Question

Define the four major components and the subcomponents of the Barringer/Ireland Business Model Template. Briefly apply 2-4 components to a business idea of your own.

Answer 1

Definition:

The Barringer/Ireland Business Model Template is a visual template that lays out the four major categories and 12 individual parts of a firm's business model. It is a tool that allows an entrepreneur to describe, project, revise, and pivot a business model until all 12 parts are decided upon.

Four major components :

1) Core strategy : It describes how the firm plans to compete relative to its competitors.

A) Business mission:–It describes why it exists and what its business model is supposed to accomplish.

– If carefully written and used properly, a mission statement can articulate a business’s overarching priorities and act as its financial and moral compass.

– A well-written mission statement is something that a business can continually refer back to as it makes important decisions in other elements of its business model.

B) Business of differentiation :– It’s important that a business clearly convey the points that differentiate its product or service from competitors.

– A company’s basis of differentiation is what causes consumers to pick one company’s products over another’s.

– It solves a problem or satisfies a customer need.

C) Target Market : A target market is a place within a larger market segment that represents a narrow group of customers with similar interests.

D) Product/ Market scope: It defines the products and markets on which it will concentrate.

– Most firms start with a narrow or limited product/market scope, and pursue adjacent product and market opportunities as the company grows and becomes more financially secure.

2) Resources : These are the inputs that a firm uses to produce, sell, distribute, and service a product or service.

A) Core competency : It is a specific factor or capability that supports a firm’s business model and sets it apart from rivals.  

– It can take on various forms, such as technical know-how, an efficient process, a trusting relationship with customers, expertise in product design, and so forth.

B) Key assets : These are the assets that a firm owns that enable its business model to work. The assets can be financial, physical, intellectual, or human.

3) Financials :This is the only section of a firm’s business model that describes how it earns money , this characteristic of its makes it very important for the firm.

A) Revenue streams : – It describe the ways in which a firm makes money.

– Some businesses have a single revenue stream while others have several.

B ) Cost structure : It describes the most important costs incurred to support its business model.

C) Financing/ Funding :Many business models rely on a certain amount of financing or funding to bring their business model to life.

– At the business model stage projections do not need to be completed to determine the exact amount of money that is needed. An approximation is sufficient.

4) Operations :Operations are both integral to a firm’s overall business model and represent the day-to-day heartbeat of a firm.

A) Products (or service) production: This section focuses on how a firm’s products and/or services are produced.

B) Channels :A company’s channels describe how it delivers its product or service to its customers.

C) Key partners :Start-ups, in particular, typically do not have sufficient resources (or funding) to perform all the tasks necessary to make their business models work, so they rely on key partners to perform important roles.