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Business Model Generation > Business Model Building Blocks > Flashcards

Business Model Building Blocks Flashcards

1
Q

What is a business model?

A

A business model is rationale for how an organisation creates , delivers or captures value.

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2
Q

What are the nine building blocks of an organsations business model?

A
  1. Customer Segments
  2. Key Resources
  3. Key Partnerships
  4. Key Activities
  5. Cost Structure
  6. Value Proposition
  7. Channels
  8. Revenue Streams
  9. Customer Realtionships
    10.
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3
Q

Describe the Customer Segment Building Block

A

The customer segment building block defines the different groups of people or organisations an enterprise aims to reach and serve.

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4
Q

What anatomy of the business do the customers represent?

A

Customers are the heart of the business

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5
Q

Under what circumstances would a customer group represent seperate segments

A
  1. Their needs require and justify a distinct offer
  2. They are reached through different Distribution Channels
  3. They require different types of relationships
  4. They have substantially different profitabilities
  5. They are willing to pay for different aspects of the offer
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6
Q

Describe the different types of customer segments

Name one type of industry where that segment is usually found.

Mass Market

A
  • Mass market business models do not distinguish between customer segments. Broad Appeal.
  • The value proposition, distribution channels and customer relationships all focus on one large group.
  • Consumer Electronics Sector
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7
Q

What type of business models do not distingush

between customer segments?

A

Mass Market

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8
Q

Describe the different types of customer segments

Name one type of industry where that segment is usually found.

Niche Market

A
  • Cater to specific, specialised segments - NARROW
  • The value proposition, distribution channels, and the Customer Relationships are all tailored to the specific requirement.
  • Often found in supplier-buyer relationships – car part manufactures and car manufacturers
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9
Q

Describe the different types of customer segments

Name one type of industry where that segment is usually found.

Segmented

A
  • Sub segment
  • A segment of a segment – where the segment has slightly different needs / desires.
  • Consider banking services for a customer with a NW of €500k compared to a customer with a NW of €2.5M
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10
Q

Describe the different types of customer segments

Name one type of industry where that segment is usually found.

Diversified (Unrelated)

A

A company can operate in several different unrelated segments –

Amazon and AWS

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11
Q

Describe the different types of customer segments

Name one type of industry where that segment is usually found.

Multi Sided Platforms

A
  • Some organisations serve two or more independent Customer Segments
  • Credit Card Company’s – Credit Cardholders <<<<<>>>>> Merchants
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12
Q

Describe the different types of value propositions

A

.

Value Propositions may be innovative and represent new and disruptive offers

They may also be similar to the existing market offers , but with added features and attributes.

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13
Q

Describe the Value Proposition Building Block

A

The value proposition building block describes the bundle of products and services that create value for a specific Customer Segment

The Value Propostion solves a problem for the customer or satisfies a customer need.

It can be considered the aggregation, or bundle, of benefits that a company offers customers.

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14
Q

How does a Value Proposition create value?

A

A value proposition can create value through a distinct mix of elements that cater to a segments needs.

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15
Q

``

How can a the mix of different elements contibute to value creation?

Convenience/ Usability

A

Creates value by making things/carrying out actions easier

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16
Q

``

How can a the mix of different elements contibute to value creation?

Accessibility

A

Creates value by making products/ services to customers that previously lacked access

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17
Q

``

How can a the mix of different elements contibute to value creation?

Risks

A

Creates value by helping customers reduce the costs they incur

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18
Q

How can a the mix of different elements contibute to value creation?

Cost Reduction

A

Creates value by helping customers reduce cost

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19
Q

How can a the mix of different elements contibute to value creation?

Price

A

Creates value by offering similar value at a lower price

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20
Q

How can a the mix of different elements contibute to value creation?

Brand/ Status

A

Displaying the brand is valuable for signalling

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21
Q

How can a the mix of different elements contibute to value creation?

Design

A

Creates value due its superior design

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22
Q

How can a the mix of different elements contibute to value creation?

Getting the job done

A

Creates value by carrying out some aspect of the company’s overall operation.

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23
Q

How can a the mix of different elements contibute to value creation?

Customization

A

Creates value by tailoring products and services to the specific need of the customer

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24
Q

How can a the mix of different elements contibute to value creation?

Performance

A

Creates value by improving the performance of an existing product or service

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25
Q

How can a the mix of different elements contibute to value creation?

Newness

A

Creates value by creating an entirely new set of needs

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26
Q

What are the different forms value can take?

A

Value can be quantitative (e.g price, speed of service)

or;

Value can be qualitative (e.g design, customer experience)

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27
Q

What are the different functions of Channels?

A
  1. Awareness – Raise awareness about product or services
  2. Evaluation – help customers evaluate or organisations VP
  3. Purchase – what method do we allow customers purchase goods and services
  4. Delivery – how is the VP delivered
  5. After Sales – how is post purchase support provided
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28
Q

What is the optimal strategy for choosing a channel?

A

Find the right balance between channels and integrate them in a way to create a great customer experience and to maximise revenue.

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29
Q

What are the trade-offs in choosing Owned Channels?

