BUSINESS MODEL CANVAS (BMC)

AND
SWOT ANALYSIS

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 WHAT IS BMC?

 Developed by Alexander Osterwalder in 2009

 BMC is a visual representation of current or new business models. It analyse,

strategise and test a business model based on nine business areas.

 It provides a holistic view of the business as a whole

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8 1
2

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• What key activities does your • What kind of relationship
value proposition require? does the target customers
• What activities are the most expect you to establish?
important in distribution • How can you integrate that
• Who are the key channels, customer • What core value
into your business in terms of
partners/ relationships and revenue do you deliver to cost and format?
streams? the customers? • Which classes
suppliers?
• What are the • Which customer are you creating
motivations for the needs are you values for?
satisfying? • Who are your

6
partnership?
most important

3 customers?

• What key resources does • Through which channels do

your customers want to be
your value proposition
reached?
require? • Which channels work best?
• What resources are the • How much do they cost?
most important in • How can they be integrated
distribution channels, into your and your customer’s
customer relationships and routines?
revenue streams?

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• What costs the most in your • What is the value that your customers are willing to

9 business?
• Which key resources/ activities are
the most expensive?
pay?
• What and how do they recently pay?
• How would they prefer to pay?

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 1. CUSTOMER SEGMENTS

 Customer segments refer to the target people and/or organisations your are
offering value propositions.

 From whom the product and/or the technology is useful and what for – such as
basic need, solving problem.

 Types of customers :- mass market, niche market, segmented.

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 2. VALUE PROPOSITION

 A company’s value proposition is what distinguishes itself from its competitors

(Osterwalder, 2008).

 The value created for users by the product or service containing the new
technology

 Describes the bundle or products that create value for specific customer segment

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 2. VALUE PROPOSITION (cont.)

 What value do we need to deliver?

- Newness – new set
- Performance
- Customisations
- Getting the job done
- Design
- Brand/status
- Price
- Cost reduction
- Accessibility
- Usability

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 2. VALUE PROPOSITION (cont.)

 Some value propositions involve innovative technology, while some simply

deliver better service. Others are a mix of better goods and services.

 The value propositions may be quantitative (e.g. price and efficiency) or

qualitative (e.g. overall customer experience and outcome).

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 3. CHANNELS

 A company can deliver its value proposition to its targeted customers through
different channels.

 Effective channels will distribute a company’s value proposition in ways that are
fast, efficient and cost-effective.

 The first decision to be made when trying to sell products or services to the
target market is whether to sell directly to that target market, or to use
intermediary services.

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 3. CHANNELS (cont.)

 Common methods of direct marketing:

- direct selling
- internet marketing
- catalogues

 Although direct marketing is a straightforward process, if does not always move

goods from producers to consumers due to lack of expertise, experience and
economies of scale.

 In order to be more efficient, many companies rely on marketing intermediaries

to market their products.
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 4. CUSTOMER RELATIONSHIPS

 Describe the types of relationships a company establishes with specific customer

segments.

 Types of relationship:
- Personal assistance – communicate directly
- Self service
- Automated services
- Co-creation – YouTube/ Facebook

 Studies show that it costs four to six times as much to get a new customer as it
does to keep a customer loyal, hence, it is imperative for companies to build
brand loyalty.
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 5. REVENUE STREAMS

 Revenue streams represent the cash a company generates from each

customer/product segment.

 Two types of revenue streams:

- Transaction revenue – cash payment
- Recurring revenue – on-going payment

 Ways to generate revenue streams:

- Asset sales – products
- Usage sales – phone calls
- Lending, licensing
- Subscription fees
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- Advertising
 6. KEY RESOURCES

 Key resources are the most important assets needed to make a business model
work.

 Key resources can be:

- physical :- building, machines
- intellectual :- brand, knowledge, IP
- human :- expertise
- financial

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 7. KEY ACTIVITIES

 Key activities are activities that a company must do in order to make its business
model work.

