Chapter 03 - Essentials of Entrepreneurship ENTR 2001...

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Essentials of Entrepreneurship ENTR 2001 Session 4 Copyright 2013 Jack M. Kaplan & Anthony C. Warren Patterns of Entrepreneurship Management Chapter 3 Designing Business Models
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Presentation Outline Definition of Business Models Tools for Development Examples Licensing and Franchising Outsourcing Models Based on Networks Copyright 2013 Jack M. Kaplan & Anthony C. Warren
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Business Model Definitions With the business environment evolving in such a dynamic and rapid way, it is no longer sufficient for a company to build a company solely around a new product or service idea. A business model is a description of how your company intends to create value in the marketplace. It includes that unique combination of products, services, image and distribution that your business carries forward. It also includes the underlying organization of people, and the operational infrastructure that they use to accomplish their work Copyright 2013 Jack M. Kaplan & Anthony C. Warren
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Business Models More Simply: “A business model is the way a company applies knowledge to capture value.” Copyright 2013 Jack M. Kaplan & Anthony C. Warren
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Business Model Components Requires blending of multiple business aspects: Manufacturing Finance Marketing Information Suppliers and Customers Product and Service development Copyright 2013 Jack M. Kaplan & Anthony C. Warren
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Good Business Models… A Business Model states how a company creates VALUE in the market A Business Model is more than just strategy – it is the fundamental architecture of a business Good Business Models are: SCALABLE Create BARRIERS TO IMITATORS Align the Interests of ALL STAKEHOLDERS Provide VALUE to ALL STAKEHOLDERS Use NETWORK effects Are CAPITAL efficient Provide sustainable high GROSS MARGINS Copyright 2013 Jack M. Kaplan & Anthony C. Warren
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The Five Component Model 1. Articulate the Value Proposition—what value are you creating for the end user? 2. Identify a Market Segment—who the product or service is useful to and for what purpose? 3. Define structure of Value/Supply Chain—who are the stakeholders and what’s needed to succeed? 4. Estimate the Cost Structure and Profit Potential 5. Formulate the Competitive Strategy—how will the firm gain and hold advantage over its rivals?
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