4 1 assignment business model canvas

The Open University
Guest user / Sign out
Study with The Open University

My OpenLearn Profile

Personalise your OpenLearn profile, save your favourite content and get recognition for your learning

About this free course

Become an ou student, download this course, share this free course.

Start this free course now. Just create an account and sign in. Enrol and complete the course for a free statement of participation or digital badge if available.

4.1 Business model canvas

‘How can we systematically invent, design, and implement these powerful new business models? How can we question, challenge, and transform old, outmoded ones?’

The author answers this question by offering a business model canvas—a tool for visualising the design of business models. It helps to detect outmoded elements in business models and to transform old models into new ones.

A business model canvas comprises nine building blocks that cover four main areas of a firm: offer (value proposition), customers, infrastructure, and financial viability (as shown in Figure 2).

There is a heading in the top left-hand corner of the figure which says: ‘The Business Model Canvas’. Figure 2 is divided up into nine separate blocks. The two blocks at the base of the figure are labelled ‘Cost structure’ (on the left-hand side) and ‘Revenue streams (on the right-hand side). There is also a label in the centre (straddling the two blocks) that says: ‘Financial viability’. There are two icons, one symbolising a graph next to the ‘Cost structure’ label and a second icon symbolising a bag of money next to the ‘Revenue streams’ label.

Above the ‘Cost structure’ and ‘Revenue streams’ blocks, there are seven more blocks. These are divided into three clusters and labelled (from left-to-right) as: ‘Infrastructure’, ‘Offer’ and ‘Customers’. The infrastructure blocks are labelled as: ‘Key partners’, ‘Key activities’ and ‘Key resources’. Each one is symbolised by an icon such as a hand shake for ‘Key partners’, a tick box for ‘Key activities’ and a factory for ‘Key resources’.

The cluster labelled ‘Offer’ consists of only one block that is labelled ‘Value proposition’ with a gift icon as its symbol. The ‘Customers’ cluster consists of three blocks labelled as: ‘Customer relationships’, ‘Channels’ and ‘Customer segments’. These are symbolised using a heart icon for ‘Customer relationships’, a lorry icon for ‘Channels’ and a people icon for ‘Customer segments’.

Business Model Canvas: Explained with Examples

Got a new business idea, but don’t know how to put it to work? Want to improve your existing business model? Overwhelmed by writing your business plan? There is a one-page technique that can provide you the solution you are looking for, and that’s the business model canvas.

In this guide, you’ll have the Business Model Canvas explained, along with steps on how to create one. All business model canvas examples in the post can be edited online.

What is a Business Model Canvas

A business model is simply a plan describing how a business intends to make money. It explains who your customer base is and how you deliver value to them and the related details of financing. And the business model canvas lets you define these different components on a single page.

The Business Model Canvas is a strategic management tool that lets you visualize and assess your business idea or concept. It’s a one-page document containing nine boxes that represent different fundamental elements of a business.

The business model canvas beats the traditional business plan that spans across several pages, by offering a much easier way to understand the different core elements of a business.

The right side of the canvas focuses on the customer or the market (external factors that are not under your control) while the left side of the canvas focuses on the business (internal factors that are mostly under your control). In the middle, you get the value propositions that represent the exchange of value between your business and your customers.

The business model canvas was originally developed by Alex Osterwalder and Yves Pigneur and introduced in their book ‘ Business Model Generation ’ as a visual framework for planning, developing and testing the business model(s) of an organization.

What Are the Benefits of Using a Business Model Canvas

Why do you need a business model canvas? The answer is simple. The business model canvas offers several benefits for businesses and entrepreneurs. It is a valuable tool and provides a visual and structured approach to designing, analyzing, optimizing, and communicating your business model.

The business model canvas provides a comprehensive overview of a business model’s essential aspects. The BMC provides a quick outline of the business model and is devoid of unnecessary details compared to the traditional business plan.
The comprehensive overview also ensures that the team considers all required components of their business model and can identify gaps or areas for improvement.
The BMC allows the team to have a holistic and shared understanding of the business model while enabling them to align and collaborate effectively.
The visual nature of the business model canvas makes it easier to refer to and understand by anyone. The business model canvas combines all vital business model elements in a single, easy-to-understand canvas.
The BMC can be considered a strategic analysis tool as it enables you to examine a business model’s strengths, weaknesses, opportunities, and challenges.
It’s easier to edit and can be easily shared with employees and stakeholders.
The BMC is a flexible and adaptable tool that can be updated and revised as the business evolves. Keep your business agile and responsive to market changes and customer needs.
The business model canvas can be used by large corporations and startups with just a few employees.
The business model canvas effectively facilitates discussions among team members, investors, partners, customers, and other stakeholders. It clarifies how different aspects of the business are related and ensures a shared understanding of the business model.
You can use a BMC template to facilitate discussions and guide brainstorming brainstorming sessions to generate insights and ideas to refine the business model and make strategic decisions.
The BMC is action-oriented, encouraging businesses to identify activities and initiatives to improve their business model to drive business growth.
A business model canvas provides a structured approach for businesses to explore possibilities and experiment with new ideas. This encourages creativity and innovation, which in turn encourages team members to think outside the box.

How to Make a Business Model Canvas

Here’s a step-by-step guide on how to create a business canvas model.

