SHARIFAH AKMAM SYED ZAKARIA SCHOOL OF CIVIL ENGINEERING, ENGINEERING CAMPUS, UNIVERSITI SAINS MALAYS - PowerPoint PPT Presentation

1 / 60
About This Presentation
Title:

SHARIFAH AKMAM SYED ZAKARIA SCHOOL OF CIVIL ENGINEERING, ENGINEERING CAMPUS, UNIVERSITI SAINS MALAYS

Description:

... working on an innovative mobile phone for its next license. ... There are very strong network effects operating in the market for widely used computer software. ... – PowerPoint PPT presentation

Number of Views:121
Avg rating:3.0/5.0
Slides: 61
Provided by: mscbp
Category:

less

Transcript and Presenter's Notes

Title: SHARIFAH AKMAM SYED ZAKARIA SCHOOL OF CIVIL ENGINEERING, ENGINEERING CAMPUS, UNIVERSITI SAINS MALAYS


1
SHARIFAH AKMAM SYED ZAKARIASCHOOL OF CIVIL
ENGINEERING, ENGINEERING CAMPUS, UNIVERSITI
SAINS MALAYSIA, 14300 NIBONG TEBAL, PENANG,
MALAYSIA.TEL 04-5996253 FAX 04-5941009EMAIL
AKMAM_at_ENG.USM.MY
  • BUSINESS MODEL

2
Business Idea
Business Model
3
What is a business model?
  • A business model is the mechanisms that are used
    by companies to represent various aspects of its
    business, including its purpose, offerings,
    strategies, infrastructure, organizational
    structures, trading practices, and operational
    processes and policies.
  • This is the most important strategy to generate
    profit (make money)
  • Over the years, business models have become much
    more sophisticated.

4
Evolution of business model
  • In the 1950s, new business models came from
    McDonald's Restaurants and Toyota.
  • In the 1960s, the innovators were Wal-Mart and
    Hypermarkets.
  • The 1970s saw new business models from FedEx and
    Toys R Us
  • the 1980s from Blockbuster, Home Depot, Intel,
    and Dell Computer
  • the 1990s from Southwest Airlines, Netflix, eBay,
    Amazon.com, and Starbucks.

5
Case Study
Home Depot
  • Huge product assortment
  • Prices are 20 30 below hardware stores
  • Obsessed with offering high quality customer
    service
  • Lifetime value of customers 25,000
  • Well-trained, highly motivated salespeople earn
    above average salaries
  • Customer problem solving is encouraged
  • Internet site offers many home improvement tips
  • One of todays most successful retailers

6
Best Brands 2008
  • 6
  • Toyota
  • Japan
  • Quality concerns have increased overall, but
    Toyotas reliability and its hybrid strategy are
    leaving auto rivals trailing.

7
(No Transcript)
8
Case Study
Amazon.com
  • Strong sales, no profits
  • Customer-driven to its core
  • Each customers experience is unique
  • Provides great selection, good value, discovery
    and convenience
  • A true online community

Discussion Will Amazon.com Survive?
9
  • Poorly thought out business models were a problem
    with many dot-coms.
  • Today, the type of business models might depend
    on how technology is used.
  • For example, entrepreneurs on the internet have
    also created entirely new models that depend
    entirely on existing or emergent technology.
  • Using technology, businesses can reach a large
    number of customers with minimal costs.

10
The importance of business model
  • In developing a business model especially for a
    new product/service/business, the most important
    element is the dimension of time, more
    specifically the timing of investments/expenses
    or cash flow out versus the receipt of
    revenues/accounts receivables or cash flow in.
  • The principle issues are
  • Essentially how much of the product or service
    has to be built before customers can make some
    level of either actual purchase decision and/or
    purchase commitment?
  • How much investment/expense is required to secure
    these revenues/commitments from customers? and
  • How much risk is there in achieving net positive
    cash flow, given the required upfront investment
    and the future time to capture revenues/receivable
    s cash inflow, within an acceptable timeframe, if
    ever?

11
  • These business model issues often make or break
    new ventures.
  • Business models that are optimized to reduce the
    upfront investment, that accelerate the
    revenue/receivables cash inflow, that obtain
    cogent and reliable customer feedback often and
    earlier, and that take other measures to reduce
    the investment risk all have a higher probability
    of business success.