 Category of key activities:

- organising
- production
- problem solving
- marketing

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 8. KEY PARTNERS

 Key partners are the network of suppliers and partners that make the business
model work.

 Companies forge partnership to optimise business models, reduce risk, and

acquire resources.

 Four different types of partnership:

- Strategic alliance
- Cooperation
- Joint venture
- Buyer-supplier relationship
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 8. KEY PARTNERS (cont.)

 Three motivations for partnership:

- Optimisation of economy of scales
- Reduction of risks
- Acquisition of resources and activities

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 9. COST STRUCTURE

 All cost involved to operate business models. Two types:

- Cost driven – minimising cost
- Value driven – concern of value

 Characteristics of cost structure:

- Fixed cost – salaries, rental, physical facilities
- Variable costs

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 SWOT ANALYSIS

 A SWOT analysis is a planning tool used to understand the Strengths,

Weaknesses, Opportunities, and Threats involved in a project or in a business.

 It involves specifying the objectives of the business or project and identifying

the internal and external factors that are supportive or unfavorable in achieving
that objective.

 SWOT is often used as part of strategic planning process.

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 SWOT ANALYSIS (cont.)
Strengths Weaknesses

- INTERNAL FACTORS –

Opportunities Threats

- EXTERNAL FACTORS -

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 SWOT ANALYSIS (cont.)
Strengths Weaknesses
• What do you do well?
• What are your unique skills? • In what areas do you need to improve?
• What expert or knowledge do you • What resources do you lack?
have? • What parts of your business are not
• What experience do you have? very profitable?
• What do you do better than your • Where do you need further education
competitors? and/or experience?
• What are your most profitable • What costs you time and/or money?
business?
Opportunities Threats
• What are the business goals you are
currently working towards? • What’s going on in the economy?
• How can you do more for your existing • What’s going on in the industry?
customers or clients? • What are your competitors doing that
• How can you use technology to you are not?
enhance your business?

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 SWOT ANALYSIS MATRICS

 TOWS Analysis is the analysis of Threats, Opportunities, Weaknesses, and

Strengths.

 The 4 strategies derived from this analysis are as follows:

- Opportunity-Strength (OS) strategies
- Opportunity-Weakness (OW) strategies
- Threat-Strength (TS) strategies
- Threat-Weakness (TW) strategies

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 SWOT ANALYSIS MATRICS (cont.)
Strengths Weaknesses

• List of strengths • List of weaknesses

Opportunites Opportunity-Strength Opportunity-Weakness

(OS) Strategies (OW) Strategies

• Use the strengths to take • Overcome weaknesses

• List of opportunities advantage of by taking advantage of
opportunities opportunities

Threats Threat-Strength (TS) Threat-Weakness (TW)

Strategies Strategies

• List of threats • Use strengths to avoid • Minimise weaknesses

threats and avoid threats

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 EXAMPLE OF SWOT ANALYSIS

 Example on the Campbell Soup Company that stress on financial goals.

 The example also illustrates how you can pair the items within SWOT grid to
develop strategies.

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 Strengths Weaknesses
• Current profit ratio • Legal suits not resolved
increased • Plant capacity has fallen
• Employee morale high • Lack of strategic
• Market share has management system
increased

Opportunites Opportunity-Strength Opportunity-Weakness

• Western European (OS) Strategies (OW) Strategies
unification • Acquire food company
• Rising health in Europe (S1,S3,O1) • Develop new
consciousness in • Develop new healthy Pepperidge Farm
selecting foods soups (S2, O2) products (W1,O2,O3)
• Demand for soups
increasing annually
Threats Threat-Strength (TS) Threat-Weakness (TW)
Strategies Strategies
• Low value of dollar
• Tin cans are not • Develop new • Close unprofitable
biodegradable biodegradable soup European operations
containers (S1,T2) (W3,T1)

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 Thank you…

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