Note on the Value Proposition and Business Models

by: Robert J. Dolan

Publication Date: December 7, 2010
Length: 6 pages
Product ID#: 1-429-009

Core Disciplines: Entrepreneurship & Innovation, Marketing/Sales, Strategy & Management

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Teaching Note

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This note introduces students to a Value Proposition. It walks students through identifying a company’s “VPC story” (Value to the customer, Price the product is sold at, Cost to provide the product) which, in essence, is developing a business model. It also introduces the Johnson, Christensen, and Kagerman model for articulating a business plan, and provides students with an example of the company Northern Telecom with which to practice identifying a company’s VPC and business model. It ends with the conclusion that there can be quite different yet successful business models within a given industry, but the key to a successful business model is that the primary driver be the Customer Value Proposition.

Teaching Objectives

After reading and discussing the material, students should:

  • Describe a Value Proposition using a VPC story (Value to the customer, Price, Cost).
  • Describe and apply the Johnson, Christensen, and Kagerman model for articulating a business plan and developing a business model.