Had been very busy lately finishing up on all the marking and a host of other stuff. Why is it that everything has to come together at the same time? Now I have to advise my students on completing their Business Model Assignment. My advise to them: “Do a little bit every day. Don’t wait until the week of submission and then try to cramp everything in one week. You will go haywire if you do that.” There are four parts to the business model as required in the coursework brief: core strategy, strategic resources, partnership network, and customer interface. Now, we are in Week 4. Try to cover one part in one week, and you will be able to complete your assignment by Week 7. Of course, you would have to compromise on your CNY celebrations. Never mind, you still have many more CNYs to come. :)) In this post, I will touch on the first part – i.e. core strategy.
Let me start with business model. A business model is just a simplified description of how a business makes money. Usually, it is the precursor to the business plan. The objective of having a business plan is to “sell” your project to external financiers or internally to top management. If you have a well-thought out business model, then it forms the basis for writing a good business plan. A business plan may consist of the management team, the business model, the implementation plan, the financial plan, an analysis of the external environments, and maybe also a part on risk analysis. So you see, the business model is actually just a part of the business plan.
Okay, now let’s look at core strategy. What exactly do we mean by “core”? It simply refers to our most valuable customers – who we are selling to. It also refers to our most important product – what we are selling. Also refers to our most important channels – how we are selling. Strategy? It’s just the art and science of today’s business environment i.e. how we differentiate ourselves from others. It refers to us finding our very own space in an over-crowded market. In the marking scheme, marks for this part is allocated for three areas of discussion: the mission statement (3 marks), product and/or market scope (4 marks) and basis for differentiation (4 marks). Let us move to the first of these: the mission statement.
The mission statement simply defines what we sell and who we sell to. Having a mission statement provides us and our employees the framework and purpose of the existence of our business. The mission statement can be stated in one sentence or several sentences. Get your group’s members to sit down together and brainstorm on a mission statement for your group’s business venture. If you put your brains together, you will be able to come up with a reasonably good mission statement. Google for examples of mission statements. Learn from the mission statements of others and try formulate a good one for yourself. After your group has come up with the mission statement, then explain your mission statement. So, in this area, two things you need to do: State and explain your mission statement.
The next area of discussion is your product and/or market scope. Product scope refers to the number of products you carry for sale in your business. You may build a successful business based on a single product strategy or you may have different lines of product to cater to a larger variety of customers. Your product scope will determine your future marketing strategy, your profit goals, and market saturation. With a single product scope, you build your business around one primary product. You become a specialist and often can build a niche market for your product, especially if you can develop territories over which you have complete control. Management is simple and inventory is easily monitored. A multiple product scope can include selling two or three or hundreds of products. Market scope is similar to product scope. It defines the number of customers you sell to and who they are. Yeah, you are right – it’s akin to market segmentation. You should have studied about market segmentation in your Fundamentals of Marketing course. If you have forgotten, well, just Google and find out. So, in this area, what you need to do is to describe your product/s and/or your customer segments.
What’s next? Oh yeah, basis for differentiation. Meaning how you differentiate your product or service with those offered by your competitors. Differentiating your product makes you stand out from the crowd. It represents the X-factor that sways the customer’s preference in your favor. In other words, successful product differentiation creates a competitive advantage for you because customers will tend to perceive that your product is unique or one of a kind. Product differentiation may be as simple as just changing the way that a product is packaged. It may also be as elaborate as introducing new functionalities to the product. So, in this area, what you need to do is to explain how your product/service is differentiated from those of your competitors.