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Business model answers
Business models
A business model is a management hypothesis about what customers want, how they want it and how an enterprise can meet those needs and get paid for doing so.
How do organizations develop business models from strategy?
What are characteristics of a successful business model?
Compatibility with corporate goals
Is the business model aligned with the corporate goals? Decisions made during the development of the business model should create consequences that enable the company to achieve its goals.
Self-reinforcing business model
Decisions made by management during the development of a business model should complement and reinforce each other (internal consistency).
Ryanair's Business model example
The business model generates positive growth cycles Example Ryanair:
Cycle 1: Low price lower fixed costs
Cycle 2: Low price costs per passenger
high volume greater bargaining power with suppliers even lower prices
high volume high capacity utilization lower fixed even lower prices
Cycle 3: Low price
variable costs even lower prices
low service expectations no meal offerings lower
→→→
→
→→→
→→→
→
→
Employees?
Robustness against four risk factors
1. Imitation: Can competitors copy the business model?
2. Holdup: Delays caused by customers, suppliers, or other players in the value chain (bargaining power).
3. Slack: Lack of employee commitment, inefficient use of resources, theft, etc.
4. Substitution: When new products reduce the demand for your own product.
EuroNatur's current strategy focuses on transboundary nature conservation across Europe, aiming to protect wildlife and their habitats while promoting sustainable development in harmony with nature. Key components of their strategy include:
By integrating these approaches, EuroNatur aims to address both the ecological and climate crises, striving for a Europe where nature and people coexist harmoniously.
Do you need to adjust your strategy?
• Business Model - Elmira
− How does your organization’s current business model support or
hinder its ability to respond to the Silberlauf River crisis?
− What changes to your business model could help align your
organization's activities with the sustainability needs of the river
and the surrounding community?
− Present a revised business model that incorporates strategies for
addressing the crisis, ensuring long-term ecological and economic
Viability.
1. How does your organization’s current business model support or hinder its ability to respond to the Silberlauf River crisis?
• Public advocacy and mobilization, Scientific expertise, lobbying influence, collaboration, access to financial support
• Limited budget for immediate action, potential conflict with local industries with agricultural needs, and other needs, Lack of capacity to implement large-scale solutions
Current Business Model Overview (Greenpeace/Environmental NGOs):
• Advocacy and Awareness: NGOs like Greenpeace primarily work by raising awareness about environmental issues through campaigns, public outreach, and collaboration with other stakeholders. They often influence public opinion and policymakers to take action on environmental matters.
• Research and Data Collection: These organizations often conduct scientific research, collaborate with academics, and monitor environmental conditions to provide data that supports their arguments for policy changes and environmental protection.
• Campaigning and Lobbying: Greenpeace focuses on lobbying governments, industries, and local authorities to adopt stronger environmental regulations and practices, using public pressure and media campaigns.
• Partnerships with Local Communities: Environmental NGOs often form alliances with local communities to push for changes in practices related to water use, waste management, and pollution control.
Strengths of the Current Model in Addressing the Crisis:
• Public Advocacy and Mobilization: Greenpeace’s ability to mobilize public opinion and generate widespread attention through media and campaigns can help bring pressure on local authorities and businesses to take immediate action on the Silberlauf crisis.
• Scientific Expertise: NGOs often have access to environmental experts and research, allowing them to understand the specific threats posed to the river and present scientifically backed solutions to stakeholders.
• Lobbying Influence: The ability to work with policymakers, businesses, and local governments positions NGOs like Greenpeace well to push for legislative and regulatory changes to address the root causes of the crisis.
Weaknesses of the Current Model:
• Limited Funding for Immediate Action: While Greenpeace and similar NGOs often raise funds for long-term sustainability projects, their funding may not be sufficient to address immediate disaster response measures (e.g., emergency cleanup, direct intervention to mitigate pollution).
• Potential Conflict with Local Industries: NGOs advocating for strict environmental regulations may face resistance from industries like agriculture, steelworks, and tourism, which are significant stakeholders in the Silberlauf region. This could limit the scope of influence or lead to tensions with key economic sectors.
• Capacity to Implement Large-Scale Solutions: NGOs generally do not have the capacity to implement infrastructure changes (e.g., sewage treatment upgrades, water management systems), which are crucial for resolving the crisis in the long term.
