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Part 5: Behind the Scenes
Key Resources, Main Activities, and Key Partners
In this part, we discuss non-customer facing components essential for running the businesses: Key Resources, Main Activities, and Key Partners.
The full lecture is now available as a video recording for a step-by-step process with explanation and examples. Make sure that subtitles in English are set for best results.
Topics covered:
- Main resources: Physical
- Intellectual resources
- Human Resources
- Financial resources
- Production activities and its classifications
- Forms of partnerships, and when to choose each
- Applicable examples
Key Resources
Key resources are the back-bone of the business. These key resources provide the infrastructure that we will use to take action and perform Activities. Such key activities will create a Value Proposition.
Resources can have many varieties:
- Physical
- Intellectual
- Human
- Financial
Physical Resources
Physical assets needed for production. This may include: Land, Buildings, Vehicles, Machinery, and Computers.
Intellectual Resources
Intangible resources a business has that enables its production. This may include: Brand Name, Knowledge, Patents and Intellectual Properties IPs, and Customer Databases.
Human Resources
Humans are what run businesses, but their importance as a resource varies according to the nature of the business model.
-Consultancy and Servicing businesses rely on Human Resources more as the skills and experiences of each employee drives the business forward. Here, workers replacement can be relatively hard.
-Production and manufacturing businesses rely less on Human Resources, like a conveyor belt worker. Here, workers replacement can be relatively easy.
Financial Resources
Financial Resources are essential for a businesses to run smoothly.
-Businesses with bigger Financial Resources rely on their financial standing to produce and enter the market much faster and more efficiently than competitors.
-Businesses with smaller Financial Resources rely on other resources (human, intellectual) to compete.
Key Activities
Key activities focus on the main activities that a business does to create the value proposition and operate. Key Activities form the engine that makes a business run. Key activities can be classified into three categories:
- Production
- Problem Solving
- Platform/ Network
Production
Activities done in businesses that offer “Products”. These activities involve: Designing, Making, and Finishing and Delivering.
Problem Solving
Activities done in businesses that offer “Services”. Businesses that offer “Problem Solving” include service providers, hospitals, and consultancies.
Platform/ Network
Businesses offering a platform or a network for customers to buy or access products and services of others.
A good example is Amazon and Alibaba, offering customers to access a variety of products from vendors around the world.
Key Partners
Partnerships allow businesses grow and access the market faster and quicker that they would otherwise.
There can be several reasons for partnerships:
- Optimization: buyer-supplier partnerships help businesses get resources at a reasonable cost.
- Reducing uncertainty: for businesses entering risky markets, it is particularly useful to share that risk with other established partners by dividing tasks and roles.
- Getting certain resources: Some businesses might need special resources that are only available from selected vendors. Forming a partnership with one would help get a better deal.
In terms of its types, partnerships can be:
- Strategic alliances
- Cooperation
- Joint Ventures
- Buyer-Supplier relationships
Strategic Alliances
Strategic alliances are best done between non-competitors. Take for example a business that prints books and another that makes paper. An alliance between the two would be beneficial to both.
Pro: Reduce cost of production and access to market.
Con: Strategic alliances tie businesses together, so increasing or decreasing profits would likely affect both.
Cooperation
Cooperation is a partnership done between competitors. For instance, two computer manufacturers can form a cooperation to kill a new rising competition threating their market share.
Pro: Increase market share and competitiveness.
Con: Depending on its nature, it may give power to the competitor over the long run.
Joint Venture
Like in Cooperation, a Joint Venture is conducted between businesses in the same market. However unlike Cooperation, its goal is to pursue a new project for the common interest of all partners. Take for instance two internet service providers partnering to improve the network infrastructure for their market.
Pro:Getting expert help in realizing a business goal.
Con: Like in Cooperation, it may give power to the competitor over the long run.
Buyer-Supplier Relationships
This type relates to the relationship between a business and its suppliers. A business that produces cars will need such partnership with vendors producing materials needed for the production.
Pro:Getting materials needed for a low cost.
Con:Unlike other forms of partnership, may not guarantee best deals (as opposed to strategic partnerships, for instance).
Example:
Further details and examples are available in the PDF file for this part of the course. Available for download for free at the bottom of the page.
Files for this lecture:
Business Model and Value Proposition Canvases here
In the next and last part, we discuss the finances of the Business Model, including Revenue Streams and Cost Structure.
Ready? Go to the last part now!
Previous(Part 4): Linking Customer with Value
