Entrepreneurial Business

Models

Introduction
A business model describes the rationale of how an
organization creates, delivers, and captures value.
On the other hand, a business plan is how you execute
the business model. If the business model does not
work, the business is unlikely to do well.

The Four-Box Business Model

Customer Value Proposition

The overall value of a CVP depends on these three key
metrics:
1.How important the job or the problem is to the
customer
2.How satisfied are the customers with the current
solutions
3.What is the relative advantage of the new offering,
compared to the previous offerings

Profit Formula
Revenue model : How much money can be made?
Cost Structure: Right mix of fixed costs and variable
costs.
Target unit margin: Achieve desired profits at desired
volume of sales.
Resource velocity: How quickly resources need to be
used to support target volume.

Key Resources
People
Technology
Raw materials
Equipment
Information
Channels
Partnerships and alliances
Funds
Licenses or permits

Key Processes
Processes: Sourcing, manufacturing, quality, control
Business rules and success metrics: Supplier, credit
Behavioral norms: Socially determined approach by
beliefs and values of the entrepreneur.

Osterwalders Business Model

Canvas

How canvas differs from 4-box

Introduction of Strategic partnerships
Splitting customers into:
Customer segments
Customer relationships
Channels

Costs and revenues are in different components

Types of Business
Models Currently
Employed

Niche
Compatibility of niche needs and product features
Size of niche
Willingness to pay
Accessibility
Eg : Sanjay Raos Sportingmindz

Long Tail
Make everything available
Have a low price
Help find products

 Founded by Sachin and Binny Bansal in October 2007

Both had worked for Amazon
Growth:
4 cr (2009)
20 cr (2010)
75 cr (2011)

Mass Customisation
Combines the low unit costs of mass production
processes with the flexibility of individual customization
Modularize products
Delay assembly
Use configurators to capture customer preferences
Assemble and deliver

Myntra.com
Started by Mukesh Bansal and Sankar Bora in 2006
Started as a site for personalised products
Now into sales of branded clothing
One of the top 10 e-commerce sites in India

Freemium
Feature limited
Time Limited
Capacity limited
Seat limited
Customer Class Limited

Zoho
Based in Chennai

Unbundling
Breakup a product into independent components
Strip away add-ons
Sell components as a complete product
Up sell add-ons
Increase in prices is possible

Zoho
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Assist
Business
Books
Calendar
Challenge
Chat
Creator
CRM
Discussions
Docs
Gadgets
Wiki
Writer
Invoice
Mail

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Viewer
Meeting
Mobile
Notebook
People
Personal
Planner
Polls
Projects
Recruit
Reports
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Sheet
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Support

Bundling
There are economies of scale in production,
There are economies of scope in distribution,
Marginal costs of bundling are low
Production set-up costs are high,
Customer acquisition costs are high.
Consumers appreciate the resulting simplification

No Frills
Low prices are driven by low costs
Rarely will small firms have lower costs than large firms
Decrease costs by removing frills which are costly but
are not valued much by customers

No Frills

Premium
Premium
Uber Premium
Mass Class

Vardenchi

Charges a premium of about two lakhs over

the price of a Royal Enfield

Open Business Models

Open source software
Crowd sourcing

Crowdfunding
Crowdcreation
Crowdvoting
Crowd wisdom

 Problems can be explored at comparatively little cost,

and often very quickly
Payment is by results or even omitted
The entrepreneur can tap a wider range of talent
Entrepreneurs gain first-hand insight on their
customers' desires
The community may feel a brand-building kinship with
the entrepreneur

I Am
400 people financed
the movie by Onir Dhar

Multi Sided Platforms

The entrepreneur acts like a go-between
To be effective, a sufficiently large pool is needed on
both sides.
A strong value proposition needs to be crafted for both
sides
Usually there are high network effects