Module Leader: Aamar Ilyas Email: aamar.ilyas@ucp.edu.

pk Office: 4th Floor, 418

A business model describes the rationale of how an organization creates, delivers, and captures value
(Osterwalder & Pigneur, 2009)

It provide the structure needed to reveal and categorize all of the issues that must be addressed before a company can confidently venture into low-knowledge It is a road map to new possibilities for innovation, transformational growth, and renewal (Creativity) that you never before thought..you could capitalize on

Value = Benefits Cost

An offering that helps customers more effectively, reliably, conveniently, or affordably solve an important problem (or satisfy a job-tobe-done) at a given price.

Before building a CVP, you must focus on your target customers job-to-be-done.

Theodore Levitt pointed out..customers do not really buy products, they hire them to accomplish particular tasks(drill example)

Over the last few decades emphasis on customers needs and the voice of customers
Needs vs job-to-be-done

Some examples of job-to-be-done I want to conveniently make phone call when Im on the go, away from my home or office I dont just want to communicate; I also want to organize my life on the go Help me kill small snippets of time in useful ways

Offering Is a product, service, or some combination, made available at an affordable price.

Is experience of purchasing, using, and maintaining it.

3 key metrics of successful CVP

How important the job-to-be-done is to customers How satisfied customers are with current solutions How well the new offering gets the job done, relative to the other options.

Focus on one type of customer:

Job-to-be-done Possible Job to Done Offering

Develop five CVP with picture of proposed offering

The economic blueprint that defines how the company will create value for itself and its shareholders. It specifies the assets and fixed cost structure, as well as the margins and velocity required to cover them.

Revolutionary industry vs Revolutionary CVP Gross margin vs Net margin

Is profit margin are too high than competitor? ??? todays philosophy of department stores???

Is the offering price times the quantity sold. Is profit formula linked with CVP????? Quantity can be measure in .. In which ways?

Asks three questions How many customers will I have? How many units per customer per transaction will I sell? How many transactions per customer can I expect?

1. 2. 3.

(potential of customers addressed by CVP) Other two define the type of offering developed to satisfy the job-to-be-done.

How much additional income can I project from related products or services?

Is simply made up of direct costs and overhead, taking into account economies of scale.

Overhead must be determined by the requirement of the value proposition.

The operating profit per unit required to cover overhead costs and achieve the desire profit level at the target volume.

Margins are only part of an overall profit formula---the goal is not necessarily to maintain any certain margin but to achieve the margin needed to reap the target profits.

How quickly resources need to be used to support target volume. It specifies not the number of widgets a firm can make, but how many it can invent, design, produce, warehouse, ship, service, sell, and pay for throughout the value chain for a given amount of investment during a given amount of time.

How will volume production be achieved?

Are each element of profit formula influences the others.

Tata Nano business model Whole Foods business model The difference between Tata Nano and Whole Foods business model.

You pick 3 local reputed companies from different industry Write down major points of business model
Comparing with industry business model

Due date: 18.11.2013 before 5 p.m.