Business Model Canvas (BMC)

Bambang Ali NUGROHO

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Business model definition:
• A business model is a conceptual tool that contains a
set of elements and their relationships and allows
expressing the business logic of a specific firm.
• It is a description of the value a company offers to
one or several segments of customers and of the
architecture of the firm and its network of partners
for creating, marketing, and delivering this value and
relationship capital, to generate profitable and
sustainable revenue streams (Osterwalder, Pigneur
and Tucci, 2005).

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What is Business Model?
• “A business model describes the logic of how an
organization creates, delivers and control value and how
money are earned in a company.“ (Osterwalder& Pigneur,
2009).
• “Business model is a method for making money in the
concrete business environment. It is consisted of key
structural and operational characteristics of company –how
company earn and create profit.“ (Wheelen& Hunger,
2008).
• “The business model is a system of resources and activities,
which create a value that is useful to the customer and the
sale of this value makes money for the company.” (Slavik,
2013).

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 Different type of Business Model

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Why Business Model Canvas?
a. Describing the connection between components clearly
and easier

b. Dynamics of changes in the business environment

forces companies to look for new competitive advantage

c. Planning and Controlling should be comprehensive but

not complicated

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Business Model Canvas (BMC)
• Developed by Alexander Osterwalder based on his
research for PhD in University of Lausanne, Switzerland
2004.
• Popularly known since 2010 when “Business Model
Generation” book was published, written by
Osterwalder, Yves Pigneur, Alan Smith, and 450
practitioners from 45 countries.
• BMC popularly known for its simple and easy analysis
in a canvas with 9 components

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9 Components of Business Model Canvas

1.Customer segments
2.Value Propositions
3.Channels
4.Customer Relationship
5.Revenue Streams
6.Key Resources
7.Key Activities
8.Key Partners
9.Cost Structure

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T H E B U S I N E S S MOD E L C A N V A S

• The nine business model elements have been

graphically integrated into a useful tool called “The
Business Model Canvas”.
• This tool resembles a painter’s canvas, preformatted
with the nine business model elements, which
allows the user to paint pictures of new or existing
business models. It is a hands‐on tool that fosters
understanding, discussion, creativity and analysis
(Osterwalder and Pigneur, 2009).

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BUSINESS MODEL CANVAS

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BUSINESS MODEL CANVAS

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1. C U S TOME R S E GME N T S
• The customer segment can be defined as the different groups
of people or organizations an enterprise aims to reach.
Customers comprise the heart of any business model.
• Without customers, no company can survive for long. In order
to better satisfy customers, a company may group them into
distinct segments with common needs, common behaviors or
other attributes.
• A business model may define one or several large or small
customer segments. An organization must make a conscious
decision about which segments to target and which segments
to ignore. Once this decision is made a business model can be
carefully designed around a strong understanding of specific
customer needs.

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• Effective segmentation enables the company to allocate
investment resources to target customers that will be most
attracted by its value proposition (Osterwalder, 2004).
• According to Kotler (2003) segment marketing offers several
benefits over mass marketing: fine tuning of product or
service offering, appropriate pricing per target segment,
selection of best distribution channels and a clear view of the
competitions. However, a segment is partly a fiction because
not everyone wants exactly the same.

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Customers are the reason for an organization existence
• 1 or more customer segments
• B to b or B to C
• Paid or unpaid
• Customer and Clients
• Every segments might be:
–Need different services
–Reached with a different distribution channels
–Need different relationships
–Provide different profitability
–The willingness to pay differs depend on the value they
received

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2. VA L U E P R OP OS I T I ON S
• The value proposition defines how items of value (product
and service features as well as complementary services) are
packaged and offered to fulfill customer needs (Kambil,
Ginsberg and Bloch, 1996).
• It gives an overall view of one of the firm’s bundles of
products and services that together represent value for a
specific customer segment. It describes the way a firm
differentiates itself from its competitors and is the reason why
customers buy from a certain firm and not from another.

