Car for hire business model case Uber

Taxis, whose business model has hardly changed since the invention of the tax meter in the 1940s, have a lot to worry about…

Advertisements

Business Model Canvas of Discount Airline case study – Southwest Airlines

Low-cost airline’s the Must-Win Battles are:

  • Very low ticket prices (customer)
  • High utilization rate of fleet of aircraft (growth, routes)
  • Efficiency through simple structures (processes)
  • Lean and productive personnel (resources)

Compare this illustration of business model to strategy model approach with quite identical modeling elements:

Rovio business model – entertainment strategy logic

Rovio business model – entertainment strategy logic

From Rovio’s homepage: “Rovio is an entertainment media company, and the creator of the globally successful Angry Birds franchise.” Rovio’s homepage >>

This statement means that Rovio is not just games. A dominant logic (strategy logic) of Rovio’s business model is here that sales of games is not (so) important, but billion downloads counts…

This strategy logic should affect on the new developed games:

  1. Rovio have strong partner and reseller network. Focus is on channels and especially in real world such as theme parks. Next developed new games have to be suitable for this strategy.
  2. The target is to create (only) a few titles, which create franchise and licensing income.
  3. The price of games should be rather low and target is billion downloads (brand awareness)

Also from earlier post: Rovio thinks the pirates are helping promote its brand  — “so long as the product is well made.” This is unusual thinking.

I added following components to business model canvas. Click picture to enlarge and discover rich content of the model:

rovio_canvasModelSnapshot

See final (so far) business model presentation:


 

Rovio business model

Rovio business model

Next week Peter Vesterbacka from Rovio will make a speech in the Kenno – tilaa ideoille Event on 11th Dec 2012 in Helsinki. I started to make Rovio Business Model and I’ll will do this on-line and via this blog. I will ask some question from Peter and you can help me and us to model Rovio’s business model by sending your questions and links to public sources, where Rovio have announce something critical related to their business model.

  • What I should ask from Peter on 11.12?
  • What are the critical business model components of Rovio’s business model? send also evidence about it for example link to article.

With your contributions, I will develop the Rovio Business Model on-line and it will evelve with help your contributions. This will be done with Business Model Canvas tool by A. Osterwalder.

Business model template?

I will also modify the original BMC-template, if it is neccessary in this case. Thus, the goals of this modeling effort  is twofold: (1) development of business model and (2) modifying the BMC template for case specific usage. This will form a serios of blog post that you can follow the evolution of moding prosess.

Business model discussion in Linkedin Group

Discussion are also feeded in Linkedin Group: http://www.linkedin.com/groups?gid=2836483

Is Hed’s approach to merchandising crazy?

Rovio business model

I started to analyze Rovio’s business model, which is not so new one, but it require a good strategy execution. The major difference to gaming companies is a brand extension of games to merchandises. Rovio branded products are e.g. coffee, cosmetics, theme parks,… This is same strategy that Disney or Lucas have executed for a long time with movies, animation, theme parks and lots of various merchandises. In addition, Rovio thinks the pirates are helping promote its brand  — “so long as the product is well made.” This is unusual thinking.

Brand awareness as business model?

I assume that this kind of business models will be targets for several companies in the Future, where brand awareness is the key and exploitation of awareness with the broad offering of merchandises.

Brand awareness business model examples:

Coffee:
http://www.paulig.com/en/products/angrybirds

Cosmetics
http://www.youtube.com/watch?v=rY9KL-zuSX0

Theme parks:
http://www.lappset.co.uk/Products/Angry_Birds_Activity_Parks.iw3

Television networks adopt Rovio’s Angry Birds merchandising strategy
http://econsultancy.com/fi/blog/10488-television-networks-adopt-rovio-s-angry-birds-merchandising-strategy

11.12.2012 event in Helsinki, where  Peter Vesterbacka from Rovio will tell about more how they have done it. See more in Finnish (tilaisuus suomeksi Helsingissä) >>>

 

See final (so far) business model presentation:

 

Low-cost Airline’s Strategy Model Analysis: Southwest Airlines

Case Southwest Airlines

Must-Win Battles & Strategy Model

About 40 years ago, Rollin King and Herb Kelleher got together and decided to start a different kind of airline. Southwest Airlines founded in 1971 and it was a novel business model innovation that breaks all the rules.