12
  • The process of business model design is part of
    business strategy.
  • The implementation of a company's business model
    into organizational structures (e.g. workflows,
    human resources) and systems (e.g. information
    technology architecture, production lines) is
    part of a company's business operations.
  • It is important to understand that business
    modeling commonly refers to business process
    design at the operational level,
  • whereas business models and business model design
    refer to defining the business logic of a company
    at the strategic level.

13
  • For example, in the entertainment industry, does
    one have to produce a movie for RM 1 million plus
    before any box office revenues can be derived, or
    can the business model be evolved by licensing
    certain established characters/signing leading
    movie stars for secondary licensing rights for
    fast-food chain promotional-tie-ins, movie
    merchandise licenses, etc. can generate
    pre-release cash inflow through licensing fees.

14
  • Hot Laptop
  • With partners such as Acer, Ferrari develops
    products that represent performance, strength,
    and credibility.
  • This Ferrari notebook PC from Acer was the first
    carbon-fiber laptop on the market.
  • Some 40 of Ferrari's merchandise is developed
    and produced directly, while the other 60 is
    licensed.
  • Other partners include Puma, Mattel, and Lego.
    Ferrari is working on an innovative mobile phone
    for its next license.

15
  • Or a different entertainment business model might
    be to create and promote a Funniest Video"
    website platform for users to contribute the
    content and then based on site traffic, sell
    advertising for revenues.
  • Here, the upfront investment for creating and
    promoting the site could be a fraction of the
    investment to produce a movie and the chances
    that it would be more popular than a movie may be
    much higher, as it can be tweaked as it is
    developed while a movie is an all or nothing
    production.

16
1. The subscription business model
  • This is a business model where a customer must
    pay a subscription price to have access to the
    product/service.
  • The model was pioneered by magazines and
    newspapers, but is now used by many businesses
    and websites.
  • Rather than selling products individually, a
    subscription sells periodic (monthly or yearly or
    seasonal) use or access to a product or service.
  • Thus, a one-time sale of a product can become a
    recurring sale and can build brand loyalty.
  • It is used for anything where a user is tracked
    in both a subscribed, and an unsubscribed status.

17
  • Industries which use this model include book
    clubs, record clubs, telephone companies, cable
    television providers, cell phone companies,
    internet providers, pay-TV channels, software
    providers, business solutions providers,
    financial services firms, fitness clubs, and
    pharmaceuticals, as well as the traditional
    newspapers and magazines.
  • Renewal of a subscription may be periodic and
    activated automatically, so that the cost of a
    new period is automatically paid for by a
    pre-authorized charge to a credit card or a
    checking account.
  • A common model on web sites is to provide content
    for free, but restrict access to premium features
    (for example, archives) to paying subscribers.

18
2. The razor and blades business model
  • Freebie marketing, also known as the razor and
    blades business model is the concept of either
    giving away a sellable item for nothing or
    charging an extremely low price in order to
    generate a continual market for another,
    generally disposable, item.
  • The concept was pioneered by King C. Gillette,
    inventor of the disposable safety razor and
    founder of Gillette Safety Razor Company (today
    known as Global Gillette, a division of Procter
    and Gamble).

19
(No Transcript)
20
3. Network model
  • In economics and business, a network effect (also
    called network externality) is the effect that
    one user of a good or service has on the value of
    that product to other users.
  • The classic example is the telephone.
  • The more people own telephones, the more valuable
    the telephone is to each owner.
  • This creates a positive externality because a
    user may purchase their phone without intending
    to create value for other users, but does so in
    any case.
  • The expression "network effect" is applied most
    commonly to positive network externalities as in
    the case of the telephone.
  • Negative network externalities can also occur,
    where more users make a product less valuable,
    but are more commonly referred to as "congestion"
    (as in traffic congestion or network congestion).

21
  • Software
  • There are very strong network effects operating
    in the market for widely used computer software.
  • Take for example Microsoft Office.
  • For many people choosing an office suite, prime
    considerations include how valuable having
    learned that office suite will prove to potential
    employers, and how well the software
    interoperates with other users.

