GİRİŞİMCİLİK FİNAL

HOCANIN DİKKAT DEDİĞİ YERLER:

A business’s mission or mission statement describes why it exists and what its business model is supposed to accomplish.

If carefully written and used properly, a mission statement can articulate a business’s overarching priorities and act as its financial and moral compass.

A well-written mission statement is something that a business can continually refer back to as it makes important decisions in other elements of its business model.

!!! BEWARE OF THE BUSINESS CONCEPT BLIND SPOT / MARKETING MYOPIA

A feasibility analysis is a study used to determine the potential success of a business venture. It evaluates the practicality of a proposed plan, identifying potential problems and opportunities. This analysis helps in deciding whether to proceed with a project.

(Fizibilite analizi, bir iş girişiminin potansiyel başarısını belirlemek için kullanılan bir çalışmadır. Önerilen bir planın uygulanabilirliğini değerlendirir, potansiyel sorunları ve fırsatları belirler. Bu analiz, bir projeye devam edip etmeme konusunda karar vermeye yardımcı olur.)

A company’s basis of differentiation is what causes consumers to pick one company’s products over another’s.

• It is what solves a problem or satisfies a customer need.

• It is best to limit a company’s basis of differentiation to two to three key points.

• Make sure that your points of differentiation refer to benefits rather than features.

Bir şirketin farklılaşma temeli, tüketicilerin neden bir şirketin ürünlerini diğerininkine tercih ettiğini belirler.

Bu, bir sorunu çözen veya bir müşteri ihtiyacını karşılayan şeydir.

Bir şirketin farklılaşma temelini iki veya üç temel nokta ile sınırlamak en iyisidir.

Farklılaşma noktalarınızın özelliklerden ziyade faydalara atıfta bulunduğundan emin olun.

What Is a Business Plan?

• Business Plan

  • A business plan is a written narrative, typically 25 to 35 pages long, that describes what a new business intends to accomplish and how it intends to accomplish it.

• Dual-Use Document

  • For most new ventures, the business plan is a dual-purpose document that is used both inside and outside the firm.

Who Reads the Business Plan—and What Are They Looking For?

• There are two primary audiences for a firm’s business plan

  • A Firm’s Employees

    • A clearly written business plan helps the employees of a firm operate in sync and move forward in a consistent and purposeful manner.

  • Investors and other external stakeholders

    • A firm’s business plan must make the case that the firm is a good use of an investor’s funds or the attention of others.

Guidelines for Writing a Business Plan

• Structure of the Business Plan

  • To make the best impression, a business plan should follow a conventional structure, such as the outline for the business plan shown in the chapter.

  • Although some entrepreneurs want to demonstrate creativity, departing from the basic structure of the conventional business plan is usually a mistake.

  • Typically, investors are busy people and want a plan where they can easily find critical information.

• Software Packages

  • There are many software packages available that employ an interactive, menu-driven approach to assist in the writing of a business plan.

  • Some of these programs are very helpful. However, entrepreneurs should avoid a boilerplate plan that looks as though it came from a “canned” source.

• Sense of Excitement

  • Along with facts and figures, a business plan needs to project a sense of anticipation and excitement about the possibilities that surround a new venture.

• Content of the Business Plan

  • The business plan should give clear and concise information on all the important aspects of the proposed venture.

  • It must be long enough to provide sufficient information yet short enough to maintain reader interest.

  • For most plans, 25 to 35 pages is sufficient.

• Types of Business Plans

  • There are three types of business plans

• Recognizing the Elements of the Plan May Change

  • It’s important to recognize that the plan will usually change while written.

  • New insights invariably emerge when an entrepreneur or a team of entrepreneurs immerse themselves in writing the plan and start getting feedback from others.

Outline of Business Plan

• A suggested outline of a business plan

• Most business plans do not include all the elements introduced in the sample plan; we include them here for the purpose of completeness.

• Each entrepreneur must decide which elements to include in his or her plan.

Section 1: Executive Summary

• Executive Summary

  • The executive summary is a short overview of the entire business plan.

  • It provides a busy reader with everything that needs to be known about the new venture’s distinctive nature.

  • An executive summary shouldn’t exceed two single-spaced pages.

