Running head: SMITH – BUSINESS MODEL GENERATION
1
Smith – Business Model Generation
Betty Jean Smith
BUSI690
Dr. Jonathan Wilson
February 11, 2017
SMITH – BUSINESS MODEL GENERATION
2
Business Model Generation Exercise 1
RQ1
A business model “is like a blueprint for a strategy to be implemented throught
organizational structures, process and systems” (Osterwalder & Pigneur, 2010, p. 15). For a
business model to be successful it must be able to show the logic of an organization’s value
capture through their creation of what their productds and or services are being delivered. In
order for an organization to be able to do this they must ensure that they have implemented the
nine building blocks that is consist of customer segments, value propositions, channels, customer
relationships, revenue streams, key resources, key activities, key partnerships and csot structure
(Osterwalder& Pigneur, 2010).
Business Models are a collections of thoughts and ideas from all key personal. It details
the organizations conception to birth taking the organizations overall functions into
consideration. It challenges the organization to strategically think of how they see their
organization creating value for their audience that they would like to capture by using their
services and or products. They must ensure that they deliver as promised to continue to hold on
to their customer segments. In order for this to happen they must ensure that they have created
significant building blocks that are accurate for their organization to carry out their business
model.
RQ2
Customer Segment – It in invaluable for organizations to know their targeted customers,
otherwise they will find themselves unable to satisfy their customers, because they do not
actually know what it is their consumers are desiring. Knowing this will allow them to separate
their consumers in category to the most important ones.
SMITH – BUSINESS MODEL GENERATION
3
Value Propositions – Organizations, must know how their services and or products are
benefiticial to their customer segment. An example of this is how Comcast uses the bundle
packages for consumers to see the value in just turning to their services rather than using another
organization’s services that offer similar products, but not the bundling packages at that price.
The automotive industries uses this when they tailor vehicles to fit their consumer’s needs
Channels – Organization must know how to reach out to their audiences. If they want to
target elderly individuals it would be best that they are not using the internet. They have to know
where the people are going to be to meet them at their needs to inform them of their products and
services that they are offering. Otherwise, they will not be able to communicate effectively and
their bottomline will forever be decreasing.
Customer Relationships – Oragnaizations must ensure that their customer relationships
are on point, or they will find themselves losing sales. An example of this would be the self
service check out registers at the grocery stores. Some customers prefer this type of check out
service, where other appreciate the meet and greet style of having a person to interact with when
checking out. Notice that these grocery stores did not stop using their cashiers because their
customers segments expects them to maintain them.
Revenue Streams – Organizations must know that their targeted segments are willing to
pay for their services or products. This will save them money in the long run and allow their
revenues to increase. If a company pays more to make a product and sells it for less, then they
have not created the value prospositions it took for their items to be sold to their audience.
Organizations must know how they will be generating their revenue streams. An example of this
would be “Basically, mobile social networking sites generate revenues through three typical
SMITH – BUSINESS MODEL GENERATION
4
streams: advertising (Ad), subscription and transactions based approaches” (Wang, Tang, Jin, &
Ma, 2014, p. 1297).
Key Resources – Every organization must know what materials they will need to generate
/ produce their product. Other their revenue streams will not allow their value proposition to be
sustainable and they will begin to loose their customer segment.
Key Activities – Organizations key activities should be reflective of their customer
relationships, channels, value prospositions and revenue streams. This is the main exsistence of
any organization.
Key Partnership – Hence the word key in key partnerships. Without these keys an
organization should re-think their overall business model.
Cost Structure – This is a must know if an organization is to meet their financial needs in
running a successful business. This details the over all structure of an organization from
employees that are a necessary eliminate in producing services or product to where these
products and services will be offered / constructed. Organizations have to think will it be less
costly to rent a placed or buy a place to which they will be operating. This cost structure must
also a lot for any changes that the organization must take to stay on track with their business
model,”short-run asymmetric cost response to activity changes (i.e., sticky costs) resulting
from short-run managerial choices” (Balakrishman, Labro & Soderstrom, 2014, p, 91).
RQ3
The role of value propositions is to let everyone know what your organization is about
and what your organization has to offer them. It involves an organization letting their segment
audience know why their products and or services are better than that of their competitors. Why
they would be better off coming to them verses their competitors. Their value proposition should
SMITH – BUSINESS MODEL GENERATION
5
attrative to capture their audience. An example of this was the catch phase “Can you hear me
now” by Verizon. It captured everyone’s attention who had a cell phone and who was having
service issue problems with hearing what the other person on the other side of their cell was
actually saying.
Organizations must capitalize on selling their product and a slogan or a catch phase can
be the pillar to that them doing so. Verizon’s catch phase allowed them to actually grasp the
attention of their targeted audience and give them what needed by way of the services that they
offered. Even though their services were more expensive than that of their competitors, Verizon
made their services valueable to their target audience, whereas their cost did not out weigh the
value that they were offering per their segment audience.
RQ4 “Brainstorming consists of a collaborative group of persons, especially with different
backgrounds, that propose several ideas to solve a specific problem” (Arsuaga-Ríos & Vega-
Rodríguez, 2015, p, 3159). Brainstorming answers the “What If” questions that should have a
positive impact on a business in making the successful. This is because of the concept of
brainstorming where a group of individuals come together and begin to think outside the box in a
what that one person would not be able to do. It allows for proposals and suggestions to be made
and truly questioned in different scenarios by each person within the group if necessary. If the
question cannot be answered in an effective way that the organization is being model upon, then
they can keep going with getting more feedback on other thoughts, suggestions and proposals.
It allows for an organization to table all of the best courses that their business is to be
modeled on depending on the way that they are going to target their audience. Doing this will
minimize an organization changes that they may have to later make because the head players did
not invision certain circumstances happening. Brainstorming will help lessen these unforeseen
SMITH – BUSINESS MODEL GENERATION
6
circumstances , especially if the group has had such experiences, skills and knowledge within the
market that they are now brainstorming.
SMITH – BUSINESS MODEL GENERATION
7
References
Arsuaga-Ríos, M., & Vega-Rodríguez, M. A. (2015). Multi-Objective Energy Optimization in
Grid Systems From a Brain Storming Strategy. Soft Computing, 19(11), 3159-3172.
doi:10.1007/s00500-014-1474-7
Balakrishnan, R., Labro, E., & Soderstrom, N. S. (2014). Cost Structure and Sticky Costs.
Journal Of Management Accounting Research, 26(2), 91-116. doi:10.2308/jmar-50831
Osterwalder, A., & Pigneur, Y. (2010). Business model generation. Hoboken, NJ: John Wiley &
Sons. ISBN: 9780470876411.
Wang, Y., Tang, J., Jin, Q., & Ma, J. (2014). On Studying Business Models in Mobile Social
Networks Based on Two-Sided Market (TSM). The Journal of Supercomputing, 70(3),
1297-1317. doi:10.1007/s11227-014-1228-4
