AFM 132 Chp 7 - Business Models Flashcards
what’s the role of a business model
helps suggest how a company plans to make money
What are some questions to consider when creating a business model - consider what those questions factor in
what are you providing? - factors in the effort + resource involved to design a product or service offering
who are you providing the product/service to? - factors the consumers that would be interested in what the company has to offer
how do you survive + thrive as a company? - factors how for a business to stay in the business, they must be profitable in order to maintain + grow the business
Define a business model
model that captures how a company creates, deliver + capture’s value
how do a company create or deliver value?
by providing a product or service that meets the needs of their customers
how does a company capture value?
by being profitable
what’s the business model freemium?
combining free + premium - apps that can be downloaded + played for free but has a premium version where consumers can get additional perks
What are the 9 factors in a business model canvas?
- customer segments
- channels
- customer relationship
- value propositions
- key activities
- key resources
- key partners
- cost structure
- revenue streams
Which factors on a BMC create value?
customer segments
channels
customer relationship
value propositions
which factors on a BMC deliver value?
value propositions
key activities
key resources
key partners
which factors on a BMC capture value?
cost structure
revenue streams
define a Business Model canvas (BMC)
a tool which helps new or existing businesses design + map out their business models
What are the different segments a company may look into in customer segments
business segment
geographic segments
consumers segment
- demographic factors
define a value proposition
describes the features + benefits offered through a company’s products/services that customers will value
What question does the value proposition answer?
why would a customer purchase this product offering?
What are some values consumers value?
- product + packaging
- quality of service
- convenience
- Brand Name
- Design
- Price
What are the 4 different channels
- marketing channels
- sales channels
- Distribution channels
- service channels
what’s the purpose of a marketing channel
to create awareness about product/services
what’s the purpose of sales channels
how customers purchase hteir products/services
what’s the purpose of distirbution channels
how to deliver products/services to customers
What’s the purpose of service channels
how to provide support to customers after a sale
define a direct channel
when a company has its own stores + salespeople
define an indirect channel
when a company’s products/services are provided through an intermediary
what’s a benefit of distributing products through a retailer?
reach a larger base of customers
What’s the value in building long-term relationships with customers?
increased customer loyalty
What are some of the ways a company may interact with a customer to help develop relationships
- customer support
- timeliness of support
- convenience
What are the tangible + intangible assets a company has
human resources
physical resources
financial resources
intellectual property
what’s the role of patents
protect new inventions or improvement to existing invention + gives the inventor the right to stop others from making, using, or selling their invention for the period of the patent
what’s the purpose of copyright
provides an exclusive right to make, reproduce, publish or perform artistic/literary works where others that want to use the work have to buy it or get permission to use it
how long does copyright exist in canada for?
for the lifetime of the creator plus 50 years following their death, after which the work becomes part of the public domain where anyone can use it
what are key activities
what a company does to operate successfully + deliver value
What’s an important consideration for companies to operate effectively in regards to key activities
prioritize what key activities they should tackle + dedicate resources to and what could be outsources
why might a company outsource an activity?
if the activity does not directly help them deliver value
provide some examples of key partners for a business
supply chain
sales
international expansion
What’s the importance of a supply chain in delivering value (key partners context)
working collaboratively with another company in their supply chain to deliver high quality value.
What’s the importance of a sales in delivering value (key partners context)
to work with other companies to sell their products such as retailers
What’s the importance of international expansion in delivering value (key partners context)
A COMPANY MAY WANT TO TEAM UP WITH ANOTHER COPMANY through A JOINT VENTURE OR A STRATEGIC ALLIANCE
What’s the purpose of revenue streams
examine the cash inflows received from selling a product or service
What are the different types of revenue stream
transactional - 1 time payments
recurring - ongoing payments
What should we consider when understanding the cost structure for a company and why?
cost types - looks at costs from a financial reporting perspective
cost behaviour - looks at the types of costs that may change if production levels increase
define fixed costs
costs that stay the same even if production increases
define variable costs
costs that will change if production increases
What major business function is in creating value
marketing
what major business function is in delivering value
operations
human resources
finance
what major business function is in capturing value
accounting
