Reviewing Robustness of the Business Model-Is the business model still valid in current

market conditions?

 Dimensions to Check:

o Value Proposition – still relevant?

o Customer Segments – shifting behaviors?

o Revenue Model – sustainable margins?

o Cost Structure – scalable or rigid?

o Distribution Channels – online/offline shifts?

 Example: Paytm’s business model pivot post demonetization.

A business model that worked five years ago may not sustain today due to market disruptions,
technological changes, customer behavior, and competition.

Dimensions to Check:

1. Value Proposition – Still Relevant?

o Does the business solve a real problem for customers?

o Has customer demand shifted (e.g., health consciousness, digital-first)?

o Example: Nokia’s value proposition of “durable phones” lost relevance against

smartphones offering apps + internet connectivity.

2. Customer Segments – Shifting Behaviors?

o Who are the primary customers? Are they evolving?

o New segments may emerge while old ones shrink.

o Example: Post-COVID, B2B SaaS providers found SMEs as new customer

segments as remote work surged.

3. Revenue Model – Sustainable Margins?

 o Is the current pricing strategy profitable long-term?

o Are discounts/subsidies artificially propping up sales?

o Example: E-commerce firms like Flipkart had to move from discount-led growth
→ ads + premium services for profitability.

4. Cost Structure – Scalable or Rigid?

o Can operations expand without costs rising disproportionately?

o Fixed costs (factories, leases) vs. variable costs (digital platforms).

o Example: Cloud-based SaaS firms scale faster than brick-and-mortar retailers.

5. Distribution Channels – Online/Offline Shifts?

o Are current channels reaching customers effectively?

o Hybrid models (online + offline) often increase robustness.

o Example: Nykaa moved from digital-first → physical retail stores to capture

omnichannel shoppers.

Case Example – Paytm (India):

 Initially: Mobile wallet & recharge platform.

 Post Demonetization (2016): Pivoted into banking, lending, UPI, and wealth
management.

 Lesson: Adapting the business model to external shocks is critical.

Teaching Tool:

Business Model Canvas (BMC)

Ask students to map a startup’s BMC and critique:

 What assumptions are risky?

 Which parts need updating to remain relevant?

The seven pillars of a robust business model

Developing a business model goes beyond just filling out your business plan or deciding which
products to pursue. It requires creating a plan for generating continuous value for your
customers.

You need to know where your business idea will begin, how it should evolve, and how you will
measure success. Additionally, you must determine how you will create value for your
customers. By following these straightforward steps, you can establish a robust business model.

Understanding Your Target Audience

When it comes to your business, targeting a wide audience won’t allow you to focus on
customers who truly need or want your product or service. Instead, it’s better to narrow down
your audience to two or three specific buyer personas. For each persona, outline their
demographics, common challenges, and how your company can offer solutions. For example,
Home Depot may appeal to everyone or carry a product that the average person needs, but the
company’s primary target market is homeowners and builders.

Optimise Operational Frameworks

In order for your business to start operating, it is important to have a thorough understanding of
the activities that need to be carried out to make your business model work. You can determine
the key business activities by first identifying the core aspect of your business’s offering. For
instance, if you are responsible for providing a service, shipping a product or offering consulting,
you need to identify the activities that are crucial for delivering these offerings. As an example,
in the case of Ticketbis, an online ticket exchange marketplace, the key business processes
include marketing and product delivery management.

Document Essential Business Assets

It is important for businesses to identify the essential resources required to carry out their daily
operations, acquire new customers, and achieve their business goals. These resources may
include a website, capital, warehouses, intellectual property, and customer lists. Proper
documentation of these resources helps to ensure that the business model is well-prepared to
meet the needs of the business and sustain its growth over time.

Craft Compelling Value Proposition

How do you plan to differentiate your company from the competition? Is it by providing an
innovative service, a revolutionary product, or a new take on an old favourite? Clearly defining
what your business has to offer and why it is superior to your competitors is the foundation of a
compelling value proposition. Once you have identified a few value propositions, connect each
one to a product or service delivery system to determine how you can continue to provide value
to your customers over time.

Identify Strategic Business Collaborators

Every business needs key partners who play an important role in contributing to the success of
the business. These partners are crucial to a company’s ability to serve its customers and achieve
its goals. When building a business model, it is essential to choose key partners such as suppliers,
strategic alliances, or advertising partners. For instance, in the case of Home Depot, some of
their key partners may include lumber suppliers, parts wholesalers, and logistics companies.

