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Sunday, May 31, 2015

Multiple Models 05-31


How Two Business Models Complement Each Other
Simultaneous investment in LAN Airlines’ passenger and cargo businesses creates a virtuous circle by increasing volume and aircraft utilization, which decreases the break-even load factor and increases the attractiveness of new routes. Adding more routes leads to greater economies of scale and scope, boosts customers’ willingness to pay, and increases revenues and profits—thereby providing a funding source for further expansion.




Are Your Business Models Complements or Substitutes?

Business models are more likely to be complements rather than substitutes—and to generate greater value together than apart—if, when you consider these two questions, your answers fall closer to the right side of the spectrum than to the left.
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QUESTION 1 To what extent do the business models share major physical assets?
QUESTION 2 To what extent are the resources and capabilities that result from operating each business model compatible?