2. What changes to your business model could help align your organization’s activities with the sustainability needs of the river and the surrounding community?
• Collaborative emergency response, and funding
• Strengthening partnerships with local stakeholders
• Expanding community engagement and education
• Policy legislative advocacy
• Integration of Sustainability into Economic and Social Strategies ℰ𝓁𝓂𝒾𝓇𝒶, [Jan 8, 2025 at 22:01]
To better align with the immediate needs of the Silberlauf River crisis, Greenpeace or a similar NGO could make the following adjustments:
1. Collaborative Emergency Response and Funding:
• Emergency Response Fund: Establish a dedicated fund to support immediate crisis response, such as the cleanup of sewage contamination, water testing, and the restoration of aquatic life.
• Rapid Response Teams: Create teams equipped to respond to pollution events swiftly, possibly in collaboration with local authorities and other stakeholders.
2. Strengthening Partnerships with Local Stakeholders:
• Joint Initiatives with Local Authorities: NGOs can work more closely with local governments and businesses (e.g., the steelworks, agricultural enterprises) to jointly develop crisis mitigation strategies and long-term restoration plans.
• Public-Private Collaboration: Work with industries to support investments in cleaner technologies, wastewater treatment, and sustainable agricultural practices that minimize runoff.
3. Expanding Community Engagement and Education:
• Community-Based Pollution Monitoring: Empower local communities to monitor pollution levels in the river, providing real-time data that can be used to press for policy changes.
• Public Education Campaigns: Launch local and regional campaigns to educate residents and industries on sustainable practices, water conservation, and reducing pollution sources.
4. Integration of Sustainability into Economic and Social Strategies:
• Green Economy Transition: Advocate for policies that transition the region toward a green economy, promoting renewable energy, sustainable agriculture, and green manufacturing practices that do not degrade the river ecosystem.
• Sustainable Tourism: Promote eco-friendly tourism that encourages visitors to enjoy the river while contributing to its preservation through environmental fees or donations.
5. Policy and Legislative Advocacy:
• Tighter Pollution Regulations: Push for more stringent regulations on wastewater management, especially during extreme weather events. This could include increasing the capacity of sewage treatment facilities, requiring industries to adopt zero-waste principles, and enhancing penalties for pollution violations.
• Climate Change Adaptation Policies: Advocate for climate change adaptation strategies that address the risks of extreme weather (e.g., flooding, drought) and their impact on the river system. ℰ𝓁𝓂𝒾𝓇𝒶, [Jan 8, 2025 at 22:01]
3. Presenting a Revised Business Model for Addressing the Crisis
A revised business model would incorporate the following strategies to ensure the long-term sustainability of the Silberlauf River and the surrounding community:
A. Mission and Vision Alignment
• Mission: To restore and protect the Silberlauf River and its surrounding ecosystems, ensuring a balance between ecological health, economic development, and social well-being.
• Vision: A sustainable, resilient river basin where water resources are protected, industries and communities thrive through eco-friendly practices, and biodiversity is preserved for future generations.
B. Key Activities
1. Crisis Response and Management: Immediate actions to contain and mitigate the effects of pollution, restore water quality, and manage the crisis with local authorities and stakeholders.
2. Sustainable River Restoration: Implement long-term ecological restoration projects focusing on water quality improvement, biodiversity conservation, and climate resilience.
3. Public Engagement and Advocacy: Increase awareness through media campaigns, public education, and lobbying to influence policy changes.
4. Partnerships for Sustainable Practices: Work closely with businesses, local governments, and communities to ensure sustainable water use and pollution control.
C. Key Partnerships
• Local Government: Collaborate with local municipalities and authorities to manage the river basin sustainably.
• Industry Partners: Work with agricultural enterprises, steelworks, and tourism operators to adopt cleaner practices and improve their impact on the environment.
• Academic and Research Institutions: Partner with universities and research organizations for scientific studies on the river's ecology and pollution control methods.
D. Funding Sources
• Donations and Grants: Mobilize public support and funding through donations, international grants, and environmental funds.
• Corporate Sponsorship: Engage businesses in sustainable practices through corporate social responsibility (CSR) programs, including contributions to river restoration.
• Government Funding: Advocate for government funds to support disaster recovery and long-term sustainability efforts.