Formulate Effective Demand Generation Tactics

If you want to launch your company successfully, you need a strategy that generates interest in
your business, attracts potential customers, and leads to sales. It’s important to ask yourself how
customers will discover your brand and what actions they should take once they become aware
of it. Developing a demand generation strategy can help you create a plan that outlines the
customer’s journey and identifies the key reasons for taking action.

Leave Room For Innovation

When starting a business and creating a business strategy, there are many assumptions that are
made. Until your business begins to attract paying customers, you won’t know if your business
model will meet the customers’ ongoing needs. Therefore, it is crucial to make room for future
innovations. You should never consider your initial plan to be a static document. Instead, you
should review it frequently and make changes as necessary to ensure its effectiveness.

Mapping Financing Decisions to Business Models

 Asset-light models → prefer equity funding (e.g., Uber).

 Capital-intensive models → mix of equity + debt (e.g., Tesla).

  Subscription-based models → recurring revenue → attract PE/VC.

 Freemium models → rely on angel/VC till monetization stabilizes.

 Franchise models → easier debt financing.

👉 Case Question: How would you finance a D2C organic food brand vs. a manufacturing-
heavy electric vehicle startup?

Mapping Financing Decisions to Business Models

Financing decisions must align with the nature of the business model. Wrong financing can
cause cash flow stress or misaligned investor expectations.

Types of Models & Financing Fit:

1. Asset-Light Models → Equity Funding

o Example: Uber, Zomato – don’t own cars/kitchens; scale requires aggressive

market capture.

o Best funded via VC/PE since they prioritize growth over profitability.

2. Capital-Intensive Models → Mix of Equity + Debt

o Example: Tesla, Infrastructure Startups – require huge R&D and

manufacturing investment.

o Equity funds risky innovation; debt funds plant & equipment.

3. Subscription-Based Models → PE/VC Attractive

o Example: Netflix, Spotify, SaaS startups – predictable recurring revenues.

o Investors love the visibility of future cash flows.

4. Freemium Models → Angel/VC Until Monetization

o Example: Dropbox, Canva – attract users for free, monetize a small % via
premium.

o Require patient equity capital until scale.

 5. Franchise Models → Debt Financing Easier

o Example: Domino’s, McDonald’s – proven, cash-generating units.

o Banks are more willing to lend since risk is low and ROI predictable.

Class Case Question:

👉 How would you finance these two?

 D2C Organic Food Brand – asset-light, high marketing spend → Angel + VC.

 EV Manufacturing Startup – high R&D + plants → Equity (early) + Long-term Debt

(later).

Reiterating & Re-innovating Business Models

Business models must evolve continuously to remain competitive.

Core Practices:

1. Continuous Adaptation

o Monitor industry trends, competitors, customer shifts.

o Example: EdTech firms pivoting from live classes → hybrid learning post-
pandemic.

2. Experimentation & Pilot Runs

o Test new offerings before scaling.

o Example: Amazon tests new markets/products (like AWS) before full rollout.

3. Pivot Strategy

o Change direction when initial idea fails but core capabilities remain valuable.

o Example: Slack pivoted from gaming → enterprise messaging platform.

4. Feedback-Driven Iteration

o Customer feedback loops shape product-market fit.

 o Example: Instagram added Stories & Reels to compete with Snapchat/TikTok.

5. Digital Reinvention

o Integrating AI, IoT, Blockchain, etc. to refresh offerings.

o Example: Banks adopting digital wallets, UPI, AI-based fraud detection.

Case Example – Netflix:

 DVD Rental → Online Streaming → Original Content Production.

 Each pivot was data-driven and technology-enabled, keeping the model relevant.

8. Reiterating & Re-innovating Business Models

 Continuous adaptation to environment and customer needs.

 Experimentation & Pilot Runs – test new models.

 Pivot Strategy – changing direction while leveraging core strengths.

 Feedback-driven iteration – listen to users & stakeholders.

 Digital Reinvention – integrate AI, IoT, blockchain, etc.

👉 Example: Netflix moved from DVD rental → streaming → content production.

Assignment: Identifying the PLC Stage of a Product

Instructions for Students:

1. Select a Product/Brand

o Choose any product from categories such as FMCG, consumer electronics,

automobiles, mobile applications, or services.

2. Research and Analyze

o Study the product’s current market situation, sales trends, competition, and
promotional strategies.

3. Identify the PLC Stage

 o Decide whether the product is in Introduction, Growth, Maturity, or Decline
stage.

4. Justify Your Answer with Reasons:

o Sales performance (increasing/peaking/declining).

o Level of competition.

o Profitability trends.

o Promotional/marketing strategies used.

o Customer adoption rate.

5. Provide Real Examples/Evidence:

o Support your answer with market data, advertisements, or recent news (if
available).