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• A value proposition creates value for a customer segment
through a distinct mix of elements catering to that segment’s
needs.
• Values may be quantitative (e.g. price, speed of service) or
qualitative (e.g. design, customer experience).
• Some value propositions may be innovative and represent a
new or disruptive offer. Others may be similar to existing
market offers but with added features and attributes
(Osterwalder and Pigneur, 2009). By describing these different
features and attributes of a value proposition a firm can
better observe how it situates itself compared to its
competitors (Osterwalder, 2004).
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• Ability to provide exceptional value is the key reason
why customers select one organization over another
• Set of products or services that benefit the targeted
market segments
• Unique compared to nearby competitors
• Value is ratio between Benefit and Price

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 3. C H A N N E L S
• When the customer segments are identified the value
propositions need to be connected to their subsequent markets.
This can be done by selecting one or more suitable distribution
channels, allowing the company to deliver value to its target
customers.
• A distribution channel describes how a company communicates
with and reaches its customer segments to deliver a value
proposition (Osterwalder and Pigneur, 2009).
• Channels are customer touch points that play an important role
in the customer experience. Its primary purpose is to make the
right quantities of the right products or services available at the
right place, at the right time to the right people (Pitt, Berthon
and Berthon, 1999), but also the value created in the awareness
phase, the evaluation phase, and the after sales phase are of
critical importance during the customer’s buying cycle.

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• There are two types of distribution channels: direct
(sales force, website) and indirect (own stores,
partner stores and wholesaler). These channels can
be company owned or partner owned (Based on
Osterwalder and Pigneur, 2009).

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• CHANNELS is a way of communicating and deliver
Value Proposition.
• 5 Stages in CHANNEL:
1. Awareness: Introduce product or service
2. Evaluation: Evaluate Value Proposition offered
3. Purchase: Persuade to buy
4. Delivery: Submit Value Proposition to customers
5. After Sales Service: Handle installation, services, and
complaints

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4. C U S TOME R R E L A T I ON S H I P S

• The customer relationship element describes the

types of relationships a company establish with
specific customer segments. A company should
clarify the type of relationship it wants to establish
with each customer segment.
• Relationships can range from personal to automated
and may be driven by different motivations. The
motivation for maintaining a relationship with a
customer can either be customer acquisition,
customer retention or boosting sales.

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• The customer relationships called for by a company’s
business model deeply influence the overall
customer experience. Several categories of customer
relationships can be distinguished which may co‐exist
in a company’s relationship with a particular
customer segment. These relationships are: personal
assistance, selfservice, automated services,
communities and co‐creation (based on Osterwalder
and Pigneur, 2009).

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• Is a way of familiarizing Relationship with Customers
• CR goal is: Acquisition of new customers, Retain
existing customers and Increase sales (to existing
customers) – to get, keep and grow
• Some examples of CR:
• Personal Assistance: e‐mail, online, face to face
• Special personal assistance. (personal banking)
• Self‐service: Empowering customers to operate the product
• Building a community (Club/Member Card)
• Designing together. (Youtube)

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 5. RE V E N U E S T R E AMS
• The income a company generates from each customer
segment is represented in the revenue streams element
of the business model.
• A business model can involve two different types of
revenue streams: transaction revenues resulting from
one‐time customer payments and recurring revenues
resulting from ongoing payments to either deliver a
value proposition to customers or provide postpurchase
customer support.

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• A company must ask itself; for what value is each
customer segment truly willing to pay? Successfully
answering this question allows the company to
generate one or more revenue streams from each
customer segment.
• There are several ways to generate revenue streams
such as asset sale, usage fee, subscription fee,
lending/renting/leasing, licensing, brokerage fees and
advertising (based on Osterwalder and Pigneur, 2009).

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• (Revenue STREAMS describes how organizations make money.
• Two types of RS:
1. Transaction Revenues: customers pay 1 time
2. Recurring Revenues: Customers pay for recurring services offered on
Value Proposition or fee for after sale service activities (e‐tol)
• Some examples:
• Sell assets or products
• Collect rent
• Charge subscription fees
• Licenses
• Providing advertising space (Budget Hotel)
• Donation
• Broker

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6. KE Y RE S OU R C E S
• Every business model requires assets or key
resources to let the model function. These resources
allow a company to create and offer a value
proposition, reach markets, maintain relationships
with customer segments and earn revenues.
• Key resources can be physical, financial, intellectual
or human. Key resources can be owned or leased by
the company or acquired from key partners (Based
on Osterwalder and Pigneur, 2009).

