Question

Hello i have a case paper due on Bavaria Brewery and this is one of the questions i have to answer but i don't really understand the question. I need more elaboration on Alex Osterwalder's Model and what it states. I googled it but i have a better understanding with detailed answers people give on here.

Using Alex Osterwalder’s Business Model template, give your analysis of the arguments for developing more ‘home bases’ as a new business model.  

Answer 1

Alex Osterwalder invented the Business Model Canvas in 2010. Business Model Canvas is a visual template for strategic management which can help firm document their existing business model or help them create new business models. The template consists of following 9 parameters which encompass all the characteristics with the help of which any firm can clearly visualise its business model

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

This is visually representated as below

Now we will briefly touch upon each of these parameters

1. Key Partners : This tells about the key partners of the firm. The key partners are usually the suppliers and the vendors of the firm. Examples of these are raw material suppliers, supply chain partners, third party contractors, outsourcing partners, research partners etc. This parameter explains about the key activities that these partners perform, what is the value that these partners bring to the firm, what kind of relationship does the firm have with these partners etc.

2. Key Activities : This tells about what are the key activities that the firm undertakes to execute its business and provide value to its customers and earn profit. This is analogous to why the firm exists and what is its purpose. For example if the firm wants to be the market player this will tell what marketing strategies the firm will have to put in place, what are the different marketing channels possible, how would the firm get the maximum market share by optimal spend of marketing budget etc.

3. Key Resources : This will define the resources which the firm needs and uses to provide the value to its customers. The resources can be of different types like employees and workers which will form part of the human resources, the financial resources of the firm, the intellectual resources like its patents, brands, copyrights etc as well as its physical resources like plants, buildings, infrastructure etc.

4. Value Proposition : This is the main value which the firm provides to its customers. It includes all the products and services which help the firm to provide value to the customers and earn profits. The value proposition of the firm distinguishes it from its competitors. There are different ways in which the firm can provide the value to its customers - it can provide a product or a service which is different from its customers, it can provide a new product which is currently unavailable in market, it can devise an innovative way of doing thing which solves a major customer pain point or it can launch a product or service which drastically increase the convenience in the way customer currently perform certain tasks.

5. Customer Relationships : This denotes the type of relationship the firm has with its customers. These relationship can be of different types and depnding on the type of the relationship the business model will change. While one firm can work very closely with customers to service their needs by having customer specific executive, other firm can provide manuals to its customers and ask them to work under the self-service model. There can be other firms who lie in between where the customer can work on their own on the product and then in case of any support liaise with the executive from the firm for additional assistance. These different types of relationships can drastically affect the type of business model the firm operates with

6. Customer Channels : This defines the way in which the firm interacts with the customers and delivers value. This includes the exisitng ways of reaching out to the customers, integration among different channels, performing the cost benefit analysis of different channels and proposing any improvements in the channels. The different options available to the firm are self owned channels or distributor owned channels or a combination of these two in varying proportions.

7. Customer Segments : This defines the customer or market segments in which the firm wants to operate. The firm can either chose to service a very small part of market to satisfy a very specific need and work in a niche segment or it can target the entire market to service a very generic need or it can lie somewhere in between depending the type of need the market has and the value delivered by the firm. There can be also be additional cases where the firm operates in multiple segments and services different types of needs of its customers. The customer segment targetted has an impact on the business model the firm chooses.

8. Cost Structure : This describes the various cost strategies employed by the firm depending on the business model it chooses. The firm can either go for cost driven business models, where the firm satisfies the vey basic needs of the customers with no additional features thus reducing the cost or the firm can meet customer requirements by concentrating on value delivered and focussing less on cost. The various cost parameters which affect the businss model are the one time fixed cost, the recurring variable cost and the economies of scale and scope which the firm has in performing its business.

9. Revenue Streams : This defines the ways in which the firm earns money and makes profit. This includes identifying the perceived value of the product or service, the current value that the customers are paying for the product, the change in demand and revenues if the price of the product increases, the different ways of earning revenues, different pricing structures etc.

Once we have the information on all these parameters and put them in the business model canvas we can then analyse the existing business model or propose the new business model based on the way these parameters are structured.