Step 1: Gather your team and the required material Bring a team or a group of people from your company together to collaborate. It is better to bring in a diverse group to cover all aspects.

While you can create a business model canvas with whiteboards, sticky notes, and markers, using an online platform like Creately will ensure that your work can be accessed from anywhere, anytime. Create a workspace in Creately and provide editing/reviewing permission to start.

Step 2: Set the context Clearly define the purpose and the scope of what you want to map out and visualize in the business model canvas. Narrow down the business or idea you want to analyze with the team and its context.

Step 3: Draw the canvas Divide the workspace into nine equal sections to represent the nine building blocks of the business model canvas.

Step 4: Identify the key building blocks Label each section as customer segment, value proposition, channels, customer relationships, revenue streams, key resources, key activities, and cost structure.

Step 5: Fill in the canvas Work with your team to fill in each section of the canvas with relevant information. You can use data, keywords, diagrams, and more to represent ideas and concepts.

Step 6: Analyze and iterate Once your team has filled in the business model canvas, analyze the relationships to identify strengths, weaknesses, opportunities, and challenges. Discuss improvements and make adjustments as necessary.

Step 7: Finalize Finalize and use the model as a visual reference to communicate and align your business model with stakeholders. You can also use the model to make informed and strategic decisions and guide your business.

What are the Key Building Blocks of the Business Model Canvas?

There are nine building blocks in the business model canvas and they are:

Customer Segments

Customer relationships, revenue streams, key activities, key resources, key partners, cost structure.

Value Proposition

When filling out a Business Model Canvas, you will brainstorm and conduct research on each of these elements. The data you collect can be placed in each relevant section of the canvas. So have a business model canvas ready when you start the exercise.

Let’s look into what the 9 components of the BMC are in more detail.

These are the groups of people or companies that you are trying to target and sell your product or service to.

Segmenting your customers based on similarities such as geographical area, gender, age, behaviors, interests, etc. gives you the opportunity to better serve their needs, specifically by customizing the solution you are providing them.

After a thorough analysis of your customer segments, you can determine who you should serve and ignore. Then create customer personas for each of the selected customer segments.

Customer Persona Template for Business Model Canvas Explained

There are different customer segments a business model can target and they are;

Mass market: A business model that focuses on mass markets doesn’t group its customers into segments. Instead, it focuses on the general population or a large group of people with similar needs. For example, a product like a phone.
Niche market: Here the focus is centered on a specific group of people with unique needs and traits. Here the value propositions, distribution channels, and customer relationships should be customized to meet their specific requirements. An example would be buyers of sports shoes.
Segmented: Based on slightly different needs, there could be different groups within the main customer segment. Accordingly, you can create different value propositions, distribution channels, etc. to meet the different needs of these segments.
Diversified: A diversified market segment includes customers with very different needs.
Multi-sided markets: this includes interdependent customer segments. For example, a credit card company caters to both their credit card holders as well as merchants who accept those cards.

Use STP Model templates for segmenting your market and developing ideal marketing campaigns

Visualize, assess, and update your business model. Collaborate on brainstorming with your team on your next business model innovation.

In this section, you need to establish the type of relationship you will have with each of your customer segments or how you will interact with them throughout their journey with your company.

There are several types of customer relationships

Personal assistance: you interact with the customer in person or by email, through phone call or other means.
Dedicated personal assistance: you assign a dedicated customer representative to an individual customer.
Self-service: here you maintain no relationship with the customer, but provides what the customer needs to help themselves.
Automated services: this includes automated processes or machinery that helps customers perform services themselves.
Communities: these include online communities where customers can help each other solve their own problems with regard to the product or service.
Co-creation: here the company allows the customer to get involved in the designing or development of the product. For example, YouTube has given its users the opportunity to create content for its audience.

You can understand the kind of relationship your customer has with your company through a customer journey map . It will help you identify the different stages your customers go through when interacting with your company. And it will help you make sense of how to acquire, retain and grow your customers.

This block is to describe how your company will communicate with and reach out to your customers. Channels are the touchpoints that let your customers connect with your company.

Channels play a role in raising awareness of your product or service among customers and delivering your value propositions to them. Channels can also be used to allow customers the avenue to buy products or services and offer post-purchase support.

There are two types of channels

Owned channels: company website, social media sites, in-house sales, etc.
Partner channels: partner-owned websites, wholesale distribution, retail, etc.

Revenues streams are the sources from which a company generates money by selling their product or service to the customers. And in this block, you should describe how you will earn revenue from your value propositions.

A revenue stream can belong to one of the following revenue models,

Transaction-based revenue: made from customers who make a one-time payment
Recurring revenue: made from ongoing payments for continuing services or post-sale services

There are several ways you can generate revenue from

Asset sales: by selling the rights of ownership for a product to a buyer
Usage fee: by charging the customer for the use of its product or service
Subscription fee: by charging the customer for using its product regularly and consistently
Lending/ leasing/ renting: the customer pays to get exclusive rights to use an asset for a fixed period of time
Licensing: customer pays to get permission to use the company’s intellectual property
Brokerage fees: revenue generated by acting as an intermediary between two or more parties
Advertising: by charging the customer to advertise a product, service or brand using company platforms

What are the activities/ tasks that need to be completed to fulfill your business purpose? In this section, you should list down all the key activities you need to do to make your business model work.

These key activities should focus on fulfilling its value proposition, reaching customer segments and maintaining customer relationships, and generating revenue.