  • Even though the executive summary appears at the beginning of the business plan, it should be written last.

    • The plan itself will evolve as it’s written, so not everything is known at the outset.

• Key Insights

  • In many instances an investor will first ask for a copy of the firm’s PowerPoint deck or executive summary and will request of a copy of the full business plan only if the PowerPoint deck or executive summary is sufficiently convincing.

  • The executive summary, then, is arguably the most important section of a business plan.

Section 2: Industry Analysis

• Industry Analysis

  • This section should begin by describing the industry the business will enter in terms of its size, growth rate, and sales projections.

  • Items to include in this section:

    • Industry size, growth rate, and sales projections.

    • Industry structure.

    • Nature of participants.

    • Key success factors.

    • Industry trends.

    • Long-term prospects.

• Key Insights

  • Before a business selects a target market it should have a good grasp of its industry—including where its promising areas are and where its points of vulnerability are.

  • The industry that a company participates in largely defines the playing field that a firm will participate in.

Section 3: Company Description

• Company Description

  • This section begins with a general description of the company.

  • Items to include in this section:

    • Company description.

    • Company history.

    • Mission statement.

    • Products and services.

    • Current status.

    • Legal status and ownership.

    • Key partnerships (if any).

• Key Insights

  • While at first glance this section may seem less important than the others, it is extremely important.

  • It demonstrates to your reader that you know how to translate an idea into a business.

Section 4: Market Analysis

• Market Analysis

  • The market analysis breaks the industry into segments and zeroes in on the specific segment (or target market) to which the firm will try to appeal.

  • Items to include in this section:

    • Market segmentation and target market selection.

    • Buyer behavior.

    • Competitor analysis.

    • Estimate of the firm’s annual sales and market share.

• Key Insights

  • Most start-ups do not service their entire industry. Instead, they focus on servicing a specific (target) market within the industry.

  • It’s important to include a section in the market analysis that deals with the behavior of the consumers in the market. The more a start-up knows about the consumers in its target market, the more it can tailor its products or services appropriately.

Section 5: The Economics of the Business

• The Economics of the Business

  • This section addresses the basic logic of how profits are earned in the business and how many units of a business’s profits must be sold for the business to “break even” and then start earning a profit.

  • Items to include in this section:

    • Revenue drivers and profit margins.

    • Fixed and variable costs.

    • Operating leverage and its implications.

    • Start-up costs.

    • Break-even chart and calculations.

• Key Insights

  • Two companies in the same industry may make profits in different ways. One may be a high-margin, low-volume business, while the other may be a low-margin, high-volume business. It’s important to check to make sure the approach you select is sound.

  • Computing a break-even analysis is an extremely useful exercise for any proposed or existing business.

Section 6: Marketing Plan

• Marketing Plan

  • The marketing plan focuses on how the business will market and sell its product or service.

  • Items to include in this section:

    • Overall marketing strategy.

    • 4P: Product, price, promotions, and distribution (place)

    • Sales process (or cycle).

    • Sales tactics.

• Key Insights

  • The best way to describe a start-up’s marketing plan is to start by articulating its marketing strategy, positioning, and points of differentiation, and then talk about how these overall aspects of the plan will be supported by price, promotional mix, and distribution strategy.

  • It’s also important to discuss the company sales process.

Section 7: Product (or Service) Design and Development Plan

• Design and Development Plan

  • If you’re developing a completely new product or service, you need to include a section in your business plan that focuses on the status of your development efforts.

  • Items to include in this section:

    • Development status and tasks.

    • Challenges and risks.

    • Projected development costs.

    • Proprietary issues (patents, trademarks, copyrights, licenses, brand names).

• Key Insights

  • Many seemingly promising start-ups never get off the ground because their product development efforts stall or the actual development of the product or service turns out to be more difficult than thought.

  • As a result, this is a very important section for businesses developing a completely new product or service.

Section 8: Operations Plan

• Operations Plan

  • Outlines how your business will be run and how your product or service will be produced.

  • A useful way to illustrate how your business will be run is to describe it in terms of “back stage” (unseen to the customer) and “front stage” (seen by the customer) activities.

  • Items to include in this section:

    • General approach to operations.

    • Business location.

    • Facilities and equipment.

