Based on a Harvard Business Review with same title by Ramon Casadesus-Masanell and Joan E. Ricart. These slides explains about what business model is, its characters, what make it good and how to differentiate it with strategy and tactics. Also had a practical real sample for better explanation.

1. Classified - Private Use
Based on a Harvard Business Review with same title by Ramon Casadesus-Masanell and Joan E. Ricart

2. Classified - Private Use
Based on a Harvard Business Review with same title by Ramon Casadesus-Masanell and Joan E. Ricart
 Introduction – Idea In Brief
 What Is A Business Model
 Three Characteristic Of A Good Business Model
 How Business Models Generate Virtuous Cycle
 Competing With Business Models
 Sample Of Business Models
 Business Models VS Strategy & Tactics
CONTENTS

3. Classified - Private Use
Based on a Harvard Business Review with same title by Ramon Casadesus-Masanell and Joan E. Ricart
Current fact:
“seven out of 10 companies are trying to create
innovative business models, and 98% are modifying
existing ones”
“most companies still create and evaluate business
models in isolation, without considering the
implications of how they will interact with rivals’
business models.”
INTRODUCTION – IDEAS IN BRIEF

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Based on a Harvard Business Review with same title by Ramon Casadesus-Masanell and Joan E. Ricart
Now and then…
Why we need business model…
INTRODUCTION – IDEAS IN BRIEF
PAST FUTURE
Strategy has been the primary
building block of competitiveness
Sustainable advantage may well
begin with business model.
DEVELOPING COUNTRY DEVELOPED COUNTRY
Pressure to crack open market
(mostly mid & bottom) driving a
surge of business model innovation
Economic slowdown is forcing
companies to modify / replace
their business model.

5. Classified - Private Use
Based on a Harvard Business Review with same title by Ramon Casadesus-Masanell and Joan E. Ricart
Facts about business model:
- Company that want to get a value trough business
model may need to do some radical transformation
which focus on innovation & modification.
- A business model successes depends on how it interact
with other’s model.
- Much of problem lies on company’s narrow focus that
work on isolation. One may superior in isolation but
actually result less when it interacts.
INTRODUCTION – IDEAS IN BRIEF

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Based on a Harvard Business Review with same title by Ramon Casadesus-Masanell and Joan E. Ricart
WHAT IS A BUSINESS MODEL
 Definition:
 “a story that explains how an enterprise works”
 “who is your customer, what does the customer value and
how do you deliver value at an appropriate cost?”
 Business model consist of 4 Elements:
1. A Customer value Proposition
2. A profit formula
3. Key resources
4. Key processes

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Based on a Harvard Business Review with same title by Ramon Casadesus-Masanell and Joan E. Ricart
THREE CHARACTERISTIC OF A GOOD
BUSINESS MODEL
1. Aligning with company goals
While designing a business model, the choices
made should enable the organization to achieve
its goals.
Example: Xerox PARC; Xerox was unable to draw
new business from its innovation, due to lack of
alignment with its goals.

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Based on a Harvard Business Review with same title by Ramon Casadesus-Masanell and Joan E. Ricart
THREE CHARACTERISTIC OF A GOOD
BUSINESS MODEL
2. Self-reinforcing
While creating business model, the choices made
should complement one another: there must be
internal consistency.
Example: Providing comfort level in a low cost
airline, comparable to that offered by a full fare
carrier (reducing number of seat on plane and
offering food and coffee).

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Based on a Harvard Business Review with same title by Ramon Casadesus-Masanell and Joan E. Ricart
THREE CHARACTERISTIC OF A GOOD
BUSINESS MODEL
3. Robustness
A good business model should be able to sustain
its effectiveness over time by fending off 4
threats:
- Imitation
- Holdups
- Slack
- Sub-situation

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Based on a Harvard Business Review with same title by Ramon Casadesus-Masanell and Joan E. Ricart
THE CHOICES & ITS CONSEQUENCES
A component of Business Models is
CHOICES; which types are:
1. Policy choices
2. Asset choices
3. Governance Choices
The choices have consequences….

