Business Model and Strategy

Question 1

How is strategy defined and what does strategic management deal with according to Terzidis
(2017)?

Answer 1

A strategy is a plan or roadmap for the fundamental behaviour of an organisation in order to achieve its mission and long-term goals.

It deals with initiatives taken by entrepreneurs involving the utilisation of resources to enhance the performance of firms in their external environments.

Question 2

2. Name the three key principles for strategic positioning (Porter, 2008).

Answer 2

1. creation of a unique and valuable position, involving a different set of activities.
2. make trade-offs in competing - to choose what not to do.
3. creating “fit” (coherence) among a company’s activities.

Question 3

3. Which questions you need to ask yourself for finding the balance (IKIGAI)?

Answer 3

There are four questions:

1. What do you love?
2. What are you good at?
3. What does the world need?
4. What can you be paid for?

Question 4

4. What is the definition of a firm according Coase (1937)?

Answer 4

A firm consists of the system of relationships which comes into existence when the direction of resources is independent on an entrepreneur.

Question 5

5. “The firm as a system” – in which markets is the firm embedded?

Hint; there are five markets

Answer 5

The firm is embedded in five markets:

1. Customer market
2. Capital market
3. Complementary partners
4. Labor market
5. Supplier market

All markets exist in a regulatory environment

Question 6

6. What is an industry according to Byers & Dorf (2011)?

Answer 6

An industry is a group of firms producing products that are close substitutes for each other and serve the same customer

Question 7

7. Describe the Industry Lifecycle and explain what is meant by the different phases.

Answer 7

1. Emergence
   - Limited sales
   - Few Competitors
2. Growth
   - Increased sales
   - Good timing to enter the market
3. Maturation
   - Less growth
   - Consolidation
4. Decline

Question 8

8. Describe Porter’s Five Forces Model – name all the forces and differentiate between
   horizontal and vertical competition.

Answer 8

Horizontal competition refers to competition between companies that offer similar products or services within the same industry.

Forces from ‘horizontal’ competition:

1. Aspiring entrants can require new investment for you to stay competitive
2. You must stand up to existing competition.
3. Substitute offering can lure customers away.

Vertical competition is competition from other firms involved in different stages of production process or supply chain.

Forces from ‘vertical’ competition:

1. Customers can force down prices by playing you and your rivals against on another.
2. Powerful suppliers may constrain your profits if they charge higher prices.

Question 9

9. Give a definition of the term ‘business model’ according to Terzidis (2017).

Answer 9

A business model is an idealised and aggregated representation of

• how a firm creates value for all its stakeholders.