22
Best Brands2008
  • 2
  • Microsoft
  • U.S.
  • The launch of its Windows Vista operating system,
    coupled with its Xbox game console, keeps the
    software giants latest technology in front of
    consumers.

23
  • Microsoft Windows is a further example of network
    effect.
  • The most-vaunted advantage of Windows, and that
    most publicized by Microsoft, is that Windows is
    compatible with the widest range of hardware and
    software.
  • Although this claim was justified at some point
    of time, it was in reality the result of network
    effect hardware and software manufacturers
    ensure that their products are compatible with
    Windows in order to have access to the large
    market of Windows users.
  • Thus, Windows is popular because it is well
    supported, but is well supported because it is
    popular.

24
2007
  • 2
  • Microsoft
  • 56,926 million
  • 2005 Rank/Value2 / 59,941 million
  • -5 change from 2006
  • Based in U.S.
  • Threats from Google and Apple haven't yet offset
    the power of its Windows and Office monopolies

25
  • Web sites
  • Many web sites also feature a network effect.
  • One example is web marketplaces and exchanges, in
    that the value of the marketplace to a new user
    is proportional to the number of other users in
    the market.
  • For example, eBay would not be a particularly
    useful site if auctions were not competitive.
  • However, as the number of users grows on eBay,
    auctions grow more competitive, pushing up the
    prices of bids on items.
  • This makes it more worthwhile to sell on eBay and
    brings more sellers onto eBay, which drives
    prices down again as this increases supply, while
    bringing more people onto eBay because there are
    more things being sold that people want.

26
Case Study
Caterpillar
  • Dominates worlds markets for heavy construction
    and mining equipment.
  • Independent dealers are key to success
  • Dealer network is linked via computers
  • Caterpillar stresses dealer profitability,
    extraordinary dealer support, personal
    relationships, dealer performance and full,
    honest, and frequent communications

27
4. Disintermediation model
  • In economics, disintermediation is the removal of
    intermediaries in a supply chain "cutting out
    the middleman".
  • Instead of going through traditional distribution
    channels, which had some type of intermediate
    (such as a distributor, wholesaler, broker, or
    agent), companies may now deal with every
    customer directly, for example via the Internet.
  • One important factor is a drop in the cost of
    servicing customers directly.

28
  • Disintermediation initiated by consumers is often
    the result of high market transparency, in that
    buyers are aware of supply prices direct from the
    manufacturer.
  • Buyers bypass the middlemen (wholesalers and
    retailers) in order to buy directly from the
    manufacturer and thereby pay less.
  • Buyers can alternatively elect to purchase from
    wholesalers.
  • Often, a B2C company functions as the bridge
    between buyer and manufacturer.
  • Computer hardware and software
  • Travel agencies
  • Bookstores and music stores
  • Stock Purchasing see E-trade
  • Prime example of disintermediation is Dell, Inc.,
    which sells many of its systems direct to the
    consumer thus bypassing traditional retail
    chains.

29
Best Brands2008
  • 12
  • Hewlett-Packard
  • U.S.
  • HP last fall edged out Dell as the worlds
    largest PC maker by market share. Sleek new
    laptops are helping boost its consumer business.

30
5. Bricks-and-clicks model
  • Bricks-and-clicks is a business model by which a
    company integrates both offline (bricks) and
    online (clicks) presences.
  • It is also known as click-and-mortar or
    clicks-and-bricks, as well as bricks, clicks and
    flips, flips referring to catalogs.
  • For example, an electronics store may allow the
    user to order online, but pick up their order
    immediately at a local store, which the user
    finds using locator software.
  • Conversely, a furniture store may have displays
    at a local store from which a customer can order
    an item electronically for delivery.

31
  • The bricks and clicks model has typically been
    used by traditional retailers who have extensive
    logistics and supply chains.
  • Part of the reason for its success is that it is
    far easier for a traditional retailer to
    establish an online presence than it is for a
    start-up company to employ a successful pure "dot
    com" strategy, or for an online retailer to
    establish a traditional presence (including a
    strong brand).

32
6. loyalty business model
  • The loyalty business model is a business model
    used in strategic management in which company
    resources are employed so as to increase the
    loyalty of customers and other stakeholders in
    the expectation that corporate objectives will be
    met or surpassed.
  • A typical example of this type of model is
    quality of product or service leads to customer
    satisfaction, which leads to customer loyalty,
    which leads to profitability.

