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Business Model Generation.docx

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MGMT 1000
Trent Tucker

MGMT 1000 EXAM REVIEW Business Model Generation BUSINESS MODEL CANVAS Customer Segments (CS)  Defines the different groups of people or organizations an enterprise aims to reach and serve  Mass Market – don’t distinguish between different customer segments, focus on large group with similar needs and problems  Niche Market – specific, specialized customer segments, often supplier-buyer relationships  Segmented – slightly different needs and problems (similar but varying)  Diversified – serves two unrelated customer segments with very different needs and problems  Multi-Sided Platform – serve two+ independent customer segments Value Proposition (VP)  The bundle of products and services that create value for a specific CS  Newness, performance, customization, “getting the job done”, design, brand/status, price, cost reduction, risk reduction, accessibility, convenience Channels (CH)  How a company communicates with and reaches its CS to deliver a VP  Awareness, evaluation, purchase, delivery, after sales Customer Relationships (CR)  The types of relationships a company establishes with specific CS  Personal assistance, dedicated personal assistance, self-service, automated services, communities, co-creation Revenue Streams (R$)  The cash a company generates from each CS (cost – revenue = earnings)  Asset sale, usage fee, subscription fees, lending/renting/leasing, licensing, brokerage fees, advertising Key Resources (KR)  The most important assets required to make a business model work  Physical, intellectual, human, financial Key Activities (KA)  Most important things a company must do to make its business model work  Production, problem solving, platform/network Key Partners (KP)  The network of suppliers and partners that make the business model work  Optimization and economy of scale (formed to reduce costs), reduction of risk and uncertainty, acquisition of particular resources and activities Cost Structure (C$)  All costs incurred to operate a business model  Cost Driven – focus on minimizing costs whenever possible; creating and maintaining the leanest possible C$ using low price VP, maximum automation, extensive outsourcing  Value Driven – focus on value creation; premium VP, lots of personalized services  Fixed Costs – costs that remain the same despite # of goods/services produced  Variable Costs – costs that vary proportionally with the # of goods/services produced  Economies of Scale – cost advantages that a business enjoys as its output expands  Economies of Scope – cost advantages that a business enjoys due to a larger scope of operation PATTERNS Unbundling Business Models  There are three fundamentally different types of businesses: CR businesses, product innovation businesses, and infrastructure businesses, each has different economic, competit
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