Wk7-02 Cost Structure Presentation
Welcome to Module 7. This module focuses on completing the very last building block, the cost structure. At the basic level, the cost structure describes the major costs that will be incurred as we create and deliver the business model. The cost categories are cost-driven, value-driven, and as is quite often the case, a combination of the two. Cost-driven business models focus on minimizing costs wherever possible. This approach aims at creating and maintaining the leanest possible cost structure using low price value propositions. A good example of this would be Walmart. The value-driven business models are used by companies who are less concerned with the cost implications, and instead focus on value creation. Premium value propositions, and a high degree of personalized services, are typically a hallmark of the value-driven method. A good example of this approach would be luxury hotels. So what is the cost structure of the idea of building and delivering a career readiness global learning program? At this very early stage, we're thinking of using primarily a value-driven cost structure with an emphasis on effectively managing cost. But, with the goal in mind to design and deliver a high caliber career planning program. We predict that we will have minimum upfront costs, except we'll need to ask the university to reallocate the time and efforts of a team of professionals for this project. Also, another fixed cost would be to hire a company to build the mobile learning gamified technology platform, and they have to pay the fees that come with that technology platform. Another key element of our cost structure will be to use a revenue sharing model, where all of the strategic partners will not charge upfront fees for their services. Instead they will receive a fair percentage of the revenues when the parents purchase the program for their son or daughter. Let's look at Module Seven assignments. First, please participate in the discussion group. Again, your assignment is to answer the question, what is the most important thing I learned in watching Everett Darby's video which tells an espresso business model story. And hopefully you'll see that even Espresso struggled with their early business models until they finally got the business model right. Next you need to determine and describe the cost structure for your idea, and then add the decisions to your business model canvas. Good luck with your assignments, and we'll get together again at the beginning of Module Eight.