33
Case Study
Intel
  • Has dominated the chip industry
  • Success is directly related to Intels
    competitive strategy
  • Strategy focuses on superior value and product
    leadership
  • Heavy focus on product and advertising innovation
    and RD investments
  • Changing market needs have challenged Intel to
    adapt
  • Intel is now capitalizing on the Internet

34
Best Brands2008
  • 5
  • Nokia
  • Finland
  • Nokia built its brand at both ends of the market,
    with high-end multimedia handsets for upscale
    buyers and low-priced phones for emerging
    countries.

35
7. Service model
  • Service economy can refer to one or both of two
    recent economic developments.
  • One is the increased importance of the service
    sector in industrialized economies.
  • The term is also used to refer to the relative
    importance of service in a product offering.
  • That is, products today have a higher service
    component than in previous decades.
  • In the management literature this is referred to
    as the servitization of products.
  • Virtually every product today has a service
    component to it.
  • The old dichotomy between product and service has
    been replaced by a service-product continuum.
  • Many products are being transformed into
    services.

36
  • For example, IBM treats its business as a service
    business.
  • Although it still manufactures computers, it sees
    the physical goods as a small part of the
    "business solutions" industry.
  • They have found that the price elasticity of
    demand for "business solutions" is much less
    elastic than for hardware.
  • There has been a corresponding shift to a
    subscription pricing model.
  • Rather than receiving a single payment for a
    piece of manufactured equipment, many
    manufacturers are now receiving a steady stream
    of revenue for ongoing contracts.

37
Best Brands2008
  • 3
  • IBM
  • U.S.
  • Big Blues ads promise to make customers feel
    special. With powerful software, servers, and
    sophisticated services its delivering.

38
Case Study
UPS
  • UPS is a 31 billion corporate giant
  • UPS wanted to reposition itself as a supply
    chain solutions provider
  • Developed new theme based on customer input
  • Implemented, What Can Brown Do for You?
    campaign
  • Realigned its sales and marketing organization
  • Ads, web sites, and salespeople deliver message
    daily

39
8. low-cost carrier model
  • A low-cost carrier or low-cost airline (also
    known as a no-frills or discount carrier or
    airline) is an airline that offers generally low
    fares in exchange for eliminating many
    traditional passenger services.
  • The concept originated in the United States
    before spreading to Europe in the early 1990s and
    subsequently to much of the rest of the world.
  • The term originated within the airline industry
    referring to airlines with a lower operating cost
    structure than their competitors.
  • While the term is often applied to any carrier
    with low ticket prices and limited services,
    regardless of their operating models, low-cost
    carriers should not be confused with regional
    airlines that operate short flights without
    service, or with full-service airlines offering
    some reduced fares.

40
(No Transcript)
41
Malaysia
  • AirAsia Berhad is a low-cost airline based in
    Kuala Lumpur, Malaysia.
  • It operates scheduled domestic and international
    flights and is Asia's largest low fare, no frills
    airline. AirAsia pioneered low cost travelling in
    Asia.
  • It is also the first airline in the region to
    implement fully ticketless travel and unassigned
    seats.
  • Its main base is the Low Cost Carrier Terminal
    (LCCT) at Kuala Lumpur International Airport
    (KLIA).
  • Its affliate airlines Thai AirAsia and Indonesia
    AirAsia fly from Suvarnabhumi Airport, Thailand
    and Soekarno-Hatta International Airport,
    Indonesia, respectively.
  • The airline was established in 1993 and started
    operations on 18 November 1996.
  • It was originally founded by a government-owned
    conglomerate DRB-Hicom.
  • On December 2, 2001, the heavily-indebted airline
    was purchased by former Time Warner executive
    Tony Fernandes's company Tune Air Sdn Bhd for the
    token sum of one ringgit.
  • Fernandes proceeded to engineer a remarkable
    turnaround, turning a profit in 2002 and
    launching new routes from its hub in Kuala Lumpur
    International Airport at breakneck speed,
    undercutting former monopoly operator Malaysia
    Airlines with promotional fares as low as RM1 (US
    0.27).

