Crafting Business Models

Crafting Business ModelsChapter 2

Source: Applegate, Lynda M., Robert D. Austin, and F. Warren McFarlan, Corporate Information Strategy and Management. Burr Ridge, IL: McGraw-Hill/Irwin, 2002.

Components of a Business Model

Chapter 2 Figure 2-1

Source: Applegate, Lynda M., Robert D. Austin, and F. Warren McFarlan, Corporate Information Strategy and Management. Burr Ridge, IL: McGraw-Hill/Irwin, 2002.

Chapter 2 Figure 2-1

Components of a Business Model (continued)

What is it?

How will we?

An organization's business concept defines its strategy. The concept is based on analysis of:

Market opportunity

Product and services offered

Competitive dynamics

Strategy for capturing a dominant position

Strategic options for evolving the business

Attract a large and loyal community?

Deliver value to all community members?

Price our product to achieve rapid adoption?

Become #1 or #2?

Evolve the business to "cash in on strategic options"?

Generate multiple revenue streams?

Erect barriers to entry?

Manage risk and growth?

Source: Applegate, Lynda M., Robert D. Austin, and F. Warren McFarlan, Corporate Information Strategy and Management. Burr Ridge, IL: McGraw-Hill/Irwin, 2002.

Chapter 2 Figure 2-1

Components of a Business Model (continued)

What is it?

How will we?

An organization's capabilities define resources needed to execute strategy. Capabilities are built and delivered through its:

People and partners

Organization and culture

Operations

Marketing/sales

Leadership/Management process

Business development/Innovation process

Infrastructure/Asset efficiency

Achieve best-in-class operating performance?

Develop modular, scalable, and flexible infrastructure?

Build and manage strong partnerships with employees and the community?

Increase the lifetime value of all members of the community?

Build, nurture, and exploit knowledge assets?

Make informed decisions and take actions that increase value?

Organize for action and agility?

Source: Applegate, Lynda M., Robert D. Austin, and F. Warren McFarlan, Corporate Information Strategy and Management. Burr Ridge, IL: McGraw-Hill/Irwin, 2002.

Chapter 2 Figure 2-1

Components of a Business Model (continued)

What is it?

How will we?

A high-performing organization returns value to all stakeholders. This value is measured by:

Benefits returned to all stakeholders

Benefits returned to the firm and its owners

Market share and performance

Brand and reputation

Financial performance

Deliver value to all stakeholders?

Claim value from stakeholder relationships and transactions?

Increase market share and drive new revenues off existing customers?

Increase brand value and reputation?

Generate confidence and trust?

Ensure strong growth in earnings?

Generate positive equity cash flow?

Increase stock price and market value?

Source: Applegate, Lynda M., Robert D. Austin, and F. Warren McFarlan, Corporate Information Strategy and Management. Burr Ridge, IL: McGraw-Hill/Irwin, 2002.

Chapter 2 Figure 2-2

Linking Strategy to Value

Source: Applegate, Lynda M., Robert D. Austin, and F. Warren McFarlan, Corporate Information Strategy and Management. Burr Ridge, IL: McGraw-Hill/Irwin, 2002.

Chapter 2 Figure 2-3

Classifying Network Business Models

Market Roles

Value Chain Roles

SuppliersProducersDistributorsCustomers

Design & BuildConnect

- Products- Buyers

- Services- Sellers

Model characteristics BBNI

Businesses Built on Network Infrastructure

Business Models Characteristics

SuppliersProducersDistributorsCustomers

1) Producers1) Focused Distributors

- Sell physical products or- Assume control of inventory?

provide face-to-face service?

- Sell online?

- Sell info based products or

services?- Online negotiation or bidding?

- Provide customized- Physical product or service?

products or services?

2) Portals

- Provide gateway access to full range

of online info & services?

- Provide access to deep content,

products and services within

vertical industry?

- Provide info and services to all

types of users?

BBNI models

Businesses Built on Network Infrastructure

Business Models

SuppliersProducersDistributorsCustomers

1) Producers1) Focused Distributors

- Manufacturers- Retailer

- Service providers- Marketplace

- Educators- Aggregator

- Advisers- Infomediary

- Information & news- Exchange

service

2) Portals

- Producer portals

- Horizontal

- Vertical

- Affinity

Model characteristics BPNI

Businesses Providing Network Infrastructure

Business Models Characteristics

SuppliersProducersDistributorsCustomers

1) Infrastructre Producers1) Infrastructure Distributors

- Manufacture computer or network- Assume control of inventory?

components or equipment?

