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Business Model Canvas

Essay by   •  July 3, 2019  •  Research Paper  •  1,785 Words (8 Pages)  •  13 Views

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Business Model Canvas (Seven Seeds)

Introduction

This report is based on researches and studies of the Business Model Canvas (BMC), and the findings of the importance of BMC model. Resolution the 9 components of BMC model. Use the BMC model to analysis the Seven Seeds specialty coffee which is establish by Mark Dundon. In the end, will discuss why BMC is important for the entrepreneur to build or develop their enterprise.

Theory

- BMC model Definition

As Alexander Osterwalder(2013) states that the Business model canvas’ main objective is to lead the corporations ‘move beyond Product-centric thinking and towards business model thinking’. “The Business Model Canvas (BMC) is a visual modeling method that is used to capture the business model of a company. It is defined by nine building blocks. The method involves adding sticky notes to each of these building blocks; these note represent the elements involved in the business model(Pigneur & Fritscher, 2014, pp.1)”. For now, BMC model is already a mature model, it has been used widely in business, such as IBM, Ericsson, Deloitte, and more area.

- Nine components of BMC model

The BMC model has 9 different elements, and it can be classify to 3 different sections, which is desirability, feasibility, and viability. Which also means that the BMC model is by looking at your goals in different ways, find out where you are lacking insight or making progress(Frankly, 2019).

The desirability is about the assumption that business can indeeply find the customer needs and to create the customer value(Frankly, 2019). This sections conclude 4 elements, which are customer segments, value propositions, channels, and customer relationship. Firstly, customer segments is different group of people or organizations that the enterprise wants to create value for them, reach to their needs(Osterwalder & Pigneur, 2010, pp.20). Second component is value propositions, it is the products or services that enterprise bring to specific customer segment, satisfies a customer need and solves the customer’s problem(Osterwalder & Pigneur, 2010, pp. 22). The third elements is channels, through channels lead to the company approach each of their customer segments to deliver a value proposition(Osterwalder & Pigneur, 2010, pp. 26). The last one component is customer relationship, this is about the ways that the company has the relationship with customer segment, and the relationships integrated with the business model, for example through personal assistance, self-service, communities or automated services(Osterwalder & Pigneur, 2010, pp.28).

Secondly, feasibility is the action business need to do,use the technology, system or workflows to make the desirable happen(Frankly, 2019). Key activities , key resources and key partnerships are the elements under feasibility section. Key activities, is the most important things that enterprise need to do make the model of business work, and the relationship build with the core customer, it conclude production, problem solving and platform(Anastasia, 2015). The second component is key resources, it is the most important assets required to support the business model work, it have few types of resources, such as physical, intellectual, human and financial resources(Anastasia, 2015). The last component is key partnerships, are the crucial partnerships and networks in which the business has to build and maintain try to reduction the risk and uncertainty, and optimization and economy(Osterwalder & Pigneur, 2010, pp.38).

Viability it is defined as how the business make money with this, how can business justify their investments to make money(Frankly, 2019). Which has two different elements, cost structure and revenue streams. Cost structure is the crucial expense incurred while operating under a business model, it incurred few different characteristics, for example, Fixed cost, variable costs, economies of scale and economies of scope(Osterwalder & Pigneur, 2010, pp.40). The second one is revenue streams, which is about the cash flow of enterprise happen and get from the customer segments, also there are two different types of revenue streams, which is the transaction revenue and recurring revenue(Osterwalder & Pigneur, 2010, pp.30). Transaction revenue is the revenue come from one-time customer payments. Recurring revenue is the revenue comes from the uninterrupted payments from the customer, maintain the enterprise to provide the product or services that post-purchase customer support(EPM, 2012).

Specialty Coffee (Seven Seeds)

The specialty coffee are those coffee bean with highest quality, and grow under a specific environment make the coffee bean have greatest flavor and taste(Donnet, Weatherspoon, & Hoehn, 2007, pp.2). Seven seeds is a coffee shop erected by Mark dundon, it is the first shop roast original green coffee bean in melbourne and sell the roast coffee bean to the other retail coffee shop and export to the oversea as well(Sevenseeds, 2019). The shop name of seven seeds is reference to the 17-century prophet Baba Budan who smuggled out back to India from Yemen(Sevenseeds, 2019). Mark Dundon even named his subsequent coffee shop Brother Baba Budan. In the following report, it will be use the nine different elements from the BMC model to analysis seven seeds company as a case study.

- Customer segments

Seven Seeds have three different customer segments, one is the their final customer, second is the coffee shop who buy the roast coffee beans from Seven Seeds, the last one is the customer who from the oversea, because of Seven Seeds export coffee beans as well. Seven Seeds have 3 different shop in melbourne, which are Seven Seeds, brother Baba Budan and Traveller locate in different location in melbourne. Each shop have their own model and emphasis. Therefore, the customer segment of the three stores are a little different as well. For example, Seven Seeds is in the university district, this shop is very spatial, it provide coffee and brunch for customer who may students, or prefer to spend their leisure time stay in the shop(Sevenseeds, 2019). Brother Baba Budan and Traveller’s targets will have a little bit difference compare to Seven Seeds.

- Value Proposition

The value proposition of Seven Seeds is it is the first shop established the specialty coffee in melbourne, they roast the original green coffee bean and sell to the retail (Sevenseeds, 2019). Seven seeds get the source beans from the Americas, Africa and Asia, they pay more attention to find the best coffee beans, and there are many requirements for the selection of the source bean(Maunder, 2017).

- Channels

The channels how Seven seeds reach the segment customer have two types, the first one is in store channel, reach the final customer directly, customer make the order in store and get the customer service and products(Personal investigation, 16/02/2019). The second is through the e-commerce, customer can make the purchase through their website to get the products(Sevenseeds, 2019). The e-commerce will cost less than operating a shop for Seven Seeds.

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