Business Model Environment Analysis

Upon either launching a start-up or reviewing the business model of a company, it’s paramount to analyze in detail the environment surrounding the new potential organization or the established one.

The environment mapping and the explanation of the several areas, performed by Alexander Osterwalder and Yves Pigneur in their book Business Model Generation, are simply remarkable from my standpoint. According to these authors four areas can be distinguished around a business model: market forces, industry forces, key trends, and macroeconomic forces.

Inside the market forces we’ll have to deal with:

• Market issues: what elements are impacting on customers?
• Market segments
• Needs and demands
• Switching costs: what switching costs are avoiding customers to go to another company?
• Revenue attractiveness: what are customers ready to pay for?

With respect to industry forces we’ll have to cope with:

• Competitors
• New entrants
• Substitute products and services
• Suppliers and other value chain actors
• Stakeholders

Regarding the key trends, we’ll have to pay attention to:

• Technology trends
• Regulatory trends
• Societal and cultural trends
• Socioeconomic trends

And eventually about the macroeconomic forces, we’ll have to look after:

• Global market conditions
• Capital markets
• Commodities and other resources
• Economic infrastructure

Having a good, deep, and total understanding of the environment around a company is the best way not only to adapt our business model to the current changing requirements but also to assess the different paths our business may take in the future.