• Key Insights

  • Your have to strike a careful balance between adequately describing this topic and providing too much detail.

  • As a result, it is best to keep this section short and crisp.

Section 9: Management Team and Company Structure

• Management Team and Company Structure

  • The management team of a new venture typically consists of the founder or founders and a handful of key management personnel.

  • Items to include in this section:

    • Management team.

    • Board of directors (if you have one).

    • Board of advisors (if you have one).

    • Company structure.

• Key Insights

  • This is a critical section of a business plan.

  • Many investors and others who read the business plan look first at the executive summary and then go directly to the management team section to assess the strength of the people starting the firm.

Section 10: Overall Schedule

• Overall Schedule

  • A schedule should be prepared that shows the major events required to launch the business.

  • The schedule should be in the format of milestones critical to the business’s success.

  • Examples of milestones:

    • Incorporating the venture.

    • Completion of prototypes.

    • Rental of facilities.

    • Obtaining critical financing.

    • Starting production.

    • Obtaining the first sale.

• Key Insight

  • An effectively prepared and presented schedule can be extremely helpful in convincing potential investors that the management team is aware of what needs to take place to launch the venture and has a plan in place to get there.

Section 11: Financial Projections

• Financial Projections

  • The final section of a business plan presents a firm’s pro forma (or projected) financial projections.

  • Items to include in this section:

    • Sources and uses of funds statement.

    • Assumptions sheet.

    • Pro forma income statements.

    • Pro forma balance sheets.

    • Pro forma cash flows.

    • Ratio analysis.

• Key Insights

  • Having completed the earlier sections of the plan, it’s easy to see why the financial projections come last.

  • They take the plans you’ve developed and express them in financial terms.

Presenting the Business Plan to Investors

• The Oral Presentation

  • The first rule in making an oral presentation is to follow directions. If you’re told you have 20 minutes, don’t talk for more than the allotted time.

  • The presentation should be smooth and well-rehearsed.

  • The slides should be sharp and not cluttered.

• Questions and Feedback to Expect from Investors

  • The smart entrepreneur has a good idea of the questions that will be asked, and will be prepared for those queries.

• Twelve PowerPoint Slides to Include in an Investor Presentation

  • Title Slide

  • Problem

  • Solution

  • Opportunity and target market

  • Technology

  • Competition

  • Marketing and sales

  • Management team

  • Financial projections

  • Current status

  • Financing sought

  • Summary

Creativity, Innovation, Entrepreneurship

What is Innovation?

• Generation, acceptance, and implementation of new ideas, processes, products, or services or technologies that are accepted by individuals, markets, governments, and society in general (Thompson, 1965).

• What does it take?

  • An initial idea +

  • A willingness to engage in a difficult work +

  • Customers who are willing to buy your idea (Cherry, 2014*)

Examples of Innovation

• R700

• Biomimicry

• Flight Birds

• Bullet Train Kingfisher

• Burr Velcro

What is innovation?

• Innovation: the process of translating ideas into useful new products, processes, services, or a value.

• Invention: coming up with a new idea.

• Innovation involves the whole process from opportunity identification, ideation or invention to development, prototyping, production marketing and sales.

A model of the entrepreneurial process

• Recognizing the opportunity

• Finding the resources

• Developing the idea

• Capturing value.

Type of innovations

• Innovation comes about through new combinations made by an entrepreneur, resulting in

  • a new product,

  • a new process,

  • opening of new market,

  • new way of organizing the business

  • new sources of supply

Dimensions of innovation

• There are several types of innovation Process, product/service, position, paradigm which can vary in degree of newness: Incremental to radical and impact: continuous to discontinuous

Drivers for innovation

• Financial pressures to reduce costs, increase efficiency, do more with less, etc.

• Increased competition

• Shorter product life cycles

• Value migration

• Stricter regulation

• Industry and community needs for sustainable development

• Increased demend for accountability

• Demographic, social and maket changes

• Rising customer expectations regarding service and quality

• Changing economy

• Greater availability of potentially useful technologies coupled with a need to exceed the competition in these technologies

New conditions for innovation

• Small start-up entrepreneurs increasingly depend on large firms:

  • as suppliers or customers

  • for venture finance,

  • for exit opportunites,

  • for knowledge (production, markets and R&D)

  • and for opening new markets.

