystem

Positionthe firm

within theoverall

ecosystem

Formulatea good

competitive strategy

Formulatea good

competitive strategy


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Thank You..

Key Source: Entrepreneurship Theory and Practice, RajShankar

For all your queries and suggestions,Please contact: [email protected]

business plan by raj sankar

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