There are 3 categories of key activities;

Production: designing, manufacturing and delivering a product in significant quantities and/ or of superior quality.
Problem-solving: finding new solutions to individual problems faced by customers.
Platform/ network: Creating and maintaining platforms. For example, Microsoft provides a reliable operating system to support third-party software products.

This is where you list down which key resources or the main inputs you need to carry out your key activities in order to create your value proposition.

There are several types of key resources and they are

Human (employees)
Financial (cash, lines of credit, etc.)
Intellectual (brand, patents, IP, copyright)
Physical (equipment, inventory, buildings)

Key partners are the external companies or suppliers that will help you carry out your key activities. These partnerships are forged in oder to reduce risks and acquire resources.

Types of partnerships are

Strategic alliance: partnership between non-competitors
Coopetition: strategic partnership between partners
Joint ventures: partners developing a new business
Buyer-supplier relationships: ensure reliable supplies

In this block, you identify all the costs associated with operating your business model.

You’ll need to focus on evaluating the cost of creating and delivering your value propositions, creating revenue streams, and maintaining customer relationships. And this will be easier to do so once you have defined your key resources, activities, and partners.

Businesses can either be cost-driven (focuses on minimizing costs whenever possible) and value-driven (focuses on providing maximum value to the customer).

Value Propositions

This is the building block that is at the heart of the business model canvas. And it represents your unique solution (product or service) for a problem faced by a customer segment, or that creates value for the customer segment.

A value proposition should be unique or should be different from that of your competitors. If you are offering a new product, it should be innovative and disruptive. And if you are offering a product that already exists in the market, it should stand out with new features and attributes.

Value propositions can be either quantitative (price and speed of service) or qualitative (customer experience or design).

What to Avoid When Creating a Business Model Canvas

One thing to remember when creating a business model canvas is that it is a concise and focused document. It is designed to capture key elements of a business model and, as such, should not include detailed information. Some of the items to avoid include,

Detailed financial projections such as revenue forecasts, cost breakdowns, and financial ratios. Revenue streams and cost structure should be represented at a high level, providing an overview rather than detailed projections.
Detailed operational processes such as standard operating procedures of a business. The BMC focuses on the strategic and conceptual aspects.
Comprehensive marketing or sales strategies. The business model canvas does not provide space for comprehensive marketing or sales strategies. These should be included in marketing or sales plans, which allow you to expand into more details.
Legal or regulatory details such as intellectual property, licensing agreements, or compliance requirements. As these require more detailed and specialized attention, they are better suited to be addressed in separate legal or regulatory documents.
Long-term strategic goals or vision statements. While the canvas helps to align the business model with the overall strategy, it should focus on the immediate and tangible aspects.
Irrelevant or unnecessary information that does not directly relate to the business model. Including extra or unnecessary information can clutter the BMC and make it less effective in communicating the core elements.

What Are Your Thoughts on the Business Model Canvas?

Once you have completed your business model canvas, you can share it with your organization and stakeholders and get their feedback as well. The business model canvas is a living document, therefore after completing it you need to revisit and ensure that it is relevant, updated and accurate.

What best practices do you follow when creating a business model canvas? Do share your tips with us in the comments section below.

Join over thousands of organizations that use Creately to brainstorm, plan, analyze, and execute their projects successfully.

FAQs About the Business Model Canvas

Use clear and concise language
Use visual-aids
Customize for your audience
Highlight key insights
Be open to feedback and discussion

The Business Model Canvas

What is the business model canvas.

The business model canvas is a tool designers use to map out a business or product’s key actors, activities and resources, the value proposition for target customers, customer relationships, channels involved and financial matters. It gives an overview to help identify requirements to deliver the service and more.

“A business model describes the rationale of how an organization creates, delivers, and captures value.” — Alexander Osterwalder, Co-creator of the Business Model Canvas

Learn about the business model canvas and how it helps in design.

Transcript loading…

The Business Model Canvas – Flexible Chart, Early-Warning System and More

In service design , two tools are essential to use early in your design process: the business model canvas and the value proposition canvas . You can use the business model canvas to build an overview of changes to be made to an existing business (e.g., a merger) or of a totally new business opportunity or market gap . At the start of your design process, it’s vital to map out the business model of your service to see how it will fit into the marketplace. You’ll also need to ensure what you propose can bring maximum value to both your customers and business, and keep doing so in terms of customer retention, profitability and more.

To gain the most accurate vision of a proposed product or service, it’s essential to understand all the components and dynamics of not only the customer experience but also the service as a whole ecosystem . This ecosystem contains all the channels and touchpoints that must work together to deliver and sustain maximum value to the customer.

This canvas gives you several important advantages, namely these:

It’s collaborative – so you can bring the various partners together on the same page to generate and analyze ideas, and have an early testing ground for concepts before you advance to service staging a prototype.

It’s human-centered – so you can keep close track on how to create and maximize value for customers as well as stakeholders and other partners.

It makes it easier to collect rich data – if you have a clear purpose and strategy in mind.

A business model canvas typically contains 10 boxes:

Key Partners – The people who will help you fulfill the key activities, using the key resources.

Key Activities – Those vital actions that go into the everyday business to get things done; these are all the activities needed to realize and maintain the value proposition, and to power everything else involved.