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Based on a Harvard Business Review with same title by Ramon Casadesus-Masanell and Joan E. Ricart
THE CHOICES & ITS CONSEQUENCES
The choices have CONSEQUENCES,
which the types are:
1. Flexible Consequences
2. Rigid Consequences
Unlike flexible consequences, rigid ones are
difficult to imitate because companies need
time to build them.

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Based on a Harvard Business Review with same title by Ramon Casadesus-Masanell and Joan E. Ricart
There are consequences of business model choices.
The consequences enable further choices and so on.
This process generates virtuous cycles that
continuously strengthen the business model.
E.g.: Ryanair’s business model creates several
virtuous cycles that maximize its profits through
increasingly low cost and prices.
But these cycles don’t go on for a long time
E.g.: If ryanair’s workforce forms a union and
demand higher wages, one of the cycles will
become vicious.
HOW BUSINESS MODELS GENERATE
VIRTUOUS CYCLE

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Based on a Harvard Business Review with same title by Ramon Casadesus-Masanell and Joan E. Ricart
THREE WAYS TO COMPETING WITH
BUSINESS MODEL
1. Strengthen Your Virtuous Cycle
Modify the business models to generate new
virtuous cycle to compete more efficient with
rivals.
2. Weaken Competitor’s Cycle
Use the rigid consequences of the choices to
weaken entrants’ virtuous cycle.
3. Turn Competitor Into Complement
Rival with different business models can also
become partners in value creation.

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Based on a Harvard Business Review with same title by Ramon Casadesus-Masanell and Joan E. Ricart
SAMPLE OF RYANAIR BUSINESS MODEL
Ryanair in 1980’s…
 Took CHOICES to offer
excellent service &
standardize fleet.
 Need redesign due to
competitive market
 In early 1990’s, has
been transformed
(radically) into a low
cost carrier
.

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Based on a Harvard Business Review with same title by Ramon Casadesus-Masanell and Joan E. Ricart
SAMPLE OF RYANAIR BUSINESS MODEL
Ryanair nowadays…
 Become the largest low
cost carrier in Europe.
 Take CHOICES on low
fares, that:
 Align with its goal;
“firmly establish
itself as Europe's
leading low-fares”
 Self-reinforcing its
virtuous cycle
 Robust; its has run
for 20 years

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Based on a Harvard Business Review with same title by Ramon Casadesus-Masanell and Joan E. Ricart
SAMPLE OF COKE’S COOLER DIVISION
BUSINESS MODEL
.
BEFOREAFTER
High-end
cooler
High electricity
intake
Less placement Less sales
Mid-low
cooler
Less electricity
intake
More placement More sales
More money to
get more coolers
CHOICES CONSEQUENCES

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Based on a Harvard Business Review with same title by Ramon Casadesus-Masanell and Joan E. Ricart
These three are interrelated…
1. Strategy
Contingent plan about which business model will be used;
choices and consequences are reflection of it
2. Business Model
Logic of the company, how it operates, creates and capture
values
3. Tactics
Residual choices open to a company by virtue of a business
model it employs.
BUSINESS MODEL VS STRATEGY &
TACTICS

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Based on a Harvard Business Review with same title by Ramon Casadesus-Masanell and Joan E. Ricart
CLOSING REMARKS…
 To achieve better competitiveness, a company should not only create a
strategy but should implement it into a good business model.
 A good business model is a model that align with your goal, self-reinforcing
and robust.
 When you have a good model, you may able to strengthen your cycle,
weaken you rival’s cycle or make it as a complement.
 Strategy, business model and tactics are interrelated; strategy is design the
car, business model is the car and tactics is how we drive the car.
 A company may struggling to build them toughly , especially because of
their interactions with those of other players (rivals, suppliers, etc) that has
their these three, too.
 That’s the essence of competitiveness—and developing strategy, tactics, or
innovative business models has never been easy.

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Based on a Harvard Business Review with same title by Ramon Casadesus-Masanell and Joan E. Ricart