E. Long-term Sustainability Goals
• Pollution Reduction: Achieve a 50% reduction in river pollution levels within the next 5 years.
• Biodiversity Restoration: Increase fish populations and aquatic life by restoring natural habitats along the riverbanks.
• Climate Adaptation: Strengthen the river’s resilience to climate change through improved water management and sustainable land-use practices.
- How does your organization ensure that employees feel safe to speak up during the crisis?
Our organization fosters an environment of psychological safety by implementing anonymous reporting systems, conducting regular feedback sessions, and creating a culture of open dialogue. We emphasize inclusivity and transparency in all crisis-related communication, ensuring that employees know their input is valued and acted upon. Leaders are trained in active listening and conflict resolution to further support this approach.
- What mechanisms are in place for employees to contribute ideas or concerns?
Mechanisms include suggestion boxes (both physical and digital), dedicated forums for brainstorming, and employee committees that meet regularly to discuss ongoing issues. These structures empower employees at all levels to propose solutions and raise concerns. Digital tools like Trello or Slack enable real-time collaboration and idea-sharing during the crisis.
- Identify any internal barriers that might prevent employees from speaking openly about the crisis.
Potential barriers include fear of retaliation, a hierarchical culture that discourages upward feedback, or a lack of awareness about reporting mechanisms. To address these issues, we conduct awareness campaigns, ensure whistleblower protections, and train managers to actively encourage and reward employee contributions.
2. Structures ℰ𝓁𝓂𝒾𝓇𝒶, [Jan 8, 2025 at 22:01]
- How does your organization’s internal structure support or hinder its ability to make ethical decisions during the crisis?
Answer:
Our decentralized structure enables quick, localized responses to ethical dilemmas. However, inconsistencies can arise across regions, making it essential to implement overarching ethical guidelines and oversight committees to ensure alignment. A clear chain of accountability supports ethical decision-making and minimizes delays during crises.
- What structural changes might be necessary for your organization to effectively collaborate with other stakeholders on the river's recovery?
Answer:
We recommend forming a Crisis Management Taskforce with representatives from key stakeholder groups, such as local governments, industries, and NGOs. Establishing cross-functional teams within our organization can also ensure more integrated decision-making. Digital collaboration tools can further streamline communication and data sharing.
- How can your organization’s structural approach to decision-making be positioned as an advantage during discussions with other stakeholders in the crisis meeting?
Answer:
Our structure’s adaptability and inclusivity can be highlighted as strengths during stakeholder discussions. For instance, emphasizing our decentralized teams’ ability to act quickly in localized areas while maintaining centralized coordination ensures both agility and consistency. Transparency in decision-making processes also builds stakeholder trust.
PRESENTATION
- How do you handle waste and minimize pollution?
We utilize a circular economy approach to waste management, focusing on recycling, reuse, and waste reduction at the source. Partnerships with technology providers enable us to implement innovative waste treatment solutions, such as bio-based remediation for polluted water.
- Do you see that you need to adapt your governance system ?
Yes, Adapting the governance system is crucial for an NGO restoring a river to address dynamic environmental challenges, engage diverse stakeholders, ensure compliance with changing regulations, optimize resources, and integrate monitoring and feedback for continuous improvement.
- Do you see a need to handle your waste differently?
Yes, we plan to adopt more advanced technologies for waste treatment, such as real-time monitoring of waste streams to prevent pollutants from reaching the river. Additionally, collaborating with industries along the Silberlauf to implement stricter waste disposal standards is essential.
- Do you see that you pollute a lot?
As an NGO focused on protecting and restoring a river, we strive to minimize pollution. However, it's essential to assess our activities critically, such as operations, resource use, or logistical processes, to identify any unintended environmental impacts. This includes evaluating practices like transportation, material use, and waste management.
If we identify areas where we are contributing to pollution, we will take steps to address them by implementing eco-friendly practices, reducing waste, and promoting sustainable resource use. Continuous monitoring and feedback will help us ensure that our operations align with our mission to protect and restore the river.
What is a business model?
With which tool can we map business models? What are characteristics of a successful business model?
But what exactly is a business model (BM)?
[1]
David Teece, UC Berkeley
Depicting elements of a business model using the BM canvas
Source: strategyzer.com (2024) 17
Explicating characteristics of a successful business model
Compatibility with corporate goals
Is the business model aligned with the corporate goals? Decisions made during the development of the business model should create consequences that enable the company to achieve its goals.
