FUNDAMENTALS OF

ENTREPRENEURSHIP

BUSINESS MODEL
CANVAS
 DEFINITION
Introduced by Osterwalder (2008)
It is a method of analyzing, designing,
strategizing and testing.

“A business model describes the value an

organization offers its customers and illustrates
the capabilities and resources required to
create, market and deliver this value and to
generate profitable, sustainable revenue
streams.”
 (Osterwalder, A., Pigneur, Y., &
 DEFINITION

.... is a strategic management and

entrepreneurial tool. It allows you to
describe, design, challenge, invent, and
pivot your business model.
 BMC
A business model based on 9 business areas
• Customer segments
• Firm value propositions
• Marketing channels
• Customer relationships
• Key partners
• Key activities
• Key resources
• Cost structure
• Revenue streams
The Business Model Canvas
Key Partners Key Activities Value Proposition Customer Relationships Customer Segments
Who are our Key Partners? What Key Activities do our Value What value do we deliver to the What type of relationship does each of For whom are we creating value?
Who are our Key Suppliers? Propositions require? customer? our Customer Who are our most important
Which Key Resources are we acquiring Our Distribution Channels? Which one of our customer’s problems Segments expect us to establish and customers?
from partners?
Which Key Activities do partners
Customer Relationships?
Revenue streams?
are we helping to solve?
What bundles of products and services
maintain with them?
Which ones have we established?
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perform?
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Segment?
Which customer needs are we satisfying?
our business model?
How costly are they?
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& WRITE HERE & WRITE HERE

Key Resources Channels

What Key Resources do our Value Through which Channels do our
Propositions require? Customer Segments want to be reached?
Our Distribution Channels? Customer How are we reaching them now? How
Relationships? are our Channels integrated?
Revenue Streams? Which ones work best?
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How are we integrating them with
& WRITE HERE customer routines?
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& WRITE HERE

Cost Structure Revenue Streams

What are the most important costs inherent in our business model? For what value are our customers really willing to pay?
Which Key Resources are most expensive? For what do they currently pay?
Which Key Activities are most expensive? How are they currently paying?
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How much does each Revenue Stream contribute to overall revenues?
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Source: www.businessmodelgeneration.com
 1. CUSTOMER SEGMENTS
• CS – refers to the target people and/or
organizations you are offering value
propositions
• They can be divided into groups of
individuals or organizations that have
similar demographics, psychographics,
behaviours, geographical characteristics
or combinations
 1. CUSTOMER SEGMENTS(cont)
HOW TO PROFILE YOUR CUSTOMER?

1. Geography - location
2. Demographics - age, gender, education level
or household
size, income level.
3. Psychographics - Psychological or emotional
traits
 1. CUSTOMER SEGMENTS (cont)
HOW TO PROFILE YOUR CUSTOMER?

4. Lifestyle - behaviourally-based, focusing on the

activities,
from work to hobbies pursued or vacations
favoured.
5. Life stage - life cycle: college and career,
young families,
empty nesters and the like.
2. FIRM VALUE PROPOSITIONS
 DEFINITION
 is what distinguishes itself from its
competitors
 Value is provided through various elements
such as performance, brand, price, risk
reduction, accessibility and convenience
 Can be quantitative (eg. Price) or qualitative
(eg. Customer experience and outcome)
3. MARKETING CHANNELS
 A company can deliver its value to its
customers through different channels
 Decides – whether to sell it through directly
(direct marketing), intermediary
 Example of method are: direct selling,
internet marketing and catalogues
 Simple and straightforward
4. CUSTOMER RELATIONSHIPS
 It describes the types of relationship a company
established with specific customer segments
 The loyal customer is the most profitable customer yet the
focus is often on attracting new customers
 Customer relationships describes the type of relationship a
company establishes with it’s specific customer segments.
Customer relationships are driven by customer acquisition,
customer retention, and boosting sales – in other words
you need to get, keep, and grow your customer
relationships.
4. CUSTOMER RELATIONSHIPS
 There are few basic steps to increase sales
volume and build brand value at the same
time:

 Pile on the benefits

 Make buying easy
 Follow up
5. KEY PARTNERS
 KP – are the network of suppliers and
partners that make the business model
work
 Key Partners are the relationships that you
have with other business, governmental, or
non-consumer entities that help your
business model work. These can be the
relationships that your company has with
your suppliers, your manufacturers,
business partners, etc.
5. KEY PARTNERS
 Companies forge partnerships to optimize
business model, reduce risk, acquire resources
 4 types of partnerships are commonly
distinguished:

1. Strategic alliances between non-competitors

2. Competitions: strategic partnerships between
competitors
3. Joint ventures to develop new business
4. Buyer-supplier relationships to assure reliable
supplies
6. KEY ACTIVITIES
 KA – are activities that a company must do in order to
make its business model work
 Key activities are important in any business building block
 These activities will depend on the nature of the business
as seen below:
 Production: production activity dominates the business
models of manufacturing firm, related to design,
manufacture, delivery or quality control
 Problem solving: consultancies, hospitals, focus on
problem solving activities, requiring knowledge
management and staff training
7. KEY RESOURCES
 KR – are the most important assets needed to make a
business model work
 Can be physical, financial, intellectual or human
 Can be owned or leased by the company or acquired from
key partners. They can be categorized as the following:
 Physical
 Intellectual
 Human
 Financial
8. COST STRUCTURE
 The entrepreneur should strategize the best and
appropriate cost structure to suit the project concept
 The cost structured model will have to be aligned with the
other activities to match the total product and services
concept offered to customers
 Ex:
Air Asia model is a low cost model where customers are
charged for products and service items that they choose when
they purchase their ticket. Customer can choose to have food
in flight or select their seats, and will pay accordingly.
9. REVENUE STREAMS
 RS – will represent the cash a company generates
from each customers/product segment
 An entrepreneur will have to strategize and modify
his products and services to create attractive
values for target customers
 An entrepreneur may explore additional revenue
streams through export markets or online
marketing for example to generate additional
revenue