- Sell online?

- Develop packaged software?

- Online negotiation or bidding?

- Provide infrastructure

services or consulting?- Physical product or service?

2) Infrastructure Portals

- Provide "gateway access" to networks,

data centers, or web services?

- Host, operate, and maintain networks

data centers or web services?

- Provide access to hosted application

services?

BPNI models

Businesses Providing Network Infrastructure

Business Models

SuppliersProducersDistributorsCustomers

1) Infrastructure Producers1) Infrastructure Distributors

- Equipment/ component- Infrastructure retailers

manufacurers

- Infrastructure market places

- Software firms

- Infrastructure aggregators

- Custom software and integration

service providers- Infrastrucure exchanges

- Infrastrucure services

2) Infrastructure Portals

- Horizontal infrastructure portals

- Vertical infrastruture portals

Sheet3

Market Roles

Value Chain Roles

SuppliersProducersDistributorsCustomers

Design & BuildConnect

- Products- Buyers

- Services- Sellers

Model characteristics BBNI

Businesses Built on Network Infrastructure

Business Models Characteristics

SuppliersProducersDistributorsCustomers

1) Producers1) Focused Distributors

- Sell physical products or- Assume control of inventory?

provide face-to-face service?

- Sell online?

- Sell info based products or

services?- Online negotiation or bidding?

- Provide customized- Physical product or service?

products or services?

2) Portals

- Provide gateway access to full range

of online info & services?

- Provide access to deep content,

products and services within

vertical industry?

- Provide info and services to all

types of users?

BBNI models

Businesses Built on Network Infrastructure

Business Models

SuppliersProducersDistributorsCustomers

1) Producers1) Focused Distributors

- Manufacturers- Retailer

- Service providers- Marketplace

- Educators- Aggregator

- Advisers- Infomediary

- Information & news- Exchange

service

2) Portals

- Producer portals

- Horizontal

- Vertical

- Affinity

Model characteristics BPNI

Businesses Providing Network Infrastructure

Business Models Characteristics

SuppliersProducersDistributorsCustomers

1) Infrastructre Producers1) Infrastructure Distributors

- Manufacture computer or network- Assume control of inventory?

components or equipment?

- Sell online?

- Develop packaged software?

- Online negotiation or bidding?

- Provide infrastructure

services or consulting?- Physical product or service?

2) Infrastructure Portals

- Provide "gateway access" to networks,

data centers, or web services?

- Host, operate, and maintain networks

data centers or web services?

- Provide access to hosted application

services?

BPNI models

Businesses Providing Network Infrastructure

Business Models

SuppliersProducersDistributorsCustomers

1) Infrastructure Producers1) Infrastructure Distributors

- Equipment/ component- Infrastructure retailers

manufacurers

- Infrastructure market places

- Software firms

- Infrastructure aggregators

- Custom software and integration

service providers- Infrastrucure exchanges

- Infrastrucure services

2) Infrastructure Portals

- Horizontal infrastructure portals

- Vertical infrastruture portals

Sheet3

Market Roles

Value Chain Roles

SuppliersProducersDistributorsCustomers

Design & BuildConnect

- Products- Buyers

- Services- Sellers

Model characteristics BBNI

Businesses Built on Network Infrastructure

Business Models Characteristics

SuppliersProducersDistributorsCustomers

1) Producers1) Focused Distributors

- Sell physical products or- Assume control of inventory?

provide face-to-face service?

- Sell online?

- Sell info based products or

services?- Online negotiation or bidding?

- Provide customized- Physical product or service?

products or services?

2) Portals

- Provide gateway access to full range

of online info & services?

- Provide access to deep content,

products and services within

vertical industry?

- Provide info and services to all

types of users?