• Large firms increasingly depend on small start-ups

  • for NPD (new product development),

  • as suppliers of new knowledge (which they cannot develop themselves),

  • or organizational renewal, for experimentation with busienss models,

  • for opening new markets, etc.

New developments in innovation raises new issues and problems

• Greater emphasis on commercializing scientific discoveries, particularly in IT and the bio-sciences

• Speed and potential value of scientific progress leads to emphasis on solid and well-designed portfolios of research projects

• Universities as active drivers of innovation: Academic entrepreneurship and the entrepreneurial university University-industry partnerships

• Increased search for radical innovation and top-line growth.

UNDERSTANDING 10 Types of Innovation

• CONFIGURATION

  • PROFIT MODEL

    • The New York Times pivoted from its traditional ad-driven media model to digital user subscriptions.

  • STRUCTURE

    • Google's "20% rule", which allowed employees to work on side projects, led to the creation of Gmail and Google News.

  • NETWORK

    • Henry Ford was one of the first industrialists to control his entire supply chain, a strategy later called vertical integration.

  • PROCESS

    • McDonald's franchisees were encouraged to develop and launch their own new food items, leading to wins such as the Egg McMuffin.

• OFFERING

  • PRODUCT PERFORMANCE

    • Spotify created a seamless music streaming product that lapped competitors in terms of speed, responsiveness, and user experience.

  • PRODUCT SYSTEM

    • Apple has built an extensive ecosystem of products that work together, creating additional value for users.

• EXPERIENCE

  • SERVICE

    • Amazon Prime comes with free expedited shipping, which can have products come as fast as within 2 hours in some metro areas.

  • BRAND

    • Patagonia's brand activism and links to environmental causes gives it a unique position in the outdoor apparel market.

  • CHANNEL

    • Nespresso locks in customers with its Nespresso Club, as well as through ongoing sales of single-use coffee pods.

  • CUSTOMER ENGAGEMENT

    • Mercedes has launched an augmented reality owner's manual that replaces its bulky predecessor while also highlighting driver and car data.

Open Innovation

• Organizations and their Environment

  • OPEN SYSTEM

    • Exchange of energy

    • BOUNDARY

    • Exchange of matter

• Definition of open innovation

  • A distributed innovation process based on purposively managed knowledge flows across organizational boundaries, using pecuniary and non-pecuniary mechanisms in line with the organization's business model.

• A paradigm shift in how companies innovate, emphasizing the idea that valuable ideas and technologies can come from both inside and outside the organization's boundaries. In traditional closed innovation models, companies relied primarily on internal R&D to develop new products and technologies. However, with open innovation, companies actively seek and incorporate external ideas, technologies, and expertise into their innovation processes. Definition

• Forms of Open Innovation

  • Inbound Innovation: This involves leveraging external sources of innovation such as customers, suppliers, partners, competitors, and research institutions to bring new ideas, technologies, and expertise into the organization.

  • Outbound Innovation: This involves commercializing internal innovations by licensing or selling intellectual property, patents, or technologies to other companies or partners.

  • Collaborative Innovation: This involves collaborating with external partners, such as startups, universities, research institutions, or other companies, to jointly develop new products, technologies, or solutions.

  • Crowdsourcing: This involves engaging a large group of people, often through online platforms, to contribute ideas, solutions, or feedback to specific innovation challenges or projects.

• Why is open innovation more trendy now?

  • Labor

  • Capital

  • Natural resources/entities Do you think can it be co- created?

  • Know-how (Patent, licences)

  • Entrepreneurship (Intrapreneurs & Extrapreneurs)

  • Information& communication technologies (Cloud computing e.g., AWS, MS Azure etc.) Crowdsourcing, (e.g.,UPSHIFT, Amazon Mturk) Venture Capital, Angel investors, Crowdfunding.

