Dr.

Osman Barghouth
Department of Logistics, Tourism and Services Management
Faculty of Business and Economics

Department of Logistics, Tourism and Service Management

SS 2024/2025
 What is the goal?

With a simple and hands-on module to an excellent Business Plan

 Chapter 2
Business Model

SEITE 3
Learning objectives

• Define and explain the meaning of a business Model

• Discuss the different stages of business model development

• Explain the different components of a Business Model

• Apply the components of business model to a certain business idea

 Definition of a business model

A business model describes how a company creates, delivers, and captures

value. It outlines how a business operates, including its revenue streams,
customer base, cost structure, and key resources.

Key features
• A successful business creates something of value.

• A viable business model is one that allows a business to charge a price for the
value it’s creating, such that the business brings in enough money to make it
worthwhile and continue operating over time.

• Whatever the business is offering must also satisfy the customer’s needs and
quality expectations.

Source: https://online.hbs.edu/blog/post/types-of-business-models
https://www.youtube.com/watch?v=6dKIOSe2A2o&t=29s
 Examples of Business Models

1. The product/service business model

It's the most basic business model, the company sells the products and services it produces.
In order for that business model to be viable, the company needs to generate enough sales to cover
its production , distribution, and storage costs.

2. The advertising business model 7

Here the goal is to generate revenues by selling advertising space.

On the Internet this model can be segmented based on the type of advertising:
CPM (cost per thousand): the advertiser pays the publisher a fixed amount for 1,000 impressions.
CPC (cost per click): the advertiser pays the publisher every time someone clicks on the ad. The
amount paid can be fixed or established through an auction process.
CPA (cost per action): the advertiser pays every time a specific action is executed. An action can be a
sale or a lead for example. The amount can be fixed or set as a percentage of the action value.
Examples of Business Models

3. Intermediation Model
The company acts as an intermediary between the seller and the buyer and takes a cut of every sell it helps
generate.
For example, travel sites such as Booking.com and Expedia act as intermediaries between you and airlines,
hotels, and vehicle rental agencies.
4. Disintermediation Model
The opposite can also make a strong business model. Disintermediation removes a step in the supply chain
process to streamline product delivery. 8

A well-known example of disintermediation is e-commerce giant Amazon, which removes retailers’

transaction and delivery processes, simplifying the experience for the seller and end user.

5. The freemium business model

The company offers 2 versions of its product. A free version with a limited set of features which goals are either
to raise awareness about the product or to create a network effect. And a paid version, comprising more
features, from which it can generate enough margin to cover the cost of the free users.
The keys to success with this business model are to be able to generate huge network effect (example: Linkedin)
and/or to convert a sufficient number of free users into paid customers (example: Uservoice).
https://one-sec.app/

Another option is to combine the freemium and advertisement-based models—like some streaming
platforms do—by offering your product’s free version with ads and the premium version without them.
 Examples of Business Models

6. Employee Benefit Model

In the employee benefit model, your product is free to your end user and paid for by a corporation to
offer as a benefit.

7. The subscription business model

The company receives revenues from its subscribers at regular intervals.
This business model has one clear advantage: the company knows in advance how much revenues it is
9

going to generate.
 Basic Components of a business model

1. The customer (target customer, distribution channel, customer relationship)

2. The firm (core resources and competencies, key processes, partner network)

3. The value proposition bridges the gap between the firm and the customer (job to
be done and offering)

4. Profit formula (revenue streams, cost structure, margin model)

Simple Business model Example
Business Model Canvas

is a strategic management and lean startup template for

developing new or documenting existing business models. It is a
visual chart with elements describing a firm's or product's value
proposition, infrastructure, customers, and finances. It assists
firms in aligning their activities by illustrating potential trade-offs.
Business Model Canvas Building Blocks
14
Examples of customer segments

Mass market: A business model that focuses on mass markets doesn’t group its
customers into segments. Instead, it focuses on the general population or a large group
of people with similar needs. For example, a product like a phone.

Niche market: Here the focus is centered on a specific group of people with unique
needs and traits. Here the value propositions, distribution channels, and customer
relationships should be customized to meet their specific
15 requirements. An example
would be buyers of sports shoes.

Segmented: Based on slightly different needs, there could be different groups within the
main customer segment. Accordingly, you can create different value propositions,
distribution channels, etc. to meet the different needs of these segments.

Diversified: A diversified market segment includes customers with very different needs.

Multi-sided markets: this includes interdependent customer segments. For example, a

credit card company caters to both their credit card holders as well as merchants who
accept those cards.
Examples of customer relationships

Personal assistance: you interact with the customer in person or by email,

through phone call or other means.

Dedicated personal assistance: you assign a dedicated customer representative

to an individual customer.
16

Self-service: here you maintain no relationship with the customer, but provides
what the customer needs to help themselves.

Automated services: this includes automated processes or machinery that helps

customers perform services themselves.

Communities: these include online communities where customers can help each
other solve their own problems with regard to the product or service.