BBNI models

Businesses Built on Network Infrastructure

Business Models

SuppliersProducersDistributorsCustomers

1) Producers1) Focused Distributors

- Manufacturers- Retailer

- Service providers- Marketplace

- Educators- Aggregator

- Advisers- Infomediary

- Information & news- Exchange

service

2) Portals

- Producer portals

- Horizontal

- Vertical

- Affinity

Model characteristics BPNI

Businesses Providing Network Infrastructure

Business Models Characteristics

SuppliersProducersDistributorsCustomers

1) Infrastructre Producers1) Infrastructure Distributors

- Manufacture computer or network- Assume control of inventory?

components or equipment?

- Sell online?

- Develop packaged software?

- Online negotiation or bidding?

- Provide infrastructure

services or consulting?- Physical product or service?

2) Infrastructure Portals

- Provide "gateway access" to networks,

data centers, or web services?

- Host, operate, and maintain networks

data centers or web services?

- Provide access to hosted application

services?

BPNI models

Businesses Providing Network Infrastructure

Business Models

SuppliersProducersDistributorsCustomers

1) Infrastructure Producers1) Infrastructure Distributors

- Equipment/ component- Infrastructure retailers

manufacurers

- Infrastructure market places

- Software firms

- Infrastructure aggregators

- Custom software and integration

service providers- Infrastrucure exchanges

- Infrastrucure services

2) Infrastructure Portals

- Horizontal infrastructure portals

- Vertical infrastruture portals

Sheet3

Market Roles

Value Chain Roles

SuppliersProducersDistributorsCustomers

Design & BuildConnect

- Products- Buyers

- Services- Sellers

Model characteristics BBNI

Businesses Built on Network Infrastructure

Business Models Characteristics

SuppliersProducersDistributorsCustomers

1) Producers1) Focused Distributors

- Sell physical products or- Assume control of inventory?

provide face-to-face service?

- Sell online?

- Sell info based products or

services?- Online negotiation or bidding?

- Provide customized- Physical product or service?

products or services?

2) Portals

- Provide gateway access to full range

of online info & services?

- Provide access to deep content,

products and services within

vertical industry?

- Provide info and services to all

types of users?

BBNI models

Businesses Built on Network Infrastructure

Business Models

SuppliersProducersDistributorsCustomers

1) Producers1) Focused Distributors

- Manufacturers- Retailer

- Service providers- Marketplace

- Educators- Aggregator

- Advisers- Infomediary

- Information & news- Exchange

service

2) Portals

- Producer portals

- Horizontal

- Vertical

- Affinity

Model characteristics BPNI

Businesses Providing Network Infrastructure

Business Models Characteristics

SuppliersProducersDistributorsCustomers

1) Infrastructre Producers1) Infrastructure Distributors

- Manufacture computer or network- Assume control of inventory?

components or equipment?

- Sell online?

- Develop packaged software?

- Online negotiation or bidding?

- Provide infrastructure

services or consulting?- Physical product or service?

2) Infrastructure Portals

- Provide "gateway access" to networks,

data centers, or web services?

- Host, operate, and maintain networks

data centers or web services?

- Provide access to hosted application

services?

BPNI models

Businesses Providing Network Infrastructure

Business Models

SuppliersProducersDistributorsCustomers

1) Infrastructure Producers1) Infrastructure Distributors

- Equipment/ component- Infrastructure retailers

manufacurers

- Infrastructure market places

- Software firms

- Infrastructure aggregators

- Custom software and integration

service providers- Infrastrucure exchanges

- Infrastrucure services

2) Infrastructure Portals

- Horizontal infrastructure portals

- Vertical infrastruture portals

Sheet3

Market Roles

Value Chain Roles

SuppliersProducersDistributorsCustomers

Design & BuildConnect

- Products- Buyers

- Services- Sellers

Model characteristics BBNI

Businesses Built on Network Infrastructure

Business Models Characteristics

SuppliersProducersDistributorsCustomers

1) Producers1) Focused Distributors

- Sell physical products or- Assume control of inventory?

provide face-to-face service?

- Sell online?

- Sell info based products or

services?- Online negotiation or bidding?

- Provide customized- Physical product or service?

products or services?

2) Portals

- Provide gateway access to full range

of online info & services?

- Provide access to deep content,

products and services within

vertical industry?

- Provide info and services to all

types of users?

