Exercises: The Business Model Canvas: building blocks, utility, and patterns

List the nine building blocks of the Business Model Canvas and explain in one sentence what each one covers.

State which block of the canvas each element of a food delivery company belongs to: premises rent, the ordering app, "home-cooked food in 15 minutes", hired delivery drivers, subscriber monthly fees, and vegetable suppliers.

The figure shows the Business Model Canvas with its nine blocks. Identify the missing central block, marked with "?", and justify why it is considered the heart of the canvas: what would happen to the remaining blocks if it were poorly defined?

Say which canvas block each description corresponds to: "the most important thing the company must do for the model to work", "the assets needed to carry it out", "how the value proposition reaches the customer" and "the type of bond it establishes with each segment".

Classify these elements of an electric scooter rental company into the corresponding canvas block: the app to unlock them, the tourists and the city's students, the monthly subscription, the crews that recharge the batteries at night and the liability insurance.

Match each canvas block with the question it answers: value proposition, customer segments, channels, cost structure and revenue streams; with the questions "what do we offer?", "who do we work for?", "how do we reach them?", "what do we spend on?" and "what do they pay us for and how?".

Complete three blocks of the canvas of a home dog grooming service with two reasoned ideas in each: value proposition, customer segments and channels.

Explain two practical uses of the canvas for a team that has just started a project (overview on one page, common language for discussion, detection of inconsistencies) and why it is worth reviewing it from time to time even if the business is already working.

For a grocery delivery app, we know: value proposition ("groceries delivered home within one hour"), customer segment (busy families), channel (mobile app), and revenue stream (commission per order). Propose, with reasons, the contents of the other five blocks: key partners, key activities, key resources, customer relationships, and cost structure.

Some business model patterns recur repeatedly: freemium, subscription, multi-sided platform, and long tail. Explain what each consists of and give an example of a real or fictional company that applies it.

Explain two advantages of the canvas over a traditional 40-page business plan when an idea is emerging (speed, overview, ease of adapting) and at what stage the full plan is still required.

From the canvas of a party dress rental company we know these elements, unordered: its own alterations workshop, couples going to weddings, a physical shop with a fitting room, three-day rental, "dressing up without buying", text message reminders, a partner dry cleaner's, the dress collection and the shop rent. a) Place each element in the corresponding canvas block. b) Spot which block is left unattended and complete it with a proposal.

A photo editing app is free, but charges for the advanced features; a yoga platform charges a monthly fee to access all its classes. Identify the business model pattern of each one (freemium and subscription) and analyse one advantage and one risk of each pattern.

A patisserie sells cakes only to order. In its canvas, the channels block says "home delivery across the whole city", but the key resources only include an oven and two people. Explain why the model is not viable as it is drawn and what two changes would make it coherent (limiting the delivery area, subcontracting delivery, a collection point).

A gourmet preserves brand currently sells only in large supermarkets and is considering opening its own online shop. Explain which canvas blocks would change with direct sales (channels, customer relationships, revenue streams, cost structure) and what conflict can arise with its long-standing partners: the supermarkets.

An app that connects dog walkers with owners is a multi-sided platform: it serves two segments at once. Explain what value proposition each segment receives, why the platform needs enough users on both sides (network effect) and where its revenue can come from.

In a company's canvas, these three blocks appear: value proposition "premium handcrafted product", channel "budget supermarkets", and customer relationship "one-to-one personalised service". Identify two inconsistencies between blocks, explain why they conflict, and correct the canvas to make it consistent.

A traditional language academy with physical classrooms and in-person small group lessons decides to transform into a 100\ % online platform. Its new strategy consists of replacing in-person classes with pre-recorded courses and live weekly tutoring sessions, reducing the monthly fee from $90\ \text{€}$ to $20\ \text{€}$.

1. a) Analyze the transformation in the cost structure: identify which fixed costs are eliminated, what new costs appear, and how the academy's operating risk (operating leverage) is altered.
2. b) Evaluate the impact of this change on customer relationships and channels. Justify whether this pivot implies targeting a different customer segment or if keeping the current one is viable, reasoning how it will affect the perceived value proposition.