• Three Facets of Innovation

  • Infrastructure

  • Generation

  • Dissemination

  • Absorption

• Open innovation process model

  • Focal Firm

  • Innovation Source*

  • R&D

  • Other Functions

  • Customers

  • Interaction

• Open Innovation Partners

  • Internal Employees

  • Customers

  • Universities

  • Suppliers

  • Indirect customer or final consumer

  • Public research organisation

  • Entrepreneurs

  • Contracted R&D service providers

  • External consultants

  • Competitors

  • Restricted communities

  • Unrestricted communities

• Open Innovation Practices

  • Outside-in (inbound) practices

    • Customer/consumer Co-creation

    • Information Networking

    • University research grants

    • Publically funded R&D consortia

    • Contracting of external R&D service providers

    • Idea and start up competitions

    • IP in-licensing

    • Supplier innovation awards

    • Crowdsourcing/crowfunding

    • Specialized services OI intermediaries

    • Joint venture activities with external partners

  • Inside-out (outbound) practices

    • Selling of market ready products

    • Participation in public standardization

    • Corporate business incubation and venturing

    • IP outlicensing and patent selling

    • Donations to commons or nonprofits

    • Spin-offs

Social Innovation & Social Entrepreneurship

• Innovation is about creating value and one important dimension of this is making change happen in a socially valuable direction. Social entrepreneurs – individuals and organizations – recognize a social problem and organize an innovation process to enable social change. Just because there is no direct profit motive doesn’t take the commercial challenges out of the equation. If anything, it becomes harder to be an entrepreneur when the challenge is to convince people not only that it can be done but also that it can be done in a form which makes it commercially sustainable.

• Motivation: Why Do It?

  • Social entrepreneurship of this kind is also an increasingly important component of ‘big business’, as large organizations realize they only secure a licence to operate if they can demonstrate some concern for the wider communities in which they are located.

  • There are also benefits which emerge through aligning corporate values with those of employees within organizations.

  • And there are significant learning opportunities through experiments in social innovation which may have impacts on mainstream innovation.

• Founder: Muhammad Yunus

  • Initiative: Grameen Bank's Microfinance Program

  • Objectives: Poverty alleviation, women's empowerment, social transformation

  • Key Features:

    • Group lending model

    • Low - interest rates

    • Focus on financial inclusion

    • Nonprofit structure

  • Impact:

    • Women's empowerment and economic independence

    • Poverty reduction and improved living standards

    • Global replication and influence on social entrepreneurship

  • Legacy:

    • Nobel Peace Prize in 2006

    • Continues to shape efforts in financial inclusion and poverty alleviation worldwide

Marketing Issues and Objectives

• Learning Objectives

  • Explain the three steps (segmenting the market, selecting a target market, and establishing a unique market position) entrepreneurial firms use to identify their customers.

  • Define a brand and explain why it is important to an entrepreneurial firm’s marketing efforts.

  • Identify and explain the 4Ps of marketing activities (product, price, promotion, and place) used by entrepreneurial firms.

  • Describe the seven-step sales process an entrepreneurial firm uses to identify prospects and close sales.

• Selecting a Market and Establishing a Position

  • Important Questions That All Start-ups Must Ask

    • In order to succeed, a new firm must address this important issue: Who are our customers and how will we appeal to them?

    • A well-managed start-up approaches this query by following a three-step process:

      • Segmenting the market.

      • Selecting a target market.

      • Crafting a unique positioning strategy.

• Market Segmentation

  • Segmenting the Market

    • Involves studying a firm’s industry and determining the different target markets in that industry.

    • Markets can be segmented in a number of different ways, including:

      • Geography (city, state, country).

      • Demographic variables (age, gender, family size).

      • Psychographic variables (personality, lifestyle, values).

      • Behavioral variables (benefits sought, brand loyalty).

      • Product type (varies by product).

• Example: Segmenting the Computer Industry

  • The computer industry can be segmented in the following ways:

    • Product type (handheld computers, tablet computers, PCs, work stations, minicomputers, mainframes and super computers.

    • Customers served (individuals, businesses, schools or government).

• Selecting a Target Market

  • Target Market

    • Once a firm has segmented the market, a target market must be chosen.

    • The market must be sufficiently attractive and the firm must have the capability to serve it.

    • By focusing on a clearly defined market, a firm can become an expert in that market and then be able to provide customers a high level of service.

• Establishing a Unique Position

  • Positioning

    • After selecting a target market, the firm’s next step is to establish a “position” within the market that differentiates it from its rivals.

    • A “position” is the part of a market that the firm is claiming as its own.