42
  • On 27 March 2006, the Government of Malaysia
    announced that AirAsia will take over 96
    non-trunk routes, in addition to 19 domestic
    trunk routes.
  • This was part of Malaysia Airlines route
    rationalization programme which saw a large
    number of its domestic sectors being transferred
    to AirAsia from 1 August 2006.
  • On September 2007, AirAsia's Kuala Lumpur hub is
    fully operated with A320s while Thai AirAsia
    received its first Airbus A320 in October 2007.
  • Indonesia AirAsia will receive its first Airbus
    by January 2008.
  • On April 5, 2007, AirAsia announced a three-year
    partnership with the British Formula One team
    ATT Williams.
  • The airline brand is displayed on the helmets of
    Nico Rosberg and Alexander Wurz, and on the
    bargeboards and nose of the cars.

43
9. online and offline model
  • The terms online and offline (also on-line and
    off-line) have specific meanings with respect to
    computer technology and telecommunication.
  • The concepts have however been extended from
    their computing and telecommunication meanings
    into the area of human interaction and
    conversation, such that even offline can be used
    in contrast to the common usage of online (e.g.,
    "I bought that shirt offline").

44
  • One example of a common use of these concepts is
    a Mail User Agent that can be instructed to be in
    either online or offline states.
  • One such MUA is Microsoft Outlook. When online it
    will attempt to connect to mail servers (to check
    for new mail at regular intervals, for example),
    and when off-line it will not attempt to make any
    such connection.
  • The online or offline state of the MUA does not
    necessarily reflect the connection status between
    the computer on which it is running and Internet.
  • That is, the computer itself may be
    onlineconnected to Internet via a cable modem or
    other meanswhile Outlook is kept offline by the
    user, so that it makes no attempt to send or to
    receive messages.

45
  • Another example of the use of these concepts is
    in the world of digital audio technology.
  • A tape recorder, digital editor, or other device
    that is online is one whose clock is under the
    control of the clock of a synchronization master
    device.
  • When the sync master commences playback, the
    online device automatically synchronizes itself
    to the master and commences playing from the same
    point in the recording.
  • A device that is offline uses no external clock
    reference and relies upon its own internal clock.
  • When a large number of devices are connected to a
    sync master it is often convenient, if one wants
    to hear just the output of one single device, to
    take it offline because, if the device is played
    back online, all synchronized devices have to
    locate the playback point and wait for each other
    device to be in synchronization

46
  • A third example of a common use of these concepts
    is a web browser that can be instructed to be in
    either online or offline states.
  • The browser only attempts to fetch pages from
    servers whilst in the online state.
  • In the off-line state, users can perform offline
    browsing, where pages can be browsed using local
    copies of those pages that have previously been
    downloaded whilst in the on-line state.
  • This can be useful when the computer is offline
    and connection to the Internet is impossible or
    undesirable.
  • The pages are either downloaded implicitly into
    the web browser's own cache as a result of prior
    online browsing by the user, or explicitly by a
    browser configured to keep local, up-to-date
    copies of certain web pages, which are updated
    when the browser is in the online state.
  • One such web browser capable of being explicitly
    configured to download pages for offline browsing
    is Internet Explorer.
  • When pages are added to the Favourites list, they
    can be marked to be "available for offline
    browsing."

47
10. Professional open-source model
  • Professional open-source is a business model that
    many open-source software vendors are attempting
    to follow. The model partners what is perceived
    as "free" open-source software with paid
    professional services.
  • As open-source software began to become popular
    in the 1990s with the introduction of Linux,
    there was a growing stigma that such a package
    could not be trusted as stable or supported.
  • As a consequence, larger businesses would often
    choose commercially distributed software over a
    product that was released under an open-source
    license.
  • However, there has been the growth in the number
    of professional open-source companies - made
    popular by companies like Liferay, Inc., Red Hat,
    MySQL AB, and JBoss.
  • The business model of these companies tries "to
    offer open-source software with a free license,
    while using professional services, maintenance
    and support for these products to derive
    revenue."

