Nine building blocks of business model

 In their book “Business Model Generation” authors Alexander Osterwalder and Yves Pigneur have introduced a canvas consisting nine building blocks that sketch the core elements required for a business model. Let me give you this canvas so that you can build your own business model: 

1.        Customer segments:       This block defines the different groups of people or organizations an enterprise aims to reach and serve. These are distinct segments and small or large. The business must decide which segments to serve and which ones to ignore. This could result in mass, niche, segmented or diversified markets

2.        Value propositions:          This block describes the bundles of products and services that create value for customer segments. Each such bundle of product/service caters to requirements of a specific customer segment. The proposition could result in new offers, improved ones or customized products

3.        Channels:     In this block, a company communicates & reaches customer segments to deliver value proposition. Communication, distribution and sales channels comprise a company's interface with customers. Channels encourage customers to be aware of the product & buy them. Delivering and after-sales are the ending part of this process.

4.        Customer relationships:             This block describes the types of relationships company need to establish with specific customer segments. Customer acquisition, retention and boosting sales are the forces that drive customer relationships and result in sales delivery such as personal assistance, self-service or automated service

5.        Revenue streams:            This block represents the cash company generates from each customer segment. A business model can generate two types of revenue stream:  one-time sale and recurring sale. It can arise in number of ways, chiefly by asset sale, usage fee, subscription fee, and lending/renting/leasing payment, licensing fee or brokerage

6.        Key resources:       This denotes the most important assets required to make a business model work by creating and offering value proposition, reaching markets, maintaining relationships with customer segments, and earning revenues. Key resources can be physical, financial, intellectual, or human and part of resources can be owned or leased by the company or acquired from key partners

7.        Key activities:        In this block, the most important areas of successful operation are described. These activities include production, quality control and related matters

8.        Key partnerships: Inside partnerships block we notice how the network of suppliers and partners contribute to the success of a business model. Partnerships include strategic alliance with non-competitors, business alliance with competitors, joint ventures with new parties & suppliers to ensure reliable supplies. This helps in reduction of cost in acquiring vital resources

9.        Cost structure:       The last block is cost structure that covers all costs incurred to operate a business mode. Such a cost schedule Includes fixed cost, variable cost and the manner in which economic scale and scope are to be managed.

Cheers!

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mail:   cosmicgems@gmail.com

Blog:   Business Strategist