BBNI models

Businesses Built on Network Infrastructure

Business Models

SuppliersProducersDistributorsCustomers

1) Producers1) Focused Distributors

- Manufacturers- Retailer

- Service providers- Marketplace

- Educators- Aggregator

- Advisers- Infomediary

- Information & news- Exchange

service

2) Portals

- Producer portals

- Horizontal

- Vertical

- Affinity

Model characteristics BPNI

Businesses Providing Network Infrastructure

Business Models Characteristics

SuppliersProducersDistributorsCustomers

1) Infrastructre Producers1) Infrastructure Distributors

- Manufacture computer or network- Assume control of inventory?

components or equipment?

- Sell online?

- Develop packaged software?

- Online negotiation or bidding?

- Provide infrastructure

services or consulting?- Physical product or service?

2) Infrastructure Portals

- Provide "gateway access" to networks,

data centers, or web services?

- Host, operate, and maintain networks

data centers or web services?

- Provide access to hosted application

services?

BPNI models

Businesses Providing Network Infrastructure

Business Models

SuppliersProducersDistributorsCustomers

1) Infrastructure Producers1) Infrastructure Distributors

- Equipment/ component- Infrastructure retailers

manufacurers

- Infrastructure market places

- Software firms

- Infrastructure aggregators

- Custom software and integration

service providers- Infrastrucure exchanges

- Infrastrucure services

2) Infrastructure Portals

- Horizontal infrastructure portals

- Vertical infrastruture portals

Sheet3

Market Roles

Value Chain Roles

SuppliersProducersDistributorsCustomers

Design & BuildConnect

- Products- Buyers

- Services- Sellers

Model characteristics BBNI

Businesses Built on Network Infrastructure

Business Models Characteristics

SuppliersProducersDistributorsCustomers

1) Producers1) Focused Distributors

- Sell physical products or- Assume control of inventory?

provide face-to-face service?

- Sell online?

- Sell info based products or

services?- Online negotiation or bidding?

- Provide customized- Physical product or service?

products or services?

2) Portals

- Provide gateway access to full range

of online info & services?

- Provide access to deep content,

products and services within

vertical industry?

- Provide info and services to all

types of users?

BBNI models

Businesses Built on Network Infrastructure

Business Models

SuppliersProducersDistributorsCustomers

1) Producers1) Focused Distributors

- Manufacturers- Retailer

- Service providers- Marketplace

- Educators- Aggregator

- Advisers- Infomediary

- Information & news- Exchange

service

2) Portals

- Producer portals

- Horizontal

- Vertical

- Affinity

Model characteristics BPNI

Businesses Providing Network Infrastructure

Business Models Characteristics

SuppliersProducersDistributorsCustomers

1) Infrastructre Producers1) Infrastructure Distributors

- Manufacture computer or network- Assume control of inventory?

components or equipment?

- Sell online?

- Develop packaged software?

- Online negotiation or bidding?

- Provide infrastructure

services or consulting?- Physical product or service?

2) Infrastructure Portals

- Provide "gateway access" to networks,

data centers, or web services?

- Host, operate, and maintain networks

data centers or web services?

- Provide access to hosted application

services?

BPNI models

Businesses Providing Network Infrastructure

Business Models

SuppliersProducersDistributorsCustomers

1) Infrastructure Producers1) Infrastructure Distributors

- Equipment/ component- Infrastructure retailers

manufacurers

- Infrastructure market places

- Software firms

- Infrastructure aggregators

- Custom software and integration

service providers- Infrastrucure exchanges

- Infrastrucure services

2) Infrastructure Portals

- Horizontal infrastructure portals

- Vertical infrastruture portals

Sheet3

Market Roles

Value Chain Roles

SuppliersProducersDistributorsCustomers

Design & BuildConnect

- Products- Buyers

- Services- Sellers

Model characteristics BBNI

Businesses Built on Network Infrastructure

Business Models Characteristics

SuppliersProducersDistributorsCustomers

1) Producers1) Focused Distributors

- Sell physical products or- Assume control of inventory?

provide face-to-face service?

- Sell online?

- Sell info based products or

services?- Online negotiation or bidding?

- Provide customized- Physical product or service?

products or services?

2) Portals

- Provide gateway access to full range

of online info & services?

- Provide access to deep content,

products and services within

vertical industry?

- Provide info and services to all

types of users?