48
Top 10 e-Commerce Mistakes
49
  • 1. Weak Website Design
  • Have several people look at your website and give
    you honest feedback.  
  • 2. Unclear Purpose
  • Make sure your websites purpose is clear and easy
    to see.
  • You should make it obvious why your website
    exists right on the homepage.
  • Help customersdont make them guess.
  • If you sell, make your product obvious.   

50
  • 3. Shopping Obstacles
  • Customers leave websites within seconds if they
    meet with any obstacle blocking their purpose.
  • If you confuse or frighten customers with an
    awkward checkout procedure, ask too many
    questions, dont let them know whats coming
    next, or they dont feel safe buying from you,
    they will leave.
  • Make your shopping experience friendlyagain ask
    for input from a few friends willing to look at
    your website.
  • Once youve got your shopping system set up just
    right, check the links once a week to be certain
    it stays that way.  

51
  • 4. Poor Marketing
  • There are over four billion webpages on the
    Internet.
  • How will people find yours?
  • You must develop a plan to drive people to your
    website.
  • You need to have a good marketing strategy.
  • You can learn about marking tools and strategies
    from most ecommerce web host providers.
  • Use the resources of your host, learn the ways of
    web marketing and you will keep your website in
    the public eye.   

52
  • 5. Weak Customer Service
  • If you sell a product, you need a customer
    service plan.
  • The best way to develop one is to put yourself in
    your customers shoes.
  • How would you want a problem resolved?
  • Do your best to serve customers well and they
    will reward you by sending their friends to your
    website.   

53
  • 6. Poor Product Choice
  • Not everything should be sold on the Internet.
  • Shipping costs, for example, are a big obstacle
    for heavy products that your customer can get
    locallyyou cant compete.
  • (But if your large product is unique, you may
    succeed in spite of shipping costs.)
  • Clothing and shoes are difficult for some people
    to purchase online as they prefer to try on
    before buying.
  • Food products may spoil, candy may melt, glass
    may break.
  • Evaluate your potential products with a
    worst-case-scenario mentality.
  • Pick products that will give you the best chance
    to succeed first, then expand and take more
    chances after your business develops roots. 

54
  • 7. Fail to Prepare for Success
  • Youve heard of online businesses succeeding
    overnight.
  • If you are so lucky, do you have a plan to deal
    with a sudden onslaught of orders?
  • Even if your growth is gradual (as most growth
    is) do you have a plan for the time you outgrow
    your shopping cart your bandwidth allowance?
  • Plan ahead plan for growth.
  • What seems like a great five-year shopping cart
    deal may not work for you in three.  

55
  • 8. Slow Shipping
  • If your website promises two day shipping but
    your customer doesnt get the product until day
    four, guess who the customer will blame?
  • Use reputable shippers that offer guarantees.   

56
  • 8. Slow Shipping
  • If your website promises two day shipping but
    your customer doesnt get the product until day
    four, guess who the customer will blame?
  • Use reputable shippers that offer guarantees.   

57
  • 9. Lack of Specialization
  • Instead of trying to serve a huge market, pick a
    niche and work to be the best in that niche.
  • Youll need to specialize in a small area to
    build up a good reputation.
  • Reputation is key to have clout in the online
    world.  

58
  • 10. Missing Security
  • Making your website secure is vital customers
    will leave before buying if they dont feel your
    system is safe.
  • Visitors wont be anxious to divulge even their
    email address if they feel your website is
    untrustworthy.  
  • Electronic theft and website sabotage happens.
  • Often overlooked when it comes to security is
    protecting your client's information e-mail
    address, billing address, phone numbers. 
  • Pick reputable services to process your
    customers credit cards.
  • And write a privacy policy or Intellectual
    Property policy for your website.
  • Reassure your customers, then honor your promises
    to protect their privacy.

59
From Business Idea to Business model
  • Bear in mind that, to develop a successful
    business, you must
  • Define precisely the nature of the business
  • Offer clearly identifiable products or services
  • Tap a real need or generate a demand for your
    product/service
  • Operate within your expertise and resources
  • Have realistic targets and have reasonable
    expectations
  • Keep everything as simple and straightforward as
    possible.

60
Thank you
GLOBAL COMPETITIVENESS IS OUR COMMITMENTBERSAING
DI PERINGKAT DUNIA KOMITMEN KITA
Write a Comment
User Comments (0)
About PowerShow.com