Business Design and Evaluation

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 Business Model Design

Business model design sets out to define how

an enterprise creates, delivers and captures
market value.
It is key to understanding how a business
model can be invented to define a new
venture for producing products or services to
potentially target customer segments.
 Business Model Canvas
The canvas can be developed using paper
prototyping techniques where each of the
elements are represented by note cards and
modified easily during the design process
 Design Process
Step 1 Starting a new venture by forming a team
consisting of intrapreneurs, enterprise
architects and executives from existing
business units.
They will identify shared services and data
that would support the new ventures.
 Enterprise Architectures
MIT Center for Information Systems Research in 2007
Enterprise architecture is the organizing logic for
business processes and IT infrastructure reflecting
the integration and standardization requirements of
the company's operating model.
The operating model is the desired state of business
process integration and business process
standardization for delivering goods and services to
customers.
 Enterprise Architectures

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te gi c i s
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Enterprise Architectures
 Design Process
Step 2 The team will seek to understand the
viability of the value propositions by conduct
market research and identifying how they can
take shape with new products and services.
For analyzing customer contexts and feedback
to gain a deep understanding of the needs and
problems that present an opportunity.
 The design Phase
Step 3 The team create Business model prototyping is the key
activity to experiment with various designs on the Business
Model Canvas.
The team can use post-it notes on a wall in the design room to
rapidly change the elements in the Business Model Canvas.
Different versions of proposed business model prototypes can
be evaluated to determine best fit and optimal viability for the
target Customer Segments.
Other factors such as Key Resources and Key Activities can be
assessed to support Channels, Customer Relationships, and
Revenue Streams.
 In fact, it is in the design phase that enterprise
architects begin the process of mapping the
business model to an operating model.
Enterprise architects collaborate with
intrapreneurs to identify the data and
processes to enable the elements in the
business model.
 Conclusion: The Design Process

The process for designing business models

consists of four stages that are repeated in an
iterative process:
Insight
Ideation
Prototype/build
Test
 Why Evaluate a Business Model
The reasons for these needs can be;
Have awareness of their strengths and weaknesses,
Analyze how well their team has performed,
Create quantitative goals and encourage smart
spending,
Provide delegate decision-making and responsibility to
the team,
Streamline their businesses so they are get more
market share and have increased cash flows,
Planning for appropriate action to solve obstacles.
 Evaluation Companys Competitive
Advantage
what sets the business model apart from others
of its kind in the market
The business models ability to remain unique
from the rest.
How difficult it is for others to emulate the same
model due to the unique factors that make it up.
how well the business model has the ability to
continue remains viable.
Concept for Assessing Business Models
To assess a business model by using a SWOT for the
entire model and then additionally a SWOT for each
building block of the model. And comparing with
competitors
MEASURES OF ASSESSING BUSINESS MODELS

1. Are your switching costs a deterrent to

customer churn?
The cost time or effort it would cost a
customer to find another product and service
an is called switching costs and most
organizations strive to keep switching costs
high, so customers continue to use their
product and service.
 Example: Switching Costs
Contractual cost is the penalty charged by the
old provider when leaving
 Example: Switching Costs
Conversely, the firms must try to lower these
costs for the competitors customer so as to
attract him to come to the firm, and give it a
try. (Credit Card Loan Transfer)
2. How scaleable is your business model?

Scale-ability refers to how easily the business

model allows the owner to increase the size of
the business without a significant impact on
the bottom line.
 Example: Scale-ability
Facebook is a valid example since it required
only a few thousand engineers to create
profiles for millions of users
3. Does your business model produce recurring
revenue?
Recurring revenue is revenue that the
company gets on a regular basis through
repeat customers without having to expend
any extra money to keep them attracted to
your business.
 Example: recurring revenue
Customer must pay a subscription price to have
access to the product/service.
The model was pioneered by magazines and
newspapers, but is now used by many businesses
and websites.
4. Do you earn before you spend?

This is an obvious metric and one used with

great success by Dell, who would assemble
the computer once the order has been booked
creating revenue before any costs are
incurred. This helps the business remain
liquid.
 Example: Dell
Why assemble -to- order products?
This allows for Dell to make the product to
the customers liking but still get them product
quickly.

https://www.youtube.com/watch?
v=G71CMm2-eiw
5. How much do you get others to do the work?

The kind of business model that saves you the

labor costs and asks others, sometimes even
the customer, to help put together or create
the product.
 Example: IKEA
Customers have to assemble their own furniture. IKEA can
save labor and storage costs.
6.Does your business model provide built in
protection from competition?
Some business models are so unique in their
features that they become impossible to
emulate which is a competitive advantage
permanently belonging to the business owner.
Example
7. Is your business model based on a game
changing cost structure?
Outsourcing Turns Fixed Costs Into Variable
Costs

https://www.entrepreneur.com/article/217487
 Sales: Instead of hiring full-time salespeople
and paying with weekly or monthly wages,
change to a percentage basis.
Manufacturing: You don't have to own a
factory just because you want to produce,
assemble, store, ship and build your product.
Contract manufacturers are happy to do all or
some of the above for you.
Public relations
Administration Inventors/designers