4 Business Model Design Parameters

If you were to design a business model from scratch, you would have to make four decisions:

  1. What are the boundaries of my business, both vertically (the degree of integration along the value chain) and horizontally (the width of the portfolio of products offered and markets served)?
  2. What is the nature of the relationships between my business and parties outside the boundaries of my business, such as suppliers, customers and partners?
  3. Which assets and capabilities do I deploy to create value within my competitive environment in a unique and durable way?
  4. What are the economics of my business, i.e. the cost structure and pricing format that will enable me to extract value from my activities?
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