Key Resources – The tools needed to get those things done, stretching across all areas the canvas covers to include, for example, customer retention.

Value Proposition – The item you think will create value for your customer: e.g., a new idea, a price drop. This is a summary of what your business will deliver to customers, and feeds into the value proposition canvas, the tool you’ll use to expand this.

Customer Relationships – Where you envision the relationship each customer segment expects: e.g., customer acquisition, retention and upselling (i.e., How do you get customers? How do you keep customers? How do you continue to create value for them?).

(Note: boxes 5 and 4 are closely linked as everything you do revolves around retaining the customer and considering the customer lifecycle.)

Customer Segments – Your most important customers (e.g., seniors); consider the value of personas here.

Channels – How you deliver the value proposition. Will it be online, through physical means or a combination? Here, you identify which channels are the best (both desirable for customers as well as cost-efficient and cost-effective for the brand).

Cost Structure – Here you find the most essential cost drivers. This allows you to consider the return on investment (ROI).

Revenue Streams – Where you find potential revenue sources (e.g., advertising).

Sustainability – How sustainable your offering is overall, to the environment, to the social good, etc.

How to Build a Business Model Canvas

For the best results, follow these guidelines and aim to fill in all the gaps, looking out for cause-and-effect relationships that run between boxes/throughout:

Complete the top seven boxes (Key Partners to Customer Segments) – using all the information you can gather from your research.

Complete the next boxes:

Cost Structure – Determine the cost drivers from the Key Partners, Activities and Resources boxes; and

Revenue Streams – Determine these from the Customer Relationships, Customer Segments and Channels boxes.

Once you have established these, you can work to estimate them in monetary terms.

Complete the Sustainability box – according to the insights you’ve found.

Here’s an example of a business model canvas as a work in progress:

Overall, remember your canvas is a flexible tool. It’s also a living document that you can revisit and use to find the most effective alternatives. With a clear sense of goals, a keen eye for detail and ear for input, and a readiness to refine this canvas, you can use it to fine-tune the best service prototype every time.

Learn More about The Business Model Canvas

Take our Service Design course , featuring a template for service blueprints.

Read this example-rich piece by experienced strategy designer Justin Lokitz for tips on using the business model canvas .

Find some additional tips on how to make the most of your business model canvas here .

Literature on the Business Model Canvas

Here’s the entire UX literature on the Business Model Canvas by the Interaction Design Foundation, collated in one place:

Learn more about the Business Model Canvas

Take a deep dive into Business Model Canvas with our course Service Design: How to Design Integrated Service Experiences .

Services are everywhere! When you get a new passport, order a pizza or make a reservation on AirBnB, you're engaging with services. How those services are designed is crucial to whether they provide a pleasant experience or an exasperating one. The experience of a service is essential to its success or failure no matter if your goal is to gain and retain customers for your app or to design an efficient waiting system for a doctor’s office.

In a service design process, you use an in-depth understanding of the business and its customers to ensure that all the touchpoints of your service are perfect and, just as importantly, that your organization can deliver a great service experience every time . It’s not just about designing the customer interactions; you also need to design the entire ecosystem surrounding those interactions.

In this course, you’ll learn how to go through a robust service design process and which methods to use at each step along the way. You’ll also learn how to create a service design culture in your organization and set up a service design team . We’ll provide you with lots of case studies to learn from as well as interviews with top designers in the field. For each practical method, you’ll get downloadable templates that guide you on how to use the methods in your own work.

This course contains a series of practical exercises that build on one another to create a complete service design project . The exercises are optional, but you’ll get invaluable hands-on experience with the methods you encounter in this course if you complete them, because they will teach you to take your first steps as a service designer. What’s equally important is that you can use your work as a case study for your portfolio to showcase your abilities to future employers! A portfolio is essential if you want to step into or move ahead in a career in service design.

Your primary instructor in the course is Frank Spillers . Frank is CXO of award-winning design agency Experience Dynamics and a service design expert who has consulted with companies all over the world. Much of the written learning material also comes from John Zimmerman and Jodi Forlizzi , both Professors in Human-Computer Interaction at Carnegie Mellon University and highly influential in establishing design research as we know it today.

You’ll earn a verifiable and industry-trusted Course Certificate once you complete the course. You can highlight it on your resume, CV, LinkedIn profile or on your website.

All open-source articles on the Business Model Canvas

Service design - design is not just for products.

The Relationship Between Visual Design and User Experience Design

2 years ago

Open Access—Link to us!

We believe in Open Access and the democratization of knowledge . Unfortunately, world-class educational materials such as this page are normally hidden behind paywalls or in expensive textbooks.

If you want this to change , cite this page , link to us, or join us to help us democratize design knowledge !

Privacy Settings

Our digital services use necessary tracking technologies, including third-party cookies, for security, functionality, and to uphold user rights. Optional cookies offer enhanced features, and analytics.

Experience the full potential of our site that remembers your preferences and supports secure sign-in.

Governs the storage of data necessary for maintaining website security, user authentication, and fraud prevention mechanisms.

Enhanced Functionality

Saves your settings and preferences, like your location, for a more personalized experience.

Referral Program

We use cookies to enable our referral program, giving you and your friends discounts.

Error Reporting

We share user ID with Bugsnag and NewRelic to help us track errors and fix issues.

Optimize your experience by allowing us to monitor site usage. You’ll enjoy a smoother, more personalized journey without compromising your privacy.