They began with one simple notion:

If you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, and make darn sure they have a good time doing it, people will fly your airline.

A  low-cost airline is also known as a no-frills, discount or budget carrier or airline. It is an airline that generally has lower fares and limited services. The term originated within the airline industry referring to airlines with a lower operating cost structure than traditional airlines. Low-cost carriers should not be confused with regional airlines that operate short flights without service, or with full-service airlines offering some reduced fares, because they have different business model.

Must-Win Battles

Low-cost airline’s the Must-Win Battles are:

  • Very low ticket prices (customer)
  • High utilization rate of fleet of aircraft (growth, routes)
  • Efficiency through simple structures (processes)
  • Lean and productive personnel (resources)

Low-cost airline allow business travelers, who could not fly in First Class, to enjoy a premium service. Accordingly, elements of the customer perspective focusing on frequent point-to-point flyers, limited service and refundable ticketless flight. Frequent flyers are people, mostly business, who frequently travel between destinations that are 600-900 miles apart.

The growth perspective follow only the strategy logic of the high utilization of aircrafts, which is based on elements such as the efficiency in ground services (25 min gate turnaround), short-haul, frequent and point-to-point routes between mid-sized cities and secondary airports. These the key issues keep planes in the air the most of the time. The utilization rate with high volume is very crucial for the low-cost airline’s strategy model and every business issues must follow this logic.

The process perspective based on simplicity of operations. Just one type of aircraft (Boeing 737) keeps costs down related to pilots’ training, spare parts, maintenance, etc. The hardest part of the implementation of low-cost airline business model is personnel.

Create lean organization, flexible and productive personnel:

  • Flexible contracts & multi-skilled personnel
  • Create right company spirit
  • Reward: High compensations of employees
  • Be selective: Only hire persons fit in profile

The strategy analysis (strategy model / strategy map) in Slideshare:

The whole Strategy Model of Southwest Airlines (see picture below).

Levels of analysis:

  1. Root: Mantra (“mission statement”)
  2. Orange elements: strategy logics per strategic perspective
  3. Dark blue/violet elements: business issues
  4. Blue elements: activity elements

Read more about Must-Win Battles [Click picture below]


See also Business Model Canvas:

Strategy as model and guiding business rules

The biggest challenge in strategy development is crystallizing the strategy and making it easily conceivable. This is achieved by applying a guiding rule or simple rule, which is a principle of concrete decision-making and unambiguous operation.

Rules can be made for different things, organization units and themes: rules for the management to help decide on acquisition criteria, rules on customer soliciting for the sales department, or rules for choosing a business location.

All of these details may be crucial to the strategy. Decision-making rules evidently guide the decision-making situation. Whether to choose x or y? Whether to close a deal or not? For example, a decision-making rule unambiguously defines whether a store is opened in a given location.

Operative rules are related to the timing and the ways of conducting business. An operative rule relates to the practical side of operation and its characteristics. In its simplest form, an operative model is just a set of a few rules according to which the business is lead and developed. Performance rules define concrete goals, for instance a specific figure or volume.

Rules of this kind include, for example, product development lead-time, the portion of new products of the sales return, customer profitability and the sales volume in a given period of time. A restrictive rule outlines, among other things, the area, the customer segment, magnitude and also what is not done. Guiding rules aim to achieve the following benefits:

•    simplifying the strategy and facilitating its adoption
•    developing operating culture (= a strategic competition advantage)
•    facilitating implementation

Modular modeling of strategy

and business activities

The modeling approach differs from the traditional document-based strategy description in that the content may be constantly realigned and iterated.

The information model of the strategy can be modified module by module, and the model allows a visual presentation of the occurred changes. Discerning change from a written document is much more difficult. Therefore, strategic modeling is practically organic to an agile strategy process. Strategy written out in a document is useless for constant iteration of strategy, in which it is necessary to quickly identify cause-effect relationships and entities.

Example: mindmap style Strategy Model

See the above case study here: Southwest Airlines Strategy Model in Cone Made software [web link to service]

  • You need to login: swa
  • Password: swa

Navigate to MODEL and use VIEW mode from top-right corner.