Business Model Assessment 2 Business Model Assessment 2 (1/8) How would your value proposition bring utility to the customer? To what extend? * 1 – The business model wouldn’t add value or differentiation compared to existing options 2 – A new fashion restaurant 3 – Dell 4 – IKEA, McDonalds 5 – The business model would add important advantages for the potential customer, either huge savings in effort and money or real and exciting benefits. (Ryanair, Cirque du Soleil) Are all the necessary complements already available? If not, can we obtain those complements or develop them conveniently and at a reasonable price? * 1 – The business model requires legal development which for the entrepreneur is out of reach 2 – The BM requires expensive changes for you and the customer 3 – The BM requires technological changes that you do not control 4 – The BM requires technological changes, but these are available to you 5 – The business model includes a complete solution and doesn’t require any change How large is the market in terms of both customer volume and purchasing power? * 1 – The market is very small (only local, with very few customers, very few purchases by each customer and/or in small amounts 2 – Limited markets with a low level of repetitive purchases 3 – Markets with numerous customers but with small purchases or a low level of repetitive purchases 4 – Not massive but attractive market because of repetitive or big purchases 5 – There is a massive market, with huge volume of potential customers that spend a lot of money on these kinds of products or services How difficult will it be to explain the benefits of the value proposition to the potential customers? * 1 – The business model entails a radical change in the way in which customers do things. (Remote teaching systems that require satellite connection) 2 – CRM systems 3 – Multi-sided platforms such as Google Adwords 4 – Ryanair 5 – The business model value for the customer is obvious and doesn’t require any kind of explanation, additional costs or effort (IBM computer renting scheme) Would potential customers be ready to pay the price and make the effort the new business model requires? * 1 – Potential customers are very reluctant to pay for the kind of services the new business model offers, or they are not ready to make the necessary effort (Usually free services on the internet) 2 – New solutions for industrial companies that have invested huge amounts of money on previous technology 3 – Offers that imply a huge investment 4 – Customers must make relevant efforts (IKEA) 5 – Potential customers will be ready to pay and make the effort the business model demands (Limited efforts and low prices (Ryanair, Starbucks)) Will it be costly for us to offer the value proposition?, or, on the contrary, will it give us an attractive margin? * 1 – The business model doesn’t include mechanisms that reduce the unit costs (like economies of scale) or network effects that can function as a growth engine (Services with a high component of personal attention) 2 – Economies of scale but only available at corporate level or similar (Starbucks) 3 – Economies of scale on distribution or manufacturing (Dell) 4 – Strong economies of scale or self service in key tasks (IKEA) 5 – The business model includes mechanisms, like economies of scale or network effects, that reduce costs, give attractive margins, and can function as a growth engine (Very reduced costs because of its high digitalization and total self-service (Google Adwords)) Are there many alternative value propositions competing for the same customer? How valuable are they? How strong are those competitors? * 1 – There are several strong competitors whose business models are similar or better than ours. (The market is mature and has numerous and strong competitors) 2 – The market is mature and competitors are stronger than us, although we differentiate (Starbucks) 3 – Market is mature, with strong competitors, we have a markedly differentiation (Dell) 4 – We can compete with a definitely relative superiority (IKEA) 5 – There are few and weak competitors and our business model is clearly superior to theirs (The competition doesn’t exist, or it is very weak (Cirque du Soleil)) Does the business model provide a mechanism to hold imitators at bay? * 1 – The business model can’t be protected from copying, and there is no mechanism to discourage competitors from replicating the model. (Very easy to replicate) 2 – Very easy to replicate and can only be protected by marketing tools (Starbucks) 3 – Hard to replicate because it requires an important volume of investment (Dell) 4 – Protected by network effects or similar mechanisms that help the first mover (Google Adwords) 5 – The business model has legal protection mechanisms (patents for core elements), or requires resources and capabilities which are hard to obtain for competitors (Legal protection (patents)) Company name * Business model version or name Next Δ