Analytics Storage

Collects anonymous data on how you navigate and interact, helping us make informed improvements.

Differentiates real visitors from automated bots, ensuring accurate usage data and improving your website experience.

Lets us tailor your digital ads to match your interests, making them more relevant and useful to you.

Advertising Storage

Stores information for better-targeted advertising, enhancing your online ad experience.

Personalization Storage

Permits storing data to personalize content and ads across Google services based on user behavior, enhancing overall user experience.

Advertising Personalization

Allows for content and ad personalization across Google services based on user behavior. This consent enhances user experiences.

Enables personalizing ads based on user data and interactions, allowing for more relevant advertising experiences across Google services.

Receive more relevant advertisements by sharing your interests and behavior with our trusted advertising partners.

Enables better ad targeting and measurement on Meta platforms, making ads you see more relevant.

Allows for improved ad effectiveness and measurement through Meta’s Conversions API, ensuring privacy-compliant data sharing.

LinkedIn Insights

Tracks conversions, retargeting, and web analytics for LinkedIn ad campaigns, enhancing ad relevance and performance.

LinkedIn CAPI

Enhances LinkedIn advertising through server-side event tracking, offering more accurate measurement and personalization.

Google Ads Tag

Tracks ad performance and user engagement, helping deliver ads that are most useful to you.

Share Knowledge, Get Respect!

or copy link

Cite according to academic standards

Simply copy and paste the text below into your bibliographic reference list, onto your blog, or anywhere else. You can also just hyperlink to this page.

New to UX Design? We’re Giving You a Free ebook!

Download our free ebook The Basics of User Experience Design to learn about core concepts of UX design.

In 9 chapters, we’ll cover: conducting user interviews, design thinking, interaction design, mobile UX design, usability, UX research, and many more!

4-1 assignment: business model canvas | BUS 400 – Driving Business Opportunities | Southern New Hampshire University

Dec 4, 2023

NETFLIX -SPECIAL WEEKEND SUBSCRIPTION

The elevator pitch was a success! Senior management believes they made the right choice in giving you the title of CIO and putting you in charge of seizing new opportunities in the marketplace.

While the pitch conveyed your good idea, it was just that: an idea. You now have to test the feasibility of your idea. However, before you create a complete business model canvas (BMC), you want to quickly identify key elements needed to take your product or service idea to market.

In doing so, you will assume that all components of the BMC are at the fingertips of your project team. For example, you will have to work with the marketing and sales departments, and perhaps outside vendors and suppliers, to promote, advertise, and sell the product or service.

The Business Model Canvas Template you complete in this assignment will serve as the groundwork for the more detailed PowerPoint slide deck you will create in Milestone Two. As with any well-executed project, a former project manager experienced in such product-to-market initiatives has agreed to assess your complete BMC slide deck, which you will submit in Module Five.

For this assignment, consider the company you have selected and the work you have completed so far to further your business idea. Then, complete the Business Model Canvas Template linked in the Guidelines for Submission section with your assumptions about the key activities for your business idea, product, or service. Specifically, you must address the following rubric criteria:

Value proposition : Complete the Value Proposition building block by describing the value of your business idea, such as the customer need you are satisfying or the problem you are solving.
Front-stage considerations : Outline the segments related to your potential customers, which include the Customer Segments, Channels, and Customer Relationship building blocks.
Back-stage considerations : Make initial assumptions about how your business will work. This includes completing the Key Activities, Key Resources, and Key Partnership building blocks.
Financial considerations : Make reasonable assumptions about the segments that will inform your profit projections. These include the Cost Structure and Revenue Stream building blocks.

Guidelines for Submission

Complete and submit the Business Model Canvas Template PPT . Any sources cited should use APA formatting.

9.4: Business Model Canvas

Last updated
Save as PDF
Page ID 62807

How Can the Business Model Canvas Help Us to Describe and Assess a Business Model?

A business model describes the rationale of how an organization creates, delivers, and captures value. Entrepreneurs need to develop and refine a business model for themselves as they seek clarity about what they are doing, and also for discussing with colleagues, partners, and other stakeholders. Moreover, this business model will help them to identify opportunities in their internal and external environment. Originally developed by Alex Osterwalder and colleagues, the business model canvas covers the four main areas of any venture: customers, offering, infrastructure, and financial viability. There are nine building blocks that describe and assess a business model: customer segments, value propositions, channels, customer relationships, revenue streams, key resources, key activities, key partnerships, and cost structure. Table $\PageIndex{1}$. depicts the business model canvas.

Table $\PageIndex{1}$. (Attribution: Copyright Rice University, OpenStax, under CC BY-NC-SA 4.0 license)

Nine Building Blocks of the Business Model Canvas

Customer segments: Without customers, businesses cannot survive. Businesses must identify and understand their customers, and they can group these customers into segments with common characteristics.

Value propositions: A company creates value, or benefits, for customers by solving a problem or satisfying a need. The value proposition is the reason that customers choose one option over another when deciding what to buy. Although certainly not an exhaustive list, customers may value: newness, performance, customization, design, brand, price, cost reduction, risk reduction, accessibility, and convenience.

Channels: Channels bring the value proposition to the customers through communication, distribution, and sales. Companies can reach their customer segments through a mix of channels, both direct (e.g., through sales force and web sales) and indirect (e.g., through own stores, partner stores, and wholesalers), to raise awareness, allow for purchase and delivery, provide customer support, and support other important functions of the business.