A bicycle rental company for tourists in a coastal city operates from commercial premises and charges by the hour. Its business suffers from two serious problems: marked seasonality ($75\ %$ of revenue is concentrated in summer) and a new municipal ordinance prohibiting the parking of rental bicycles in public spaces.

1. a) Design a redesign of the business model by acting on at least four interconnected blocks of the canvas (value proposition, channels, customer segments, and revenue streams) that allows for deseasonalizing revenue and complying with regulations.
2. b) Assume the company decides to incorporate electric bicycles for a B2B segment (last-mile delivery couriers and hotels). Analyze how the key partners network, key activities, and cost structure are transformed compared to the original tourism model.

“MercaBox” ships monthly boxes of fresh food from local producers on a $35\ \text{€}$/month subscription. After one year, the company faces two critical problems:

1) The monthly churn rate is $12\ %$ because many customers feel they do not use all the food included.

2) Logistics costs (refrigerated transport and failed deliveries) account for $42\ %$ of each fee, generating continuous losses.

1. a) Link each of these two problems to specific blocks of the canvas and identify what design inconsistencies exist between the value proposition, channels, and cost structure.
2. b) Design two strategic modifications on the canvas (mandatorily modifying either customer relationships or key partners) to cut logistics costs and reduce the churn rate without giving up direct purchasing from the local producer. Economically justify your answer.

Two airlines operate the same European route: a traditional flag carrier and a low-cost airline. Although both transport passengers from one point to another, their business model canvases respond to opposing strategic patterns.

1. a) Compare their value propositions, channels, and revenue streams: explain why charging for ancillary services (carry-on baggage, seat selection, onboard meals) and selling exclusively through their own digital channels are essential pieces for the viability of the low-cost airline's low price.
2. b) On the left side of the canvas (infrastructure), justify how the decision to operate with a single aircraft model simultaneously impacts three building blocks: key resources, key activities, and cost structure. Reason why a traditional airline cannot easily replicate this scheme.

A coffee company operates under the "bait and hook" pattern: it sells its domestic coffee machine at cost price ($30\ \text{€}$) to build a captive customer base and earns a $70\ %$ margin on its patented capsules ($0,50\ \text{€}$ retail price with a cost of $0,15\ \text{€}$ per capsule). Each customer consumes an average of 400 capsules per year.

After the patent expires, store brands enter the market with compatible capsules at $0,25\ \text{€}$, causing $40\ %$ of its portfolio of $20.000$ customers to switch to buying exclusively compatible capsules.

1. a) Calculate the change in total annual contribution margin suffered by the company from capsule sales following the loss of the patent.
2. b) Explain which two blocks of the canvas are in conflict as a result of this change in the competitive environment.
3. c) Management proposes to compensate for the loss by raising the price of the coffee machines to $75\ \text{€}$. Critically evaluate this decision within the logic of the bait and hook pattern and predict its impact on acquiring new customers.

A self-service laundromat chain operates automated premises with no on-site staff, where customers pay per wash/dry cycle and wait inside the shop. Fixed costs (rent of prime-location premises and leasing of industrial washing machines) represent $60\ %$ of its total costs, and a $45\ %$ increase in the electricity bill has brought the business to the brink of losses.

Management is evaluating two alternatives to reconfigure its canvas:

• Option 1: Install smart parcel lockers and gourmet vending machines in the waiting area to monetize customer dwell time.

• Option 2: Close the premises to the public and transform it into a B2B laundry facility for local tourist accommodations and beauty salons, with a weekly flat fee and pick-up/delivery service.

1. a) Compare both options by analyzing what changes each would require in: customer segments, channels, key resources, and cost structure.
2. b) Justify which of the two options best mitigates the impact of the increased electricity cost and what operational risks it introduces into key activities.

"The canvas is only useful for new businesses." Argue against this with the case of a bakery chain with twenty years of history: explain how it can use the canvas to review its current model, detect outdated blocks (channels, customer relationships) and trial a new line of business without risking the main one.