Co-creation: here the company allows the customer to get involved in the
designing or development of the product. For example, YouTube has given its
users the opportunity to create content for its audience.
 Examples of revenue streams

Asset sales: by selling the rights of ownership for a product to a buyer

Usage fee: by charging the customer for the use of its product or
service
17
Subscription fee: by charging the customer for using its product
regularly and consistently

Lending/ leasing/ renting: the customer pays to get exclusive rights to

use an asset for a fixed period of time

Licensing: customer pays to get permission to use the company’s

intellectual property

Brokerage fees: revenue generated by acting as an intermediary

between two or more parties

Advertising: by charging the customer to advertise a product, service

or brand using company platforms
PUTTING IT INTO ACTION
19
Partner 1 Activity 1 Proposition 1 Relationship 1 Segment 1
Partner 2 Activity 2 Proposition 2 Relationship 2 Segment 2
Partner 3 Activity 3 Proposition 3 Relationship 3 Segment 3
… … … … …

Resource 1 Channel 1
Resource 2 Channel 2
Resource 3 Channel 3
… …

Cost 1 Stream 1
Cost 2 Stream 2
Cost 3 Stream 3
… …
Partner 1 Activity 1 Proposition 1 Relationship 1 Segment 1
Partner 2 Activity 2 Proposition 2 Relationship 2 Segment 2
Partner 3 Activity 3 Proposition 3 Relationship 3 Segment 3
… … … … …

Resource 1 Channel 1
Resource 2 Channel 2
Resource 3 Channel 3
… …

Offering
Customers
Infrastructure

Cost 1 Stream 1
Cost 2 Stream 2
Cost 3 Stream 3
… …
Partner 1 Activity 1 Proposition 1 Relationship 1 Segment 1
Partner 2 Activity 2 Proposition 2 Relationship 2 Segment 2
Partner 3 Activity 3 Proposition 3 Relationship 3 Segment 3
… … … … …

Resource 1 Channel 1
Resource 2 Channel 2
Resource 3 Channel 3
… …

Cost 1 Stream 1
Cost 2 Stream 2
Cost 3 Stream 3
… …
Partner 1 Activity 1 Proposition 1 Relationship 1 Segment 1
Partner 2 Activity 2 Proposition 2 Relationship 2 Segment 2
Partner 3 Activity 3 Proposition 3 Relationship 3 Segment 3
… … … … …

Resource 1 Channel 1
Resource 2 Channel 2
Resource 3 Channel 3
… …

Cost 1 Stream 1
Cost 2 Stream 2
Cost 3 Stream 3
… …
Partner 1 Activity 1 Proposition 1 Relationship 1 Segment 1
Partner 2 Activity 2 Proposition 2 Relationship 2 Segment 2
Partner 3 Activity 3 Proposition 3 Relationship 3 Segment 3
… … … … …

Resource 1 Channel 1
Resource 2 Channel 2
Resource 3 Channel 3
… …

Cost 1 Stream 1
Cost 2 Stream 2
Cost 3 Stream 3
… …
Partner 1 Activity 1 Proposition 1 Relationship 1 Segment 1
Partner 2 Activity 2 Proposition 2 Relationship 2 Segment 2
Partner 3 Activity 3 Proposition 3 Relationship 3 Segment 3
… … … … …

Resource 1 Channel 1
Resource 2 Channel 2
Resource 3 Channel 3
… …

Cost 1 Stream 1
Cost 2 Stream 2
Cost 3 Stream 3
… …
Partner 1 Activity 1 Proposition 1 Relationship 1 Segment 1
Partner 2 Activity 2 Proposition 2 Relationship 2 Segment 2
Partner 3 Activity 3 Proposition 3 Relationship 3 Segment 3
… … … … …

Resource 1 Channel 1
Resource 2 Channel 2
Resource 3 Channel 3
… …

Cost 1 Stream 1
Cost 2 Stream 2
Cost 3 Stream 3
… …
Partner 1 Activity 1 Proposition 1 Relationship 1 Segment 1
Partner 2 Activity 2 Proposition 2 Relationship 2 Segment 2
Partner 3 Activity 3 Proposition 3 Relationship 3 Segment 3
… … … … …

Resource 1 Channel 1
Resource 2 Channel 2
Resource 3 Channel 3
… …

Cost 1 Stream 1
Cost 2 Stream 2
Cost 3 Stream 3
… …
 Summary

28

https://www.youtube.com/watch?v=QoAOzMTLP5s&t=1s
Output of the business Model
Is the Venture Feasible

• Based on the answers for pre-feasibility plan,

• Does your proposed business model and strategy work?
• Are you able to support a model that creates or supports social value?
• Do you need to explore changes to any element of your business model to
increase your chances of success?
• What additional research do you need to conduct?
Sources: https://www.productcompass.pm/p/business-model-canvas-examples
Sources: https://www.productcompass.pm/p/business-model-canvas-examples
Sources: https://www.productcompass.pm/p/business-model-canvas-examples
https://businessmodelanalyst.com/google-business-model/?srsltid=AfmBOooN6CVpUof4S_v0RsUHvkN36CRIu3s2LjnnHPjzN33ytaaNdewh
Creating Your canvas

Full explanation for Business Model Canvas

https://www.strategyzer.com/business-model-
37

canvas/building-blocks
Creating Your canvas

1. Create an account on https://strategyzer.com/ or use any other tool

2. Choose Canvas
3. Choose Business Model Canvas
4. Create Canvas
5. Use different sticky notes to create your Canvas
6. th
Present your Canvas on Wednesday 19 of March 2025
7. Presentation Mode: Face to Face
References

https://creately.com/blog/diagrams/business-model-canvas-explained/

https://www.strategyzer.com/business-model-canvas/building-blocks