    • A firm establishes a unique position in its customers’ minds by drawing attention to two or three of the product’s attributes.

• Tagline

  • Firms often develop a “tagline” to reinforce the position they have staked out in their market, or a phrase that is used consistently in a company’s literature and thus becomes associated with the company.

  • An example is Nike’s familiar tagline, “Just do it. ”

  • The beauty of this simple three-word expression is that it applies equally to a 21-year old triathlete and a 65-year-old mall walker.

• Branding

  • Establishing a Brand

    • A brand is the set of attributes—positive or negative—that people associate with a company.

      • These attributes can be positive, such as trustworthy, innovative, dependable, or easy to deal with.

      • Or they can be negative, such as cheap, unreliable, arrogant, or difficult to deal with.

    • The customer loyalty a company creates through its brand is one of its most valuable assets.

  • Brand Management

    • Some companies monitor the integrity of their brands through a program called “brand management. ”

• The Four Ps of Marketing for New Ventures

  • Marketing Mix

    • Product

    • Price

    • Promotion

    • Place (or distribution)

• Product

  • Is the good or service a firm offers to its target market.

  • The most important attribute of a product is that it adds value in the mind of its target customers.

  • An important distinction should be made between a firm’s core product and the actual product.

    • The core product is the product itself, such as a CD that contains a tax preparation program.

    • The actual product is the product plus all the attributes that come with it such as features, design, packaging, and so on that constitutes the collection of benefits that the customer ultimately buys.

  • The initial rollout is one of the most critical times in the marketing of a new product.

  • All firms face the challenge that they are unknown and that it takes a leap of faith for the first customers to buy their products.

  • Some start-ups meet this challenge by using reference accounts.

  • A reference account is an early user of a firm’s product who is willing to give a testimonial regarding his or her experience with the product.

• Price

  • Price is the amount of money consumers pay to buy a product.

  • The price a company charges for its products sends an important message to its target market.

  • Most entrepreneurs use one of two methods to set the price for their products

    • Cost-Based Pricing

      • The list price is determined by adding a markup percentage to a product’s cost.

    • Value-Based Pricing

      • The list price is determined by estimating what consumers are willing to pay for a product.

• Promotion

  • Refers to the activities the firm takes to communicate the merits of its product to its target market.

  • There are several common activities that entrepreneurs use to promote their products and services.

  • Advertising

    • Advertising is making people aware of a product or service in hopes of persuading them to buy it.

• Public Relations

  • One of the most cost effective ways to increase the awareness of the products of a company is through public relations.

  • Public relations refer to efforts to establish and maintain a company’s image with the public.

  • The major difference between public relations and advertising is that public relations is not paid for—directly.

• Social Media

  • Consists primarily of blogging and connecting with customers and others through social networking sites such as Facebook, Twitter, Instagram, or Snapchat.

  • Blogging

    • The idea behind blogs is that they familiarize people with a business and help build an emotional bond between a business and its customers.

  • Facebook, Twitter, Instagram and Pinterest

    • Businesses establish a presence on these sites to build a community around their products and services.

• Other Promotions Techniques

  • Viral Marketing

    • Facilitates and encourages people to pass along a marketing message about a particular product or service.

  • Guerrilla Marketing

    • A low-budget approach to marketing that relies on ingenuity, cleverness, and surprise rather than traditional techniques.

• Place (or Distribution)

  • Encompasses all the activities that move a firm’s product from its place of origin to the consumer.

  • The first choice a firm has to make regarding distribution is whether to sell its products directly to consumers or through intermediaries (such as wholesalers and retailers).

  • Within most industries, both choices are available, so the decision typically depends on how a firm believes its target market wants to buy its product.

  • Selling Direct Vs. Selling Through an Intermediary

    • Selling Direct

      • Many firms sell direct to the customer, maintaining control of the distribution and sales process.

    • Selling Through Intermediaries

      • Other firms sell through intermediaries and pass off their products to wholesalers who place them in retail outlets to be sold.

• Sales Process

  • A firm’s sales process depicts the steps it goes through to identify prospects and close sales.

  • A formal sales process involves a number of identifiable steps.

  • Importance of Process

    • Some companies simply wing it when it comes to sales, which isn’t recommended.

