Let's look at an example of a business model.

Let's look at the Uber taxi service business model.

How is Uber better than call taxi service?

Essentially, Uber connects customers with drivers who are very nearby and who can reach them fast.

Uber basically connects a Lynx customers to drivers faster.

This enables customers to get early confirmation about they have asked for.

Uber customers thus have to wait the least to get a pickup compared to other call taxi services.

And also the Uber drivers thus have to drive the least empty to reach their next customer.

So what is called the dry run is the least for Uber drivers because they are able to connect to new customers or the next customer faster and reach them faster.

How does Uber create value through this business model?

Essentially Uber's business model increases efficiency and lowers costs for their drivers, thus increasing their income while providing for fast availability of cars, which is very valuable to their users.

So therefore, does Uber create equity among all its stakeholders?

There are multiple stakeholders involved here.

You have the driver, you have Uber as a company, you have the customer.

All 3 are important stakeholders and a business model will work only if there is equity among all the stakeholders.

So what Uber does is that it raises prices during taxi shortages to get more drivers.

This increases the car availability and builds the market supply while others do not get any cars at all during such a shortage.

So while the customer may face a higher price during a shortage, it at least ensures that the customer gets a ride, whereas the other suppliers who are not overcharging may simply not be available when there is a shortage.

So overall, even though it seems like Uber is overcharging in a shortage situation, it is actually giving a better service to its customers by bringing in more drivers who are willing to drive at a higher price but were not willing to drive at the lower price.

So what is a business model and how does it differ from a business strategy?

Essentially a business model depicts specifically how a firm creates value for its target customers.

So therefore the business model is an opportunity centric activity.

We are creating value by exploiting the user context to see how we can create value.

On the other hand, the business strategy depicts how the firm captures the value that it has actually created.

So business strategy is competition-centric.

It is about how do we gain advantage over rival offers.

So in this case which we just saw, Uber is creating value through the system that it has built for itself, but that's the business model which is creating value, but to capture the value, they have to find a price point and an ability to deal with other competitors who are offering similar or same type of service.

So essentially, the value created by good business models may not be captured if the business strategy fails to get the customer to buy from you


Speaker 0: Let's look at an example of a business model. Let's look at the Uber taxi service business model. How is Uber better than call taxi service? Essentially, Uber connects customers with drivers who are very nearby and who can reach them fast. Uber basically connects a Lynx customers to drivers faster.

This enables customers to get early confirmation about they have asked for. Uber customers thus have to wait the least to get a pickup compared to other call taxi services. And also the Uber drivers thus have to drive the least empty to reach their next customer. So what is called the dry run is the least for Uber drivers because they are able to connect to new customers or the next customer faster and reach them faster. How does Uber create value through this business model?

Essentially Uber's business model increases efficiency and lowers costs for their drivers, thus increasing their income while providing for fast availability of cars, which is very valuable to their users. So therefore, does Uber create equity among all its stakeholders? There are multiple stakeholders involved here. You have the driver, you have Uber as a company, you have the customer. All 3 are important stakeholders and a business model will work only if there is equity among all the stakeholders.

So what Uber does is that it raises prices during taxi shortages to get more drivers. This increases the car availability and builds the market supply while others do not get any cars at all during such a shortage. So while the customer may face a higher price during a shortage, it at least ensures that the customer gets a ride, whereas the other suppliers who are not overcharging may simply not be available when there is a shortage. So overall, even though it seems like Uber is overcharging in a shortage situation, it is actually giving a better service to its customers by bringing in more drivers who are willing to drive at a higher price but were not willing to drive at the lower price. So what is a business model and how does it differ from a business strategy?

Essentially a business model depicts specifically how a firm creates value for its target customers. So therefore the business model is an opportunity centric activity. We are creating value by exploiting the user context to see how we can create value. On the other hand, the business strategy depicts how the firm captures the value that it has actually created. So business strategy is competition-centric.

It is about how do we gain advantage over rival offers. So in this case which we just saw, Uber is creating value through the system that it has built for itself, but that's the business model which is creating value, but to capture the value, they have to find a price point and an ability to deal with other competitors who are offering similar or same type of service. So essentially, the value created by good business models may not be captured if the business strategy fails to get the customer to buy from you

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Week 1- Business Model Example Uber