1. Business Models Flashcards
What are the 2 traditional appraisal methods of an organisation’s environment? (and which is macro/micro)
PESTLE (macro) and Porter’s Five Forces (micro)
What are the factors considered in PESTLE analysis?
Political Economic Social Technological Ecological Legal
What are the 3 levels of PESTLE analysis?
Local, National and Global
What do porter’s 5 forces determine?
The competitive intensity, and therefore the attractiveness, of a market
What are porter’s five forces?
- Threat of substitutes (same need, different way)
- Threat of new entrants
- Bargaining power of customers
- Bargaining power of suppliers
- Intensity of competitive rivalry
What is porter’s ‘sixth force’?
The government
What are porter’s 3 generic strategies?
- Cost Leader (lowest cost)
- Differentiation (do things differently, higher price)
- Niche or focus
What is the risk to companies who do not adopt a strong generic strategy, when costs rise or selling prices fall?
Being ‘stuck in the middle’
What is a business ecosystem?
An economic community supported by a foundation of interacting organisations and individuals
Does a strong ecosystem mean high or low barriers to entry?
High
What are member organisms of an organisation ecosystem?
The customers, suppliers, producers, competitors and other stakeholders
What is one of the key features of the business ecosystem?
It evolves over time, and members evolve with it
What is the most key factor has lead to the increasing speed of ecosystem evolution?
Digitisation
What three factors contribute to digitisation in relation to changing ecosystems?
- The extent of the internet and its access
- The wealth of data available for decision making
- Customer empowerment
What 5 things does the digital customer most want, according to the World Economic Forum?
- Tailored products
- Seamless experience across channels
- Anytime, any where
- Great service
- Peer review and advocacy
What 4 methods can organisations use to meet the demands of the digital customer?
- Design thinking
- Experiential pilots
- Prototyping
- Brand atomisation
What are the 4 types of business model, according to Libert, Beck and Wind?
- Asset Builder
- Service Provider
- Technology creator
- Network Orchestrator
What is a network orchestrator?
Companies that deliver value through connectivity, creating a platform for transactions and interaction
What are the 10 principles of network orchestration?
- Create digital capabilities
- Invest in intangible assets
- Actively allocate your capital
- Lead through co-creation
- Invite your customers to co-create
- Focus on subscriptions
- Embrace the freelance movement
- Integrate big data
- Choose leaders who represent your customers
- Open your mind to new posibilities
What is mutuality?
The concept of working together, building a community that is fundamental to the network orchestrator conceptt
What are thee 4 main technological developments that have enabled platform organisations?
- Cloud computing
- Social media
- Mobile technology
- Data analytics
What are the two key factors of an ecosystem?
The participants and the interactions
What are the 3 characteristics of the participants in an ecosystem?
Role (what they do)
Reach (how far they extend)
Capability (key value prop)
What are the 3 characteristics of the interactions in an ecosystem?
Rules (define how)
Connections (links)
Course (speed and direction)
What are the underpinning concepts in an ecosystem?
Mutuality (working together) and orchestration (co-ordination)
What 3 factors determine the complexity of an ecosystem?
- Number and diversity of participants
- Sophistication of activities
- Range and nature of relationships
What 3 factors determine the orchestration of an ecosystem?
- Strength and extent of influence
- Formality of interactions
- Degree of enforceability
What is a shark tank ecosystem?
Low complexity, low orchestration
Need to innovate to survive
E.g. Retail
What is a hornet’s nest ecosystem?
High complexity, low orchestration
High barriers to entry
e.g. Media
What is a lion’s pride ecosystem?
High complexity, high orchestration
Dominated by a powerful orchestrator
E.g. healthcare
What is a wolf pack ecosystem?
Low complexity, high orchestration
E.g. utilities
What is outsourcing?
Getting a specialist external provider to take over the supply of a product or service
What are the advantages of outsourcing? (4)
- Can concentrate on core competencies
- Cheaper, economies of scale
- Access to expert knowledge
- Greater cost certainty
What are the disadvantages of outsourcing? (2)
- Confidentiality concerns
2. Difficulty finding a reliable partner
What is offshoring?
Transfer of an activity to a foreign country
What is a shared service centre?
A separate business unit created within a company to deliver a specific service to the company
What is a strategic alliance?
An arrangement between two or more organisations to share resources to undertake a mutually beneficial project
What are the benefits of a strategic alliance? (2)
- Less involved + less permanent than a joint venture
2. Maintain autonomy
What are the 4 alternative types of alliance?
- Franchising
- Consortia
- Licensing
- Joint venture
What are virtual teams?
Geographically dispersed teams that use tools on the internet to communicate and collaborate
What are virtual companies?
Companies whose members are geographically dispersed, a network of alliances and subcontracting arrangements
What are the 3 key risks associated with changing business ecosystems?
- Being left behind
- Investing in the wrong technology
- Failing to harness the potential of big data
What are the 2 key opportunities associated with changing business ecosystems?
- New products and services
2. New platforms and partnerships
What is the main difference between the traditional approach and the ecosystem stance on creating value?
Barriers should be removed, and the network creates value as a whole