A

Owned Channels have higher margins but can be costly to put in place and operate.

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30
Q

What are the trade-offs in choosing Partner Channels?

A

Partner Channels lead to lower margins, buy they allow an organisation to expand its reach and benefit.

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31
Q

What are examples of the Partner Channels an organisation can choose?

A

Indirect

Span a range of options

Wholesale Distribution, Partner Owned Websites, Retail

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32
Q

What is an example of the Owned Channels an organisation can choose?

A

Direct

In house sales or website

Indirect

Retail Stores

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33
Q

What are the routes the organisation chooses to reach customers?

A

Own and Partner channels can either have a direct or indirect route to customers

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34
Q

What are the types of channels an organisation can choose between?

A

An organisation can choose to reach its customers through its own channels

Or

An organisation can choose to reach its customers through a partner channel

Or

It can choose a mix of both.

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35
Q

Why are channels important?

A

Finding the right mix of Channels to satisfy how customers want to be reached is crucial in bringing the Value Proposition to market.

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36
Q

What channels comprise the company’s interface with customers?

A

Communication, distribution, and sales channels

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37
Q

What are the Channels Building Block?

A

The channels building block describes how a company communicates with and reaches its customer segments to deliver its value proposition

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38
Q

What category creates value by going beyond the traditional customer-vendor relationship?

A

Co creation

Allows customers to interact with the product/ serivce

Think Amazon reviews/ You tube

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39
Q

What is the purpose of Community relationships?

A

Communities can help companies become more involved with and understand its customers/ prospects

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40
Q

Which category represents the deepest and most intimate type of relationship?

A

Dedicated Personal Assistance

Normally develops over a long period of time

E.g. Bankers and HNWs / Key account Managers

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41
Q

What are the different categories of customer relationships?

A
  • Personal Assistance
  • Dedicated Personal Assistance
  • Self Service
  • Automated Services
  • Communities
  • Cocreation
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42
Q

What are they types of relationships a company can have with a customer segment?

A

Relationships can range from personal to automated

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43
Q

What are the drivers behind the choosing a type of customer relationship?

A
  • Customer Acquisition
  • Customer Retention
  • Boosting Sales (upselling)
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44
Q

What is the Customer Relationship Building Block?

A

Describes the type of relationships a company establishes with a specific customer segment.

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45
Q

What sort of dynamic pricing mechanism is used in both the hotel and airline industry?

A

Yield Management

46
Q

What dynamic pricing mechanism depends on inventory and time of purchase?

A

Yield Management

47
Q

What are the different types of Dynamic Pricing Mechanisms?

A

Negotiation (Bargaining)

Yield Management

Real time market

Auctions

48
Q

What are the types of different types of Fixed Menu Pricing Mechanisms?

A

List Price

Product Feature Dependent

Customer Segment Dependent

Volume Dependent

49
Q

How does the type of pricing mechanism chosen impact revenue?

A

The type of pricing mechanism chosen can make a big difference in terms of revenue generated.

50
Q

What is dynamic pricing?

A

Prices change based on market conditions.

51
Q

What is Fixed Menu Pricing?

A

Predefined prices based on static variables

52
Q

What are the different types of pricing mechanisms that can be used?

A

Fixed Menu Pricing

Dynamic Pricing

53
Q

What revenue stream arises from intermediation services?

A

Brokerage Fees

54
Q

What sectors would you likely see the use of licensing?

A

Media – Copyright

Technology - patents

55
Q

What benefit does licensing give the right holders?

A

Allows them to generate revenues from their property without having to manufacture or commercialise a service.

56
Q

What revenue stream is generated by giving customers permission to use protected intellectual property in exchange for fees?

A

Licensing

57
Q

What is the benefit of Lending/ Renting/ Leasing to the lessee or the renter?

A

They don’t bare the full ownership costs

58
Q

What is the advantage of Lending/Renting/ Leasing for the lender?

A

Recurring Revenue

59
Q

What is the advantage of Lending/Renting/ Leasing for the lender?

A

Lending/ Renting/ Leasing

60
Q

What revenue stream is created by temporary granting some the exclusive right to use a particular asset for a fixed period in return for a fee?

A

Lending/ Renting/ Leasing

61
Q

What revenue stream provides continuous access to service?

A

Subscription Fees.

62
Q

What revenue stream is an example of hotels charging customers for the number of nights stayed?

A

Usage Fee

The more the service is used , the more the customer pays.

63
Q

What is the most widely understood revenue stream?

A

Asset Sale

Selling ownership rights to physical product

64
Q

What are the different ways to generate revenue streams?

A
  • Asset Sale
  • Usage Fee
  • Subscription Fees
  • Lending/ Renting/ Leasing
  • Licensing
  • Brokerage fees
  • Advertising
65
Q

What are recurring revenues?

A

Revenues resulting from ongoing payments to either deliver a Value Proposition

Or

Provide post purchase customer support.

66
Q

What are transaction revenues?

A

Revenues resulting from one- time customer payments

67
Q

What are the main types of revenue streams?

A

Transaction Revenues

or

Recurring Revenues

68
Q

What question will allow a firm to generate revenue streams from each customer segment?