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• KEY RESOURCES (KR) is critical assets or resources that
enable business model can work well.
• Consists of:
• Physical Assets
• Money
• Intellectual (patent, brand, merk)
• Human Capital
• Culture
• Value
• Can be owned by the organization or provided by Key
Partners

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 7. KE Y A C T I V I T I E S
• To be able to actually make what it wants to sell, a firm needs
to have an activity system in place. An activity system is an
integrated set of value creating processes leading to the supply
of product and/or service offerings. Each company needs to
perform a number of activities to successfully fulfill the
customer’s needs.
• The key activities are those activities that are of the utmost
importance to the company and let it operate successfully. Like
key resources they are required to create and offer a value
proposition, reach markets, maintain customer relationships,
and earn revenues.

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• Key activities differ depending on the business model
type.
• Three main categories of key activities are identified
by Osterwalder and Pigneur (2009):
a. Production Activities,
b. Problem Solving Activities (E.G. Product
Development)
c. Platform/Network Activities (E.G. CRM
Maintenance).

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• KEY ACTIVITIES (KA) is important process that should
implemented to ensure the Business Model goes well.
• Example:
• Supply chain for manufacturing
• Delivery method and content development for school or
training provider
• Problem solving formanagement consultant
• PT (Tri Dharma)

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 8. KE Y P A R TN E R S H I P S
• The key partnerships form the network of suppliers
that make the business model work.
• Companies forge partnerships for many reasons and
partnerships are becoming a cornerstone of many
business models.
• Companies create alliances:
a. to optimize their business models,
b. reduce risk, or
c. acquire resources.

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Four different types of partnerships can be distinguished:
1. Strategic alliances between non competitors,
2. Coopetition: strategic partnerships between competitors,
3. Joint ventures to develop new businesses and
buyer‐supplier relationships to assure reliable supplies.
4. Partnerships
Generally there are three reasons for creating partnerships:
a. optimization and economy of scale,
b. reduction of risk and uncertainty and
c. acquisition of particular resources and activities (based
on Osterwalder and Pigneur, 2009).

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• KEY Partnerships is main partner enabling Business
Model success.
• Purpose of partnering is to:
a. Reduce costs due to economies of scale
b. Reduce the risk of (re‐insurance)
c. Get resources or to obtain more expert
d. Learn (benchmarking)

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 9 . C OS T S T R U C TU R E
• The cost structure element describes all costs incurred
to operate a business model. Creating and delivering
value, maintaining customer relationships and
generating revenue all incur costs. Such costs can be
calculated relatively easily after defining key resources,
activities and partnerships.
• Some business models are more cost‐driven than
others. So‐called “no‐frills” service providers, for
instance, have built business models entirely around
low cost structures.

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• Low cost structures are therefore more important to
some business models than to others.
• Two broad classes of business model cost structure can
be identified: cost‐driven and value‐driven.
• Cost structures can have the following characteristics:
fixed costs, variable costs, economies of scale and
economies of scope (based on Osterwalder and
Pigneur, 2009).

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• COST STRUCTURE (CS): describes the types and
magnitude of the cost to run the Key Activities, utilize
Key Resources, and work with Key Partners.
• Consider:
• Fixed Cost
• Variable Cost
• Economy of Scale
• Economy of Scope
• Policy basis for determining the fee structure:
• Cost‐driven, or Value‐driven

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How to Create a BMC

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 Business Model Development Process

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 Contoh BMC: Budget Hotel

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Contoh BMC: Mc Donald
• its(Use this space to list two things you should do before
franchise holders.
takes place
Atgoing to
year end 2013, the lab.)
engages in is the food of a families,
more than 80% of marketing and constant quality online on the
youngsters,
McDonald’s selling food and that is served device preferred
restaurants were by the customer the elderly
beverages quickly and
franchised. Together
consistently
and business
with its suppliers the
company's model is across the globe. people
based on a three‐
legged stool:
suppliers, franchisees the company’s distributes its
and McDonald’s. employees and its products through
restaurants on a‐ the restaurants and
locations online

consists of employee loans, restaurant, raw generated at the restaurants owned by the company itself
materials procurement and marketing costs and those owned by its franchise holders

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BMC and SWOT Analysis

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BMC and SWOT Analysis (lanjutan)

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 Thank You

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