$4.$ Business Model Framework $($Part $1)$

Business Model Framework $($Part $1)$

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A company$$s business model translates their strategy into action by detailing the firm$$s competitive tactics and initiatives to deliver value to its customers and make money. It identifies the firm$$s target market, customer needs, and how the firm$$s products or services will meet those needs. However, business models evolve dynamically, over time, in response to disruptions in the market.

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This exercise is important because there are a variety of business models that companies can choose. Choosing the right business model creates a framework that helps to define the why, who, and how a company conducts their business with its buyers, suppliers, and partners.

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The goal of this activity is to understand the dynamic nature of business models and the different business model frameworks that can be adapted to gain a competitive advantage.

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Given their critical importance in achieving competitive advantage, business models are constantly evolving. Match the following business models to their corresponding frameworks.

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Subscription

Razor$-$razor blades

Freemium

Bundling

Agency

Ultra$-$low cost

Match each of the options above to the items below.

The initial product is often sold at a loss or given away to drive demand for complementary goods.

User pays for access to a product or service regardless of whether they use the product or service during the payment term.

Provides the basic features of a product or service free of charge, but it charges the user for premium services such as advanced features and add$-$ons.

Basic service is provided at a low cost and extra items are sold at a premium.

The producer relies on a retailer to see the product at a predetermined percentage commission.

Sale of products or services for which demand is negatively correlated at a discount.