There are many ways to describe business models. One of my favorite from the book is that “A business model is a description of how your company intends to create value in the marketplace. It includes that unique combination of products, services, image, and distribution that your company carries forward. It also includes the underlying organization of people, and the operational infrastructure that they use to accomplish their work.” This description is in plain and easy to understand language yet very thorough and insightful. It carries out the full concept of business model.
The five component model and the business model canvas are both very useful tools for entrepreneurs to think about their business models. They both help start-ups to get a cleaner picture of all the components and touch down on very important points such as market segment, customers, value and strategy.
Five component model is highly condensed and each of component consists lot of questions to ask and to make clear. In the other hand, the business model canvas already help us to accelerate the process by asking questions and all we need to do is to answer those questions.
Greif Packaging changes their business focus from a commodity supplier of metal drums to a value-added service provider of “trip leasing” company. They listen carefully to their customers and provide full-service that other companies didn’t realized and capture the extra value. The extra value comes from helping their key customers to solve their problems. They take over the problems that their customers don’ t want to deal with at all and gain a big competitive advantage on this.
There differences between Franchising and Licensing,
- Franchising – Franchiser will help to support and train Franchisee and its employees / Licensing – Licenser will not provide that
- F – It is governed by securities law / L – It is governed by contract law
- F – Franchiser have control over Franchisee / L – Licenser have no control of Licensee
Three similarities between Franchising and Licensing,
- both grant receivers certain rights
- both require royalty payments
- both are exclusive intellectual property