Chapter 3 Business Models and Strategies

Business Model is the method of doing business by which a company can sustain itself generate profit. A unique configuration of elements comprising the organizations goals, strategies, process, technologies, and structure, conceived to create value for the customers and thus compete successfully in a particular market. Internet Business Model use of internet to gain profit.

Functions of Business Models: Articulate the value proposition Identify a market segment Define the structure of the value chain Estimate the cost structure and profit potential Describe the position of the firm with the value network Formulate the competitive strategy

TAKE NOTE: Difference of business model to business plan: A business plan is a written statement of how an owner intends to execute all business functions to successfully achieve objectives while business model is a conceptual description that may have been given a name. A business model is a conceptual description that may have been given a name.

Value Proposition has needs matches

Target Customers
value for

Value Proposition
enable

Capabilities

Internet Revenue Models Access to the internet Advertising revenue o Sponsorship revenue Donations Membership or subscription revenue Sale or licensing of software or systems

 Software-based services Syndication or licensing of content Transactions revenue Auction/Reverse auction Barter E-commerce Value-added services revenue

Business Models A. Aggregator Organize and choreograph the distribution of goods, services and information. Intermediate transactions. Six complementary variables: selection, organization, price, convenience, matching and fulfilment B. Application Services Providers An internet services company that offers access to software application and other services. Their customers are small businesses that cannot afford to own or manage the software and large enterprises that prefer to outsource. rent

C. Content Provider Content is provided free or at a price far below total cost of production and advertising provides the primary revenue stream. D. Fund-raiser Used of internet for campaigning and fund-raising purposes. Businesses and individuals turned immediately to the Internet for information on ways to help. E. Infomediary An infomediary is a firm that acts as a filter between companies and consumers. An infomediary is a web site that gathers and organizes large amounts of data and acts as an intermediary between those who want information and those who supply the information. F. Marketplace B2C Marketplaces communication and trade relations between companies and individuals. B2B Marketplaces G. Multichannel/Bricks and Clicks Business models that include a physical retail store, and an e-commerce internet site.

H. Machine-to-Machine A business model in which automated systems allow computers and specialized devices to communicate with one another without direct human intervention.

I. Peer-to-Peer Transmission of files directly from one user to another.

J. Portals A large site with multiple services, ranging from news to directories to searches, that acts as an entry point onto the internet.