Business Model Canvas & SWOT Analysis

Business Model Canvas (BMC)

  • A strategic planning tool to illustrate and develop business models.
  • Identifies the 9 key elements of a business.
  • Aids in constructing a shared understanding of a business.

Customer Segments

  • The heart of any business model.
  • Group customers into distinct segments with common needs or attributes.
  • Types:
    • Mass Market: No distinction between customer segments (e.g., consumer electronics).
    • Niche Market: Cater to specific, specialized segments (e.g., organic food).
    • Segmented: Distinction between market segments with slightly different needs (e.g., banking services).
    • Diversified: Serves two unrelated customer segments with different needs (e.g., Amazon).
    • Multi-sided Platforms: Serves two or more interdependent customer segments (e.g., social media).

Value Propositions

  • Summarizes why a consumer should buy a product or use a service.
  • Explains how a product solves a pain point and why it's better than similar products.
  • Elements:
    • Newness: Satisfies entirely new needs (e.g., Netflix).
    • Performance: Improving product or service performance (e.g., Apple M1 chip).
    • Customization: Tailoring products to specific customer needs (e.g., Rolls-Royce).
    • Design: Superior product design (e.g., Bialetti Moka Express).
    • Brand/Status: Value in using a specific brand (e.g., Rolex).
    • Price: Offering similar value at a lower price (e.g., Southwest Airlines).
    • Cost Reduction: Helping customers reduce costs (e.g., cloud computing).
    • Risk Reduction: Reducing risk for customers (e.g., service coverage).
    • Accessibility: Making products available to those lacking access (e.g., NetJets).
    • Convenience/Usability: Making things easier to use (e.g., Spotify).

Channels

  • How a company communicates with and reaches its customer segments to deliver value.
  • Types: Own channels (B2C), partner channels (B2B), or a mixture.
  • Examples: Sales force, web sales, own stores, partner stores, wholesalers.
  • Distribution Channel Types:
    • Direct Channel: Manufacturer to customer.
    • Indirect Channels: Selling through intermediaries (one-level, two-level, three-level channels).
    • Dual Distribution: Hybrid approach using multiple channels.

Customer Relationship

  • The nature of relationships a company develops with its customer segments.
  • Driven by customer acquisition, retention, and sales growth.
  • Types:
    • Personal assistance.
    • Dedicated personal assistance.
    • Self-service.
    • Automated services.

Revenue Stream

  • How a business makes money from each customer segment.
  • Sources: One-time sales, recurring sales (fees, subscriptions, renting, licensing, advertising).
  • Examples:
    • Asset sale (e.g., Amazon sells books).
    • Usage Fee (e.g., telecommunications).
    • Subscription fees (e.g., Gyms).
    • Lending/Renting/Leasing (e.g., Avis).

Key Activities

  • Tasks a company must perform to fulfill its business purpose.
  • Includes R&D, production, marketing, sales, and customer service.
  • Categories:
    • Production: Designing, making, and delivering products (e.g., Boeing & Airbus).
    • Problem Solving: Finding new solutions to customer problems (e.g., consultancies, hospitals).
    • Platform/Network: Activities related to platform-based business models (e.g., social media).

Key Partner

  • Relationships with other business, governmental, or non-consumer entities that help the business model work.
  • Types:
    • Strategic alliances between non-competitors.
    • Coopetition (strategic partnerships between competitors).
    • Joint Ventures to develop new businesses.
    • Buyer-supplier relationships.

Key Resources

  • Assets essential for the business model to work.
  • Categories:
    • Physical: Manufacturing facilities, buildings, vehicles.
    • Intellectual Property: Brands, patents, copyrights, knowledge.

Cost Structure

  • How a company views and manages costs to operate.
  • Types:
    • Value-Driven: Focus on high value propositions.
    • Cost-Driven: Focus on reducing costs.
  • Characteristics:
    • Fixed Costs: Remain the same regardless of production volume (e.g., salaries and rents).
    • Variable Costs: Vary with production volume (e.g., utility bills).
    • Economies of Scale: Cost advantages due to increased output.
    • Economies of Scope: Cost advantages due to a larger scope of operations.

SWOT Analysis

  • Method for analyzing internal strengths and weakness and external opportunities and threats.
  • Used to shape current and future operations and develop strategic goals.
    • Strengths: Advantages over competitors.
    • Weaknesses: Disadvantages relative to competitors.
    • Opportunities: External elements to increase profitability.
    • Threats: External factors endangering the business.