Customer relationships: Companies need to maintain relationships with their customers to acquire and retain customers and boost sales. Strong customer relationships can significantly impact overall customer experience. There are many categories of customer relationships including personal assistance, self-service, automated service, user communities, and co-creation.

Revenue streams: There are two types of revenue stream: revenues from one-time customers and revenues from ongoing payments. Revenue pricing mechanisms vary from fixed (e.g., predefined prices based on static variables) to dynamic (e.g., price changes based on market conditions). Revenue streams can be generated through asset sales (e.g., selling a physical product), usage fees, subscription fees, licensing, brokerage fees, advertising, and temporarily selling the use of a particular asset (e.g., lending, renting, or leasing).

Key resources: Any business needs resources—physical, financial, intellectual, and/or human—to function. These resources enable the company to provide their products or services to their customers.

Key activities: Key activities are the critical tasks that a company does to succeed and operate successfully. Different companies focus on different activities in categories such as production, problem-solving, and platform/network.

Key partnerships: Companies build partnerships to optimize their business, reduce risk, or gain resources. There are four main types of partnerships: strategic alliances between noncompetitors, coopetition—strategic alliances between competitors, joint ventures, and buyer-supplier relationships.

Cost structure: All businesses incur costs through operation, whether fixed or variable. They may also face economies of scale and scope. Companies consider their cost structures in two strategies—cost-driven, where all costs are reduced wherever possible, and value-driven, where the focus is on greater value creation. Cost structures will often consider fixed costs, variable costs, economies of scale, and economies of scope.

Business Model Canvas Application: Apple

To best illustrate the business model canvas, we can take a look at Apple illustrated in Table $\PageIndex{2}$.

Customer segments : Apple’s main consumer segment is the mass market, and Apple sells globally to customers all over the world. These customers tend to have similar needs and problems that can be addressed through globally standardized offerings such as the iPhone and iPad (hardware) as well as iTunes (software).

Value proposition : In a competitive marketplace, Apple must offer a bundle of products and services that cater to the customer segment. As one illustration, Apple iTunes offers a seamless music experience where customers can easily find, purchase, and download music all in one place.

Channels : Customers are able to interact with Apple in person through retail stores and Apple stores as well as online through the iTunes store and Apple’s company website.

Customer relationships : Apple’s customers are dedicated to the brand and often have many Apple products, such as iPhones, iPads, and MacBooks. The Apple lovemark has become a status symbol.

Revenue streams : Apple earns most of its revenues from selling products such as iPods, and the iTunes store protects them from competition with similar features.

Key resources : Apple’s key resources include its name brand, hardware and software, and content.

Key activities : Apple products have outstanding marketing and hardware design.

Key partnerships : Through negotiations and contracts, Apple’s iTunes store is one of the world’s largest online music libraries.

Cost structure : Most of Apple’s costs come through manufacturing and marketing, including employee salaries.

Table $\PageIndex{2}$. (Attribution: Copyright Rice University, OpenStax, under CC BY-NC-SA 4.0 license)

The business model canvas can be used to determine how to compete, as either an initial entrant or a fast follower. An entrepreneurial organization is often a first mover by introducing a new product or service category that can potentially define an innovation’s characteristics in the minds of buyers, gaining valuable name recognition and brand loyalty. First movers can also lock in key resources (such as certain distribution channels) and set a technology standard. Second movers have the potential advantage of learning from and improving on the first mover’s efforts. For example, second movers can take advantage of existing customers and optimize the first mover’s product to add new features, especially when customers are willing to switch. Research on the battle between first and second movers indicates that they are equally likely to win the market. One illustration of first and second movers is in China’s competitive mobile payment industry.

EXPANDING AROUND THE GLOBE

The War of Two “Horses”: First and Second Movers in China’s Mobile Payment Industry

Over the last decade, Chinese people have been rapidly and systematically utilizing mobile payment—that is, payment services performed through a mobile device. This trend kicked off with China’s first e-commerce wholesale platform Alibaba, founded by Jack Ma from his humble apartment in Hangzhou, China, in 1999. Responding to eBay’s growing presence in China a few years later, Jack Ma launched taobao.com, a consumer-to-consumer (C2C) and business-to-consumer (B2C) online marketplace. To support taobao.com’s transactions, Jack Ma released Alipay later that year as a “third-party online payment platform.” Mobile payment became a reality in China when Alipay released its mobile app in 2008, which can be used to pay water, electricity, and gas bills as well as mobile phone fees. After 2011, when the first third-party payment license was issued to Alipay, more Chinese consumers replaced their credit cards and debit cards with Alipay. By 2013, Alipay overtook PayPal as the world's largest mobile payment platform. Alipay dominated 69.6 percent of China’s mobile payment market. Jack Ma was the “only horse” (the surname Ma means “horse” in Chinese) in the field and a clear first mover, but faced a solid rival in second mover IT giant Tencent.

