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The Four Parts of a Business Model

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THE FOUR PARTS OF A BUSINESS MODEL 13 COMMON COMPONENTS OF A BUSINESS MODEL 13 COMMON COMPONENTS OF A BUSINESS MODEL Source: Introduction to Business Heidi M. Neck, Ph.D. Christopher P. Neck, Ph. D. Emma L. Murray, BA, H. Dip Looking for more Introduction to Business content to share with your students? Visit sagepub.com/intro-business. identifies what you are offering to a particular customer segment, the value generated for those customers, and how you will reach and communicate with them. are the people who populate the segments of a market that your offering is serving. They are the individuals or businesses willing to pay for what you are offering. generally includes all the key resources (people, technology, products, suppliers, partners, facilities) that an entrepreneur must have to drive the value proposition. defines the revenue and cost structures a business needs to meet its operating expenses and financial obligations. The OFFERING CUSTOMERS The INFRASTRUCTURE FINANCIAL VIABILITY The Problem Every new business begins with a problem. Successful entrepreneurs uncover what target customers need, provide solutions to meet those needs and relieve the pain points. Sales Channels A company's sales channels determine how the company reaches its customers. The Solution The solution outlines how the company intends to meet the customers' needs. Revenue Revenue streams describe how the company generates income. Key Resources Key resources consist of the physical, intellectual, human, and financial assets at a company. Revenue Model A company's revenue model identifies how the company will make money and generate profits. Customer Segments Customer segments involves identifying the company's target customers. Dividing customers into particular groups helps companies to market to each group more effectively. Key Partners Entrepreneurs can't do everything alone, which is why they need to team up with other key partners such as suppliers, distributors and other business associates, to help grow the company and make it become more efficient. Unique Value Proposition The unique value proposition explains why the customer is willing to buy the solution. Cost Structure The cost structure represents all the expenses required to run the company and how those costs impact pricing. Competitive Landscape Every company has to deal with a certain amount of competition in their industry. Entrepreneurs need to assess the competitive landscape by focusing on the other alternatives that customers could use. Key Metrics A company's key metrics show how the company measures success by tracking its overall performance. Competitive Advantage Companies gain competitive advantage by showcasing characteristics that are not easily copied or bought elsewhere.

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