Business Models!

This time, we were asked to evaluate a text about business models and to observe Alex Osterwalder’s business model.

a) i) Don’t other types of organizations except businesses have to make profit in order to fulfill the purposes for which they were formed? In our text, it says the opposite, it claims that only business organizations aim to make profit and that it’s the only way to fulfill their purpose. But what is “profit”? Does it always have to be money? Can’t a non-business organization’s aim be a spiritual profit? For instance, is it meaningless to say that the American Red Cross’ profit is less violated people and increased awareness about violence? That was the point where I had comprehension difficulties.

ii) If the output is something like a service or a campaign, what is the input in that case? Can input be the spent effort or energy put into work? If so, how can the value of it be measured? In the text it says that the value of output that customers are prepared to pay has to exceed the total value of the inputs paid by business. But what if the inp

ut was not only about the money? In that case, who/what determines the price of these values?

iii) It says in the text that value proposition means the way the outputs of the business are presented to the customers in the target segments. However, in the diagram, the “distribution” comes after the value proposition. The problem that occurr

ed in my mind is that shouldn’t distribution logically happen before the output is presented to the customers? Because only after distribution takes place, the customer can reach and see the product. It did not make sense to me how customers could see the product before it’s distributed.

b) The Osterwalder template might be useful since it divides the business into 4 different sections according to their usage and therefore helps an organization to plan its business better. Also, with this model, even a random person can understand the business functions, the relationships between the sectors, the revenue generation and the step-by-step processes. A negative thing about this model can be that since every part is connected to each other, if a sector makes problem, each of them will be affected.

c) This template can definitely be applied to non-business organizations since they also have business running systems. For instance, let’s say that a non-profit organization is donating blood. It will still have customers –people in the need of blood-, core capacities –to provide a healthy and a technologic atmosphere during blood taking from donors-, value configuration –but this time creating benefits only for the customers-, and revenue streams –the value from the service it gives-. Even though they do not aim to make economical profit, the non business organizations also need such a business model to run their business better.