Ma Huateng founded Tencent Inc. in 1998, and its early years focused on the iconic product of QQ, China’s first instant messaging software product. Tencent expanded into other Internet fields such as games, music, microblogging, and online shopping. By 2011, Tencent’s QQ was China’s most successful instant messaging software with over 700 million active users, and the company released WeChat, another instant messaging software product. Tencent’s two software products competed in the same space, with QQ primarily PC-based with “online” and “offline” status, and WeChat smartphone-based without “offline” status. WeChat soon acquired over 300 million users. Tencent is often described as a successful “second mover,” imitating a promising business model introduced by innovative first-mover firms and then surpassing these firms.

The two IT giants faced off in 2013 when each invested in a taxi booking app: Didi (by Tencent) and Kuaidi (by Alibaba). In an August 2013 5.0 version update of WeChat, users were surprised to find a “wallet” function added to the app, but most did not know how to use it. However, for Jack Ma and Ma Huateng, all had become clear: the two “horses” were going to war.

Tencent offered and then linked three seemingly unrelated apps: smartphone-based WeChat, taxi-booking app Didi, and a new wallet function. In January 2014, WeChat wallet was linked to Didi as the payment method. Passengers using WeChat to pay the taxi fare received a generous subsidy from Tencent, making taxi fare lower than bus fare. Alipay and the Kuaidi app responded in a similar way. While widely welcomed by white-collar workers, the money-burning campaign cost each side approximately 1.5 billion RMB (US$244 million). For Ma Huateng, the campaign is not just about occupying the newly born taxi-booking app market in China, but also about penetrating Jack Ma’s precious share of the mobile payment market by “teaching” WeChat users how to use make mobile payments. Weeks later, Ma Huateng continued his “teaching” in the virtual red envelope campaign during Chinese Spring Festival. The virtual red envelope is modeled after the Chinese tradition of exchanging packets of money among friends and family members during holidays. WeChat introduced the “red envelope shake” to the Chinese Spring Festival Gala, during which users were invited to shake their smartphones for a chance to win red envelopes, and eight million WeChat users participated in this promotion campaign. WeChat users can save the money won to their WeChat “wallet” and then send it to others with their own red envelope. WeChat sent 1.2 billion red envelopes worth over half a billion RMB (US$82 million) during the promotion. However, to use the money from the red envelope, WeChat users needed to add their bank card to their WeChat account and thus fully activate the WeChat payment function. Retrospectively, Jack Ma regarded the WeChat red envelope promotion as a “Pearl Harbor attack” on his territory.

After the Chinese Spring Festival, the money-burning war game between first mover Alipay and second mover WeChat continued. Both sides heavily subsidized taxi passengers on their taxi-booking apps through 2014. In the third quarter of 2014, Alipay’s market share reached a peak of 82.6 percent, but WeChat’s increasing presence the in mobile payment market was unstoppable. Both sides engaged in a new red envelope campaign during the next Spring Festival holiday. While Alipay fought hard to defend its market share, WeChat’s social nature smoothly transformed users into payers.

By the end of 2016, both sides saw continuous growth in user population; however, Alipay’s market share dropped to 54.10 percent, and Tencent and WeChat’s market share rose to 37.02 percent. In that year, consumers spent 157.55 trillion RMB (US$23.72 trillion) on mobile devices in China, and QR codes and POS machines supporting both Alipay and WeChat could be found at street food vendors, supermarkets, department stores, and online markets.

Discussion Questions:

What tactics did Tencent use to encroach on Alibaba’s share of the mobile payment market?
What key resources did WeChat use to compete with Alipay?
Does WeChat’s presence in the mobile payment market always negatively affect Alipay?
Would you rather be a first mover or a second mover in a new technology market?

Sophia Yan, “6 things you never knew about Alibaba”, CNN, May 12, 2015, http://money.cnn.com/2015/05/12/tech...cts/index.html ;

Paul Mozur, “In Urban China, Cash Is Rapidly Becoming Obsolete”, New York Times, July 16, 2017, https://www.nytimes.com/2017/07/16/b...-payments.html ;

Eva Xiao, “How WeChat Pay became Alipay’s largest rival”, Tech in Asia, April 20, 2017, https://www.techinasia.com/wechat-pay-vs-alipay ;

Anonymous Author, “WeChat”, Wikipedia, October 2 2017, https://en.Wikipedia.org/wiki/WeChat...yment_services ;

Anonymous Author, “WeChat red envelope”, Wikipedia, September 19, 2017, https://en.Wikipedia.org/wiki/WeChat_red_envelope ;

Anonymous Author, “Alipay”, Wikipedia; September 8, 2017, https://en.Wikipedia.org/wiki/Alipay ;

Nie Chenjing, “Mobile Payment Report: Alipay Shares Occupy Half of the Country”, Xinhuanet, March 31, 2017; http://news.xinhuanet.com/fortune/20...1120732899.htm ;

Li Yanxia, “Central Bank Report: China Mobile’s payment amount increased by nearly 50% year-on-year in 2016, March 16, 2017, http://it.people.com.cn/n1/2017/0316...-29150183.html .

CONCEPT CHECK

What are the key components of the business model canvas?
What are the advantages and disadvantages of being a first mover?

Ivory Lessons

4-1 Assignment: Business Model Canvas

The elevator pitch was a success! Senior management believes they made the right choice in giving you the title of CIO and putting you in charge of seizing new opportunities in the marketplace.

