The Black Widow is the only business model that does not create its own value proposition.
The customer imposes the terms of the association. If the customer's circumstances change, a new value proposition is demanded.
It's up to the Black Widow to either accept the value proposition, and its changes (if any), or leave it. There is little substantive negotiation.
Within these constraints, the Black Widow survives (within the relationship with its customer) by exhibiting flexibility and a willingness to partner with the customer in its new direction and initiatives.
Opnext Semiconductor (NASDAQ: OPXT) manufactures electronic components used in fiber-optic and voice communication networks. For the year ending in March 2008, Cisco Systems (NASDAQ: CSCO) accounted for 40% of OPXT's $319 million total revenues while Alcatel-Lucent accounted for 20%.
As described in their 10K, OPXT had little choice but to participate in their customers' latest supply chain management program.
"Certain of our more significant customers have implemented a supply chain management tool called vendor managed inventory ("VMI") programs that require suppliers, such as Opnext, to assume responsibility for maintaining an agreed upon level of consigned inventory at the customer's location or at a third-party logistics provider, based on the customer's demand forecast .... it remains inventory owned by the supplier until the inventory is drawn or pulled, which is the time at which the sale takes place. Our participation in VMI programs could result in our experiencing higher levels of inventory than we might otherwise and decrease our visibility into the timing of when our finished goods will ultimately result in sales generating sales. (p. 14)"
Opnext's 10K filings are quite candid in the way they state their inability to resist customer pressures. I frequently point to Delphi and Visteon, two automobile industry Black Widows, as firms in even worse positions of weakness.
To improve your mastery of the business model template: Chickens and Pigs - The Book
