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Business models in strategic management
Business models in strategic management

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4.1.3 Infrastructure area

The infrastructure area is shown in Figure 4.

Described image
Figure 4 The infrastructure area of the Business Model Canvas

The infrastructure area focuses on three elements needed to deliver the value proposition: resources and capabilities, core activities, and key partners.

  • Resources and capabilities

    The resources are assets an organisation can use in its activities. These may include buildings, financial, human resources, customer bases, and partner networks. A capability is an organisation’s ability to use resources. Examples include a capability to develop and maintain partner networks, and a capability of managing customers and their experiences. For instance, the business model infrastructure of a British Media and Telecommunications Conglomerate, Sky Group Limited, benefits from its customer management capability. Today the company has more than 24 million customers, which it manages by researching their preferences, offering subscriptions and developing new products such as Sky TV bundles (e.g. Sky TV and Netflix, Big Screen at Home, Family Fun and Film, and Build Your Own Bundle).

    Screenshot of www.sky.com/shop
  • Core activities

    The core activities are key activities performed by the organisation to make the business model work. They depend strictly on the type of business model offered by the organisation. If it is a product business model, some production or operational activities would take place in order to deliver a product or a service. In the case of matchmaking or multi-sided business models, activities are concentrated on running a platform, promoting its diffusion and providing customer service and support to clients. For instance, the core activity in Airbnb, an internet based service offering short-term home rentals, is running a platform linking lodgers and guests.

    Person holding a smart phone with the Airbnb app open.
  • Key partners

    Key partners are fundamental for every business model. Which activities are delivered by partners? This is a fundamental question that this building block tries to answer. For instance, partners can help in reaching customers through particular indirect channels: this is the case of wholesalers of kitchen appliances who create promotional offers to local customers according to their knowledge of the market.

    Another question that this building block aims to answer is: which resources are provided by our supply partners? This means, for instance, understanding what suppliers are able to mobilise: some retailers work with logistics providers to deliver their products to customers. These providers may control a fleet of vehicles and also warehouse facilities.

    Finally, there is a question as to who delivers our products and/or services to customers? For example, retailers can select the logistics providers most suitable for their purpose: for instance, they may employ flight couriers for urgent deliveries. Also, they may partner with a national courier service for national deliveries. For instance, the infrastructure of the UK-wide online sales of Waterstones, a British book sales chain, relies on its partnership with Royal Mail, a British postal service and courier company.

    Waterstones shop front.

Activity 10 Infrastructure quiz

Timing: Allow about 5 minutes

a. 

Resources and capabilities


b. 

Core activities


c. 

Key partners


d. 

All of the above


The correct answer is d.

d. 

Congratulations. This is the correct answer. Indeed, resources and capabilities, core activities and key partners are the three elements in the infrastructure area.


a. 

Supply partners


b. 

Delivery partners


c. 

Design partners


d. 

All of the above


The correct answer is d.

d. 

Congratulations.This is the correct answer. An organisation may consider partners for supply, delivery and design of a product or a service.


Now you have learned about Area 3 of the business model canvas, infrastructure, you will move on to look at the final area—the financial viability.