Value proposition : Complete the Value Proposition building block by describing the value of your business idea, such as the customer need you are satisfying or the problem you are solving.
Front-stage considerations : Outline the segments related to your potential customers, which include the Customer Segments, Channels, and Customer Relationship building blocks.
Back-stage considerations : Make initial assumptions about how your business will work. This includes completing the Key Activities, Key Resources, and Key Partnership building blocks.
Financial considerations : Make reasonable assumptions about the segments that will inform your profit projections. These include the Cost Structure and Revenue Stream building blocks.

Guidelines for Submission

Complete and submit the Business Model Canvas Template PPT. Any sources cited should use APA formatting.

Order a similar assignment, and have writers from our team of experts write it for you, guaranteeing you an A

ECE332 Week 3 Journal

Ashford ECE 332 Week 3 Journal Piaget and Me Piaget and You. Consider what age group you hope to work with and reflect on which aspects of Piaget’s theory will be the most useful to you in your future career. How will this information be useful in your everyday work with children? Will it change…

Wilmu SEC6060 Business Impact Analysis

Description After watching the video, Business Impact Analysis, Business Impact Analysis (Links to an external site.) Discuss the critical need business impact analysis for organizations. Research and develop one “weighted” matrix for an organization. The matrix should begin with 5-7 business functions for the organization. Considerations for the BIA should include revenue impact, profit impact…

Purdue PA110 2019 September Unit 7 Quiz Latest

PA110 Civil Litigation Unit 7 Quiz Question 1 For whatever reason, if the plaintiff does not like the defendant’s choice of independent medical examiner, the defendant will have to select an alternative examiner. Question options: True False Question 2 The respondent must produce business records in the same form and condition as they…

NRSE6050 2020 August Week 10 Assignment Latest

NRSE6050 Policy and Advocacy for Improving Population Health Week 10 Assignment Assessing a Healthcare Program/Policy Evaluation Program/policy evaluation is a valuable tool that can help strengthen the quality of programs/policies and improve outcomes for the populations they serve. Program/policy evaluation answers basic questions about program/policy effectiveness. It involves collecting and analyzing information about program/policy activities,…

In a recent city meeting, it was agreed that the city was going to build

write 400–600 words In a recent city meeting, it was agreed that the city was going to build a new town hall. Long-term bonds, intergovernmental transfers, and public donations will be used to construct and maintain the building. The major discussion was how to record the donations meant to fund ongoing maintenance costs. One group…

Jenn Nester's Blog

Disrupting Traditional Education at Every Turn

Revised Business Model Canvas

Refined Business Model Canvas

Ten practical lessons from the business (revenue) models of ventures we reviewed today (or others you research) as they relate to your venture.

1) End to end operation (Aravind)

Creating game, bringing game to customers, teaching them how to use, and following up with maintenance services so they are “served” from start to end

2) Building capacity (Reel Gardening)

Train people on the ground (e.g., undergrads, grad students at Lehigh, across colleges) to keep training others and advancing the work of the project.
During research implementation stage, we emphasize professional development of the staff members of our partnering educational institutions, so that we consolidate the procedure and make it easier to use the iVR

3) Task-shifting (Aravind)

Giving people in the project less skilled but time consuming tasks to divide work and optimize the workflow

4) Optimization of indigenous knowledge (Barefoot College)

Teaching from the history of the local area and watershed and using their experience as key resources

5) Certified by the community (Barefoot College)

Experience and effectiveness of our technology will be certified by the people who use it/secondary customers as a key, educational experience; they will not receive a certificate or tangible product, but a set of knowledge

6) Educational Game-changer value proposition (Reel Gardening)

Engaging and fun gamified learning experiences containing integrated STEM disciplines.
Listening to teachers in our very first presentations was key for this change. Although they loved the idea of using VR for teaching and learning, ALL of them dreaded the fact of having a bulky computer taking up space in their classroom and all wires involved in the HTC Vive VR set up.

7) Redefine value (Barefoot College)

Like redefining professionalism and focusing on skills and knowledge that is not considered mainstream, the value of the content knowledge of our project can be redefined even if environmental science and watershed education is not a traditional topic.
Similarly, once we have our learning curriculum defined, instructional narratives storyboarded, we could select a more appropriate hardware for delivering our project (if need be).
Creating unique value by developing immersive VR instructional materials. capitalize on emergent technology hardware and mainstream platforms of social engagement (e.g., video games, gamified experiences)

8) When speaking of impact, have different value propositions for different customer segments (Envirofit)

Our technology is very new which means that the nature centers/libraries with the resources to obtain the Oculus GO headsets are our primary customers, we need to have a different value proposition for them than our secondary customers who are the visitors to the centers and libraries
Look at the overall picture and how different customer segments might be related to each other

9) Leverage organizations to help advance the venture forward (Reel Gardening)

Working with other organizations to promote ourselves and create more impact because our goal is the education of watersheds in a better, engaging, and personal-relatable way; we can team up with other universities who are also working on teaching watersheds and technology companies that might want to sponsor this type of non-traditional learning with environmental and social impact to reach more people.

10) Linked prosperity along value chain (Greyston Bakery)

Creating value and benefit for everyone involved because there are multiple customer segments; primary customers (i.e. nature centers & libraries) have added value in that they receive more visitors if word spreads that they have fun and engaging learning modules → more funds for them to operate → self sustaining model of promotion by popular word of mouth; secondary customers (visitors/students) are able to learn about environmental issues in an engaging way → overall positive attitude on their local community & watershed → long term positive environmental impact
Change in larger system order