Self-reinforcing business model
Decisions made by management during the development of a business model should complement and reinforce each other (internal consistency).
Robustness against four risk factors
1. Imitation: Can competitors copy the business model?
2. Holdup: Delays caused by customers, suppliers, or other players in the value chain (bargaining power). 3. Slack: Lack of employee commitment, inefficient use of resources, theft, etc.
4. Substitution: When new products reduce the demand for your own product.
Source: Casadesus-Masanell & Ricart (2011) 18
Depciting an example of a self-reinforcing BM
The business model generates positive growth cycles
Example Ryanair:
Cycle 1: Low price → high volume → greater bargaining power with suppliers → lower fixed costs → even lower prices
Cycle 2: Low price → high volume → high capacity utilization → lower fixed costs per passenger → even lower prices
Cycle 3: Low price → low service expectations → no meal offerings → lower variable costs → even lower prices
Source: Casadesus-Masanell & Ricart (2011) 19
Gather experience in working with the Business Model Canvas...
[3] [4]
[2]
Task: Outline the Nespresso business model! What is the key core element?
Source: strategyzer.com (2024) 22
Applying the tool
https://tinyurl.com/mvc3h48u
Sit together in groups.
Fill in the business model canvas for the Nespresso business model as presented in class.
23
Explaining the business model of Nespresso (1/3)
PARTNER NETWORK
Machine Manufacturer
Coffee farme rs
KEY ACTIVITIES
VALUE PROPOSITION
Nespresso Mach ines
Nesp resso Pads
Convenience, great coffee, large variety
B2C Distribution
Marketing Production
KEY RESOURCES
IP/Patents Brand
Distribution Channels
Production Facilities
Coffee
CUSTOMER RELATIONSHIPS
Nespresso Club
DISTRIBUTION CHANNELS
CUSTOMER SEGMENTS
Hou seholds
Business
Nespresso .com
Call Center
Mail Orde r
Nespresso Stores
COST STRUCTURE
Production
Marketing
B2C Distribution
REVENUE STREAMS
1 x Machine Repetitive Sales Pad Sales
24
Explaining the business model of Nespresso (2/3)
[5]
25
Explaining the business model of Nespresso (3/3)
PARTNER NETWORK
Machine Manufacturer
Coffee farme rs
KEY ACTIVITIES
VALUE PROPOSITION
Nespresso Mach ines
Nesp resso Pads
Convenience, great coffee, large variety
B2C Distribution
Marketing Production
KEY RESOURCES
IP/Patents
Brand
Coffee
Distribution Channels
Production Facilities
CUSTOMER RELATIONSHIPS
Nespresso Club
DISTRIBUTION CHANNELS
CUSTOMER SEGMENTS
Hou seholds
Business
Nespresso .com
Call Center
Mail Orde r
Nespresso Stores
COST STRUCTURE
Production
Marketing
B2C Distribution
REVENUE STREAMS
1 x Machine Repetitive Sales Pad Sales
26
Exploring the relaunched business model of Nespresso
PARTNER NETWORK
Machine Manufacturer
Coffee farme rs
KEY ACTIVITIES
VALUE PROPOSITION
Nespresso Mach ines
Nesp resso Pads
Convenience, great coffee, large variety
Sustainability?
B2C Distribution
Marketing Production
IP/Patents
Brand
KEY RESOURCES
Distribution ManCahgainngels
Coffee
a razor-blade BM
Production Facilities
CUSTOMER RELATIONSHIPS
Nespresso Club
Nespresso Brand
DISTRIBUTION CHANNELS
CUSTOMER SEGMENTS
Hou seholds
Business
Nespresso .com
Mail Orde r
Retail
New Nespresso customer
Stores groups, e.g., vending
Call Center
COST STRUCTURE
Production Marketing
B2C Economies
Distribution
of scale
Licensing
REVENUE STREAMS
revenues1 x Machine Repetitive
machine makers
Sales Pad Sales
27
The story continues ... 2 headlines and their impact on the business model
Source: Kluwer Trademark Blog (2021), Swissinfo (2010) 28
Is the Business Model Canvas holistic enough? Does it account for the triple bottom line? Do we need to add dimensions to it?
Showcasing the sustainable Business Model Canvas
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