1. Business Models Flashcards
What are the 2 traditional appraisal methods of an organisation?
PESTEL and Porter’s 5 Forces
What are the factors considered in PESTEL analysis?
Political, Economical, Social, Technological, Ecological, Legal
What are the 3 levels of PESTEL analysis?
Local, National, Global
What do Porter’s 5 Forces determine?
Competitive Intensity and therefore the attractiveness of a market.
What are Porter’s Five Forces?
- The Threat of Substitute Products
- The Threat of Entry of New Competitors
- The Bargaining Power of Customers
- The Bargaining Power of Suppliers
- The Intensity of Competitive Rivalry
What is Porter’s Sixth Force?
The Government
What are Porter’s 3 generic strategies?
- Cost Leader
- Differentiation
- Niche or Focus
What is the risk to companies who do not adopt a strong generic strategy?
Being “stuck in the middle” and squeezed out the market first.
What is a business ecosystem?
An economic community supported by a foundation of interacting organisations and individuals.
What is one of the key features of the business ecosystem?
All organisations have to reinvent themselves every 20-30 years.
What is the most key factor that has lead to the speed up of the evolution process of an ecosystem?
Digitisation
What 3 factors contribute to digitisation in relation to the ecosystem?
- The extent of the internet and its access
- The wealth of data
- Customer Empowerment
What 7 things does the digital customer want most?
- Tailored Products
- Seamless Experience across channels
- Anytime, Anywhere
- Great Service
- Self Service
- Transparency
- 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 capital
- Lead through co-creation
- Invite customers to co-create
- Focus on subscriptions
- Embrace freelance movement
- Integrate Big Date
- Choose leaders who represent customers
- Open minded to new possibilities
What is mutuality?
The concept of working together, building a community that is fundamental to the network orchestrator concept.
What are the 4 main technological developments that have enabled new platforms to connect?
- Cloud Computing
- Social Media
- Mobile Technology
- Data Analytics
What are the two key factors of an ecosystem?
- Participants
- Interactions
What are the 3 characteristics of the participants in an ecosystem?
- Role (what they do)
- Reach (how far they extend)
- Capability (key value proposition)
What are the 3 characteristics of the interactions in an economy?
- Rules (define how)
- Connections (links)
- Course (speed and direction)
What are the underpinning concepts in an ecosystem?
- Mutuality (working together)
- 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 economy?
- Strength and extent of influence
- Formality of interactions
- Degree of enforceability
What is a shark tank ecosystem?
Low complexity, low orchestration.
Will 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.
Less chance of domination by one participant - 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?
- Confidentiality concerns
- 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 mutually beneficial projects.
What are the benefits of strategic alliance? (2)
- Less involved and less permanent than a joint venture
- 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 2 key opportunities associated with changing business ecosystems?
- New products and services
- New platforms and partnerships
What is the main difference between the traditional approach and the ecosystem stand on creating value?
Barriers should be removed, and the network creates value as a whole