BBNI models

Businesses Built on Network Infrastructure

Business Models

SuppliersProducersDistributorsCustomers

1) Producers1) Focused Distributors

- Manufacturers- Retailer

- Service providers- Marketplace

- Educators- Aggregator

- Advisers- Infomediary

- Information & news- Exchange

service

2) Portals

- Producer portals

- Horizontal

- Vertical

- Affinity

Model characteristics BPNI

Businesses Providing Network Infrastructure

Business Models Characteristics

SuppliersProducersDistributorsCustomers

1) Infrastructre Producers1) Infrastructure Distributors

- Manufacture computer or network- Assume control of inventory?

components or equipment?

- Sell online?

- Develop packaged software?

- Online negotiation or bidding?

- Provide infrastructure

services or consulting?- Physical product or service?

2) Infrastructure Portals

- Provide "gateway access" to networks,

data centers, or web services?

- Host, operate, and maintain networks

data centers or web services?

- Provide access to hosted application

services?

BPNI models

Businesses Providing Network Infrastructure

Business Models

SuppliersProducersDistributorsCustomers

1) Infrastructure Producers1) Infrastructure Distributors

- Equipment/ component- Infrastructure retailers

manufacurers

- Infrastructure market places

- Software firms

- Infrastructure aggregators

- Custom software and integration

service providers- Infrastrucure exchanges

- Infrastrucure services

2) Infrastructure Portals

- Horizontal infrastructure portals

- Vertical infrastruture portals

Sheet3

Market Roles

Value Chain Roles

SuppliersProducersDistributorsCustomers

Design & BuildConnect

- Products- Buyers

- Services- Sellers

Model characteristics BBNI

Businesses Built on Network Infrastructure

Business Models Characteristics

SuppliersProducersDistributorsCustomers

1) Producers1) Focused Distributors

- Sell physical products or- Assume control of inventory?

provide face-to-face service?

- Sell online?

- Sell info based products or

services?- Online negotiation or bidding?

- Provide customized- Physical product or service?

products or services?

2) Portals

- Provide gateway access to full range

of online info & services?

- Provide access to deep content,

products and services within

vertical industry?

- Provide info and services to all

types of users?

BBNI models

Businesses Built on Network Infrastructure

Business Models

SuppliersProducersDistributorsCustomers

1) Producers1) Focused Distributors

- Manufacturers- Retailer

- Service providers- Marketplace

- Educators- Aggregator

- Advisers- Infomediary

- Information & news- Exchange

service

2) Portals

- Producer portals

- Horizontal

- Vertical

- Affinity

Model characteristics BPNI

Businesses Providing Network Infrastructure

Business Models Characteristics

SuppliersProducersDistributorsCustomers

1) Infrastructre Producers1) Infrastructure Distributors

- Manufacture computer or network- Assume control of inventory?

components or equipment?

- Sell online?

- Develop packaged software?

- Online negotiation or bidding?

- Provide infrastructure

services or consulting?- Physical product or service?

2) Infrastructure Portals

- Provide "gateway access" to networks,

data centers, or web services?

- Host, operate, and maintain networks

data centers or web services?

- Provide access to hosted application

services?

BPNI models

Businesses Providing Network Infrastructure

Business Models

SuppliersProducersDistributorsCustomers

1) Infrastructure Producers1) Infrastructure Distributors

- Equipment/ component- Infrastructure retailers

manufacurers

- Infrastructure market places

- Software firms

- Infrastructure aggregators

- Custom software and integration

service providers- Infrastrucure exchanges

- Infrastrucure services

2) Infrastructure Portals

- Horizontal infrastructure portals

- Vertical infrastruture portals

Sheet3

Market Roles

Value Chain Roles

SuppliersProducersDistributorsCustomers

Design & BuildConnect

- Products- Buyers

- Services- Sellers

Model characteristics BBNI

Businesses Built on Network Infrastructure

Business Models Characteristics

SuppliersProducersDistributorsCustomers

1) Producers1) Focused Distributors

- Sell physical products or- Assume control of inventory?

provide face-to-face service?

- Sell online?

- Sell info based products or

services?- Online negotiation or bidding?

- Provide customized- Physical product or service?

products or services?

2) Portals

- Provide gateway access to full range

of online info & services?