A

For what value is each Customer Segment truly willing to pay?

69
Q

What part of the company’s anatomy do revenue streams represent?

A

Arteries – The life blood

70
Q

What is the Revenue Stream Building Block?

A

This represents the cash the company generates from a customer segment

71
Q

Name a company that uses financial resources to provide vendor financing?

A

Ericsson

72
Q

What resource is crucial in knowledge intensive industries and creative industries?

A

Human Resources

73
Q

What sort of revenue stream did Qualcomm generate from patented microchips?

A

Licensing Fees

74
Q

What did Qualcomm build its business model around?

A

Patented Microchips Designs

75
Q

Microsoft and SAP depend on what type of intellectual resource?

A

Software and intellectual property developed over many years.

76
Q

Nike and Sony are an example of the value of what type of intellectual resource?

A

Brand Value

77
Q

Resources such as brands, proprietary knowledge, patents and copyrights, partnerships, and customer databases are what type of resources?

A

Intellectual Assets

78
Q

A global network of stores and related logistics infrastructure would represent the key physical resources of which retailer?

A

Wal Mart

79
Q

Extensive IT, warehouse, and logistics infrastructure would represent the key physical resources of which company?

A

Amazon

80
Q

Manufacturing facilities, buildings, vehicles, machines, systems, point of sale systems, and distribution networks are forms of which type of asset?

A

Physical Assets

81
Q

What are the different categories of key resources?

A
  • Physical
  • Intellectual
  • Human
  • Financial
82
Q

What do key resources allow an enterprise to do?

A

Enables the other building blocks

  • Create and offer a value proposition
  • Maintain relationships with Customer Segments
  • Earn Revenues
83
Q

Describe the Key Resources Building Block

A

The Key Resources Building Block describes the most important assets required to make a business model work

84
Q

The key activities of the platform and network model are?

A
  • Platform Management
  • Service Provisioning
  • Platform Promotion
85
Q

Consultancies and hospitals are dominated by what type of key activities?

A

Problem Solving

86
Q

Coming up with new solutions to individual customer problems relates to which key activity?

A

Problem Solving

87
Q

What activity dominates the business model of manufacturing firms?

A

Production

88
Q

Designing, making and delivering product in substantial quantities relates to which key activity?

A

Production

89
Q

What are the categories of key activities?

A
  • Production
  • Problem Solving
  • Platform/ Network
90
Q

Define the Key Activities Building Block?

A

The Key Activities Building Block describes the most important things a company must to make its business model work.

91
Q

Define Key Partnerships as a Building Block?

A

Key Partnerships describes the network of suppliers and partners that make a business model work.

92
Q

What are the four different types of Partnerships?

A
  1. Strategic Alliances between non competitors
  2. Coopetition - alliances between non competitors
  3. Joint Ventures to develop new business
  4. Buyer-Supplier relationships to assure reliable supplies
93
Q

What are the four different types of Partnerships?

A
  1. Strategic Alliances between non competitors
  2. Coopetition - alliances between non competitors
  3. Joint Ventures to develop new business
  4. Buyer-Supplier relationships to assure reliable supplies
94
Q

Why do companies create alliances?

A
  1. To optimise their business models
  2. Reduce risk
  3. Acquire resources
95
Q

What partnerships are generally formed to reduce costs?

A

Optimization and economy of scale

96
Q

What type of Partnerships involve outsourcing or sharing infrastructure?

A

Optimization and economy of scale.

97
Q

What is the benefit of competitors forming a strategic alliance?

A

Reducing Risk and Uncertainity.

98
Q

Partnerships can help companies extend their own capabilities by ___

A

Relying on other firms to furnish particular resources or perform certain activities.

99
Q

Partnerships were companies are looking to extend their own capabilities are motivated by?

A
  1. Needs to acquire knowldge
  2. Licenses
  3. Access to customers
100
Q

Cost Advantages that a business enjoys due to larger scope of operations is called?

A

Economies of Scope

101
Q

Cost Advantages that a business enjoyes as its output expands are called?

A

Economies of Scale

102
Q

Costs that vary proportiionally with the volume of goods and services are?

A

Variable Costs

103
Q

Manufacturing Companies are characterised by a high proportion of ____

A

Fixed Costs

104
Q

What are examples of fixed costs?

A
  1. Salaries
  2. Rent
  3. Physical Manufacturing facilities
105
Q

Costs that dont change with volume produced are called?

A

Fixed Costs

106
Q

Premium Value Propositions and high desgree of personalisation are characteristics of what cost structure?

A

Value Driven

107
Q

Premium Value Propositions and high desgree of personalisation are characteristics of what cost structure?

A

Value Driven

108
Q

Lean structures, low value propositions, maximum automation, and extensive resourcing is an example of what type of cost structure?

A

Cost Driven

109
Q

What are the two broad classes of business model?

A
  1. Cost Driven
  2. Value Driven
110
Q

What is the Cost Structure Block?

A

The cost structure building block describes the most important costs incurred while operating under a particular business model.

111
Q
A

Business Model Generation (3 decks)

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