    • It’s much better to have a well thought-out approach to prospecting customers and closing sales.

Developing an Effective Business Model

• Two Primary Reasons for Writing a Business Model

  • Internal Reason

    • Forces the founding team to systematically think through every aspect of their new venture

  • External Reason

    • Communicates the merits of a new venture to outsiders, such as investors and bankers

• Business Models

  • A business model is a firm’s plan or recipe for how it creates, delivers, and captures value for its stakeholders.

  • The proper time to develop a business model is following the feasibility analysis stage and prior to fleshing out the operational details of the company.

  • A firm’s business model is integral to its ability to succeed both in the short and long term.

• General Categories of Business Models

  • Standard Business Models

    • The first category is standard business models.

    • Standard business models depict existing plans or recipes firms can use to determine how they will create, deliver, and capture value.

    • There are a number of standard or common business models

      • Advertising Business Model- Google, Facebook

      • Auction Business Model -eBay, uBid

      • Bricks and Clicks Business Model -Apple, Barnes & Noble

      • Franchise Business Model -24 Hour Fitness, Panera Bread

      • Freemium Business Model- Dropbox, Evernote

      • Low-Cost Business ModelSouthwest Airlines, Warby Parker

      • Manufacturer/Retailer Business ModelApple, Fitbit, Tesla Motors

      • Peer-to-Peer Business ModelAirbnb, Uber

      • Razor and Blades Business Model Game Consoles and Games, Printers and Ink Cartridges

      • Subscription Business ModelBirchbox, Blue Apron, Netflix

      • Traditional Retailer Business ModelWhole Foods Markets, Zappos

  • Disruptive Business Models

    • The second category is disruptive business models.

    • Disruptive business models, which are rare, are ones that do not fit the profile of a standard business model.

    • They are impactful enough that they disrupt or change the way business is conducted in an industry or an important niche within an industry.

      • Direct-to-Consumer Computer Sales (which allowed consumers to customize their computers) Dell

      • Online Text Ads on Search Engines (allowed advertisers to place ads for products that searchers were already searching for) Yahoo, Google

      • Software as a Service (SaaS) (By moving software to the cloud, allowed users to access the software and their data from anywhere there was an Internet connection) Salesforce.com

      • Cloud-based Service to Connect Riders and People Willing to Provide Rides (Provided riders with an app that connects them with the owners of private cars) Uber, Lyft

• Barringer/Ireland Business Model Template

  • Although not everyone agrees precisely on the components of a business model, many agree that a successful business model has a common set of attributes.

  • These attributes can be laid out in a visual framework or template so it is easy to see the individual parts and their interrelationships.

• Core Strategy

  • The first component of the business model is core strategy.

  • A core strategy describes how the firm plans to compete relative to its competitors.

  • The primary elements of core strategy are:

    • Business Mission

    • Basis of Differentiation

    • Target Market

    • Product/Market Scope

    • Business Mission

      • A business’s mission or mission statement describes why it exists and what its business model is supposed to accomplish.

      • If carefully written and used properly, a mission statement can articulate a business’s overarching priorities and act as its financial and moral compass.

      • A well-written mission statement is something that a business can continually refer back to as it makes important decisions in other elements of its business model.

      • !!! BEWARE OF THE BUSINESS CONCEPT BLIND SPOT / MARKETING MYOPIA

    • Basis of Differentiation

      • It’s important that a business clearly articulate the points that differentiate its product or service from competitors.

      • A company’s basis of differentiation is what causes consumers to pick one company’s products over another’s.

      • It is what solves a problem or satisfies a customer need.

      • It is best to limit a company’s basis of differentiation to two to three key points.

      • Make sure that your points of differentiation refer to benefits rather than features.

    • Target Market

      • The identification of the target market in which the firm will compete is extremely important.

      • A target market is a place within a larger market segment that represents a narrow group of customers with similar interests.

    • Product/Market Scope

      • A company’s product/market scope defines the products and markets on which it will concentrate.

      • Most firms start with a narrow (or limited) product/market scope, and pursue adjacent product and market opportunities as the company grows and becomes more financially secure.

• Resources

  • The second component of a business model is resources.

  • Resources are the inputs a firm uses to produce, sell, distribute, and service a product or