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DTIM - Strategic Management of Technological Innovation > Business Model > Flashcards

Business Model Flashcards

1
Q

What is a business model?

A

A model that describes how a company captures, creates and delivers value for the firm and for the customer

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2
Q

What are the four types of business model frameworks?

A 
•	Component focused
o	Business model canvas
•	Relationship/transaction focused
o	Business model blocks
•	Decision and consequence focused
•	Financially focused
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3
Q

What elements are used in the business model canvas?

A
  • Key Activities
  • Key Partners
  • Channels
  • Customer Relationships
  • Cost Structure
  • Revenue Streams
  • Key Resources
  • Customer Segments
  • Value Proposition
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4
Q

What is value proposition?

A

A value proposition describes in detail what benefits can be expect from the delivered product or services

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5
Q

Why is designing a value proposition important?

A
  • One of the top reasons for failure in startups is that there is no market need, i.e. a company delivers a service that no one needs.
  • The need, demand and what benefits can be expected depends on the customer
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6
Q

Which values can be created from a value proposition design point of view?

A 
This depends on who you ask, and if you see if from a gain or pain point of view
•	Economic value
•	Utilitarian value
•	Social value
•	Experiential value
•	Moral value
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7
Q

What are three top reasons for start up failures?

A
  • No market need
  • Ran out of cash
  • Not the right team
  • Get outcompeted
  • Pricing/cost issues
  • User un-friendly product
  • Product without a business model
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8
Q

What is a customer profile?

A

Describes a specific customer or customer segment and some of its characteristics

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9
Q

What are different ways to understand your customer?

A
  • Use the internet
  • Individual interview
  • Focus group
  • Ethnographic study
  • Customer survey
  • Testing
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10
Q

How can a customer profile be described?

A

Through customer jobs, customer pains and gains

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11
Q

What is the important when understanding if there is a market need?

A

To understand the customer segment in detail, and what the customer wants

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12
Q

What are some reasons for startup failure?

A
  • No market need
  • Ran out of cash
  • No right team
  • Get outcompeted
  • Pricing/cost issues
  • User un-friendly product
  • Product without a business model
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13
Q

What does a value map describe?

A

A value map describes value propositions as product and services, pain relivers and gain creators

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14
Q

What is the essence of value proposition design?

A

To find the right fit; when customers get excited about your value proposition which happens when you address important jobs, alleviate extreme pains and create essential gains that customer care about.

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15
Q

What is mentioned as the main driver for customer development within startups?

A

• There is no startup that has a business plan that survives the first contact with customer

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16
Q

What is a MVP?

A

A minimum viable product (MVP) is a product with just enough features to satisfy the early customer and provide feedback to future development

17
Q

What are the three main financial statements, describe them breifly.

A

• Balance Sheet
o A statement that describes what a company has, what it owes and its worth.
• Income Statement
o A statement with an estimation of how the company will perform over a period of time
• Cash Flow Statement
o A statement that tracks the inflow and out flow of cash sepnd in a period of time.

18
Q

Which of the financial statements are fiction and real?

A

• Balance and income statements are fiction, the cash flow statement is a reality that should show the company’s performance and viability.

19
Q

What is the customer development method?

A

• The Customer development methodology is used by testing and developing new hypothesizes about a business model

20
Q

What is depreciation and what is it used for?

A
  • The value of an asset that depreciates over time and matches cost to revenue over time. Example: a product will reduce in value over time when used.
  • A method of reallocating the cost of a tangible assets over its useful life span of it being in motion.
  • Businesses depreciate long-term asses for both accounting and tax purposes.
  • There are several types of depreciation expense and different formulas for determining the book value of an asset.
21
Q

What is important to know about market types?

A
  • The chosen market you are in should guide you in what to focus on
  • Either, enter an existing market, re-segmented market an existing market, cloning another market or creating a completely new market
  • Depending on chosen market type; there is a difference between the customers, product performance, competition and risk.
22
Q

What are the different types of markets types?

A

• Bringing a new product into an existing market
• Bringing a new product into a new market
• Bringing a new product into an existing market
o Re-segment market as a low-cost entrant
o Re-segment market as a niche entrant
• Cloning a business model that successful in another country.

23
Q

What important to know about market sizing?

A
  • There is a clear difference between the size of a theorical total market, the addressable market, the serviceable market and target market.
  • A top-down market approach gives a first estimate while the bottom-up serviceable market size assessment provides a reality check
  • There is often data on existing stable markets, however estimating the size of a new market or markets in growth/decline can be challenging.
24
Q

Which types of markets are there?

A

Total market potential (TMP)
• The potential sales values of a particular product or service within a specific target segment over a specified time frame

Total addressable market (TAM)
• The potential sales values of a particular product or service within a specific target segment over a specified time frame, taking into consideration the addressable demand.

Serviceable available market (SAM)
• The potential sales values of a particular product or service within a specific target segment over a specified time frame, taking into consideration the addressable demand for a specific business model.

Target Market
• The potential sales values of a particular product or service within a specific target segment over a specified time frame, taking into consideration the part of the SAM that is being actively targeted by marketing
• Most realistic assessment of the short-term available opportunity, but the input data may be difficult to acquire.

25
Q

Describe the common business models and their degree of scalability

A
  • A consulting/expertise service– low scalability, difficult to scale a persons time and effort.
  • A commodity service –
  • A physical product
  • A software/digital product - high scalability
26
Q

What is indicates a business model with high scalability?

A

This often indicates that the business is not as complex, which in turn means lower entry barriers and more competition, often resulting in highly capital-intensive battle for leadership and existence.

27
Q

What is unique with example Facebooks, YouTube, Airbnbs business model?

A

They have had a unique opportunity to where they have had strong networks effects involved and a highly scalable business model which have resulted in a “winner-takes it all” solution for their businesses.

28
Q

What is the key point with competitive advantage?

A

As a business, you aim for monopoly and the advantage over competition as perfect competitors erodes all margins

29
Q

In which ways can a business model be analyzed?

A
  • SWOT

* Resourced based view

30
Q

Why are metrics important?

A
  • Metrics are used to help businesses focus their people resources on what’s important
  • Which metric to use, track and analyse depends on the chosen business model. There are some specific metrics for specific business models.
31
Q

What are key points in valuation of a business?

A
  • To arrive at a valuation one must both assess the numbers and the story that gives the number significance and meaning.
  • There are many valuation methods however there are no precise valuation and no unbiased valuations
  • The most used valuations methods, such as relative valuation and DCF valuation, requires relatively basic computation. The difficult arises for making assumptions about the future.

DTIM - Strategic Management of Technological Innovation (18 decks)

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