- Provide access to deep content,

products and services within

vertical industry?

- Provide info and services to all

types of users?

BBNI models

Businesses Built on Network Infrastructure

Business Models

SuppliersProducersDistributorsCustomers

1) Producers1) Focused Distributors

- Manufacturers- Retailer

- Service providers- Marketplace

- Educators- Aggregator

- Advisers- Infomediary

- Information & news- Exchange

service

2) Portals

- Producer portals

- Horizontal

- Vertical

- Affinity

Model characteristics BPNI

Businesses Providing Network Infrastructure

Business Models Characteristics

SuppliersProducersDistributorsCustomers

1) Infrastructre Producers1) Infrastructure Distributors

- Manufacture computer or network- Assume control of inventory?

components or equipment?

- Sell online?

- Develop packaged software?

- Online negotiation or bidding?

- Provide infrastructure

services or consulting?- Physical product or service?

2) Infrastructure Portals

- Provide "gateway access" to networks,

data centers, or web services?

- Host, operate, and maintain networks

data centers or web services?

- Provide access to hosted application

services?

BPNI models

Businesses Providing Network Infrastructure

Business Models

SuppliersProducersDistributorsCustomers

1) Infrastructure Producers1) Infrastructure Distributors

- Equipment/ component- Infrastructure retailers

manufacurers

- Infrastructure market places

- Software firms

- Infrastructure aggregators

- Custom software and integration

service providers- Infrastrucure exchanges

- Infrastrucure services

2) Infrastructure Portals

- Horizontal infrastructure portals

- Vertical infrastruture portals

Sheet3

Market Roles

Value Chain Roles

SuppliersProducersDistributorsCustomers

Design & BuildConnect

- Products- Buyers

- Services- Sellers

Model characteristics BBNI

Businesses Built on Network Infrastructure

Business Models Characteristics

SuppliersProducersDistributorsCustomers

1) Producers1) Focused Distributors

- Sell physical products or- Assume control of inventory?

provide face-to-face service?

- Sell online?

- Sell info based products or

services?- Online negotiation or bidding?

- Provide customized- Physical product or service?

products or services?

2) Portals

- Provide gateway access to full range

of online info & services?

- Provide access to deep content,

products and services within

vertical industry?

- Provide info and services to all

types of users?

BBNI models

Businesses Built on Network Infrastructure

Business Models

SuppliersProducersDistributorsCustomers

1) Producers1) Focused Distributors

- Manufacturers- Retailer

- Service providers- Marketplace

- Educators- Aggregator

- Advisers- Infomediary

- Information & news- Exchange

service

2) Portals

- Producer portals

- Horizontal

- Vertical

- Affinity

Model characteristics BPNI

Businesses Providing Network Infrastructure

Business Models Characteristics

SuppliersProducersDistributorsCustomers

1) Infrastructre Producers1) Infrastructure Distributors

- Manufacture computer or network- Assume control of inventory?

components or equipment?

- Sell online?

- Develop packaged software?

- Online negotiation or bidding?

- Provide infrastructure

services or consulting?- Physical product or service?

2) Infrastructure Portals

- Provide "gateway access" to networks,

data centers, or web services?

- Host, operate, and maintain networks

data centers or web services?

- Provide access to hosted application

services?

BPNI models

Businesses Providing Network Infrastructure

Business Models

SuppliersProducersDistributorsCustomers

1) Infrastructure Producers1) Infrastructure Distributors

- Equipment/ component- Infrastructure retailers

manufacurers

- Infrastructure market places

- Software firms

- Infrastructure aggregators

- Custom software and integration

service providers- Infrastrucure exchanges

- Infrastrucure services

2) Infrastructure Portals

- Horizontal infrastructure portals

- Vertical infrastruture portals

Sheet3

Source: Applegate, Lynda M., Robert D. Austin, and F. Warren McFarlan, Corporate Information Strategy and Management. Burr Ridge, IL: McGraw-Hill/Irwin, 2002.

Chapter 2 Figure 2-4

Approaches to Business Model Evolution

Enhance

Add functionality or features to current

product/service offerings or improve

performance of existing business

Expand

Add new product/service offerings

or enter new geographic markets

Extend

Enter new line of business and/or add new

business models

Exit

Exit a business or market or drop a

product/service offering