Business Model Strategy Audit

Question 1

• Business model

Answer 1

defines how an organization interacts with its environment to define a unique strategy, attract the resources and build the capabilities required to execute the strategy, and create value for all stakeholders

Question 2

• The four areas of a business model strategy audit

Answer 2

Business context, customers, competitors, business network

Question 3

a. What is Business Context:

Answer 3

a. Assess what business are we in today and what business should we be in?
b. Identifies industry trends and disruptors
c. Defines what opportunities can be pursued and their associated risks.
d. Helps frame choices concerning boundary positioning, IT trends, disruptors, opportunities, and risks.

Question 4

How to analyze Business Context

Answer 4

 Examine external environments and competitive environment dynamics
 Identity regulatory, societal, industry trends, and disruptors that signal opportunities and threats
 Determine approaches to exploiting opportunities and managing risks
 Determine which opportunities to pursue and which ones not to pursue

Question 5

Business Context questions to ask

Answer 5

 How favorable or unfavorable is the business context we operate in today and what changes do we anticipate?
 Can we disrupt the inventory and create new opportunities?
 What are the key opportunities and threats?
 Have we clearly defined future opportunities and which opportunities we should and should not pursue?

Question 6

Aspects of Customers

Answer 6

a. Analyze current and future customers

b. Identify issues customers face and how current and future products and services can solve the problems

Question 7

o How to analyze customers:

Answer 7

 Use IT to collect and analyze real-time and historical market and customer information
 Talk with current and potential customers
 Visit and watch customers perform activities that your product/service offerings support
 Conduct focus groups
 Involve customers in product design or improvement

Question 8

o Customer questions to ask:

Answer 8

 What are pressing problems our customers are facing?
 How well are customer needs being met and how much are they willing to pay?
 What customer segments are growing?

Question 9

Aspects of Competitors:

Answer 9

a. Analyze alternatives customers have to meet their needs
b. This analysis helps frame choices concerning product positioning.
c. It serves as an important source of differentiation and proprietary advantage

Question 10

o How to analyze competitors:

Answer 10

 Identify rivals, new entrants, and substitutes
 Benchmark current or potential new offerings
 Ask potential customers why they use alternatives, what needs are not being met, and what would cause them to switch
 Collect competitor data
 Talk to experts

Question 11

o Questions to ask about competitors:

Answer 11

 Who are our competitors and how do they differentiate their offerings by feature or price?
 What prices do competitors charge and what margins do they get?
 What approaches could we take to preserve or enhance our differentiated position?

Question 12

Aspects of Business Network (suppliers)

Answer 12

a. Analyze network of suppliers, distributors, and other partners needed to execute strategy
b. Analysis of the business network helps frame choices concerning the role a firm plays and its positioning within the value chain.
c. Need to define the business network structure and whether activities are incorporated within a single company, through selective sourcing partnerships or within a community
d. Need to make choices about business network partnerships and what activities should be performed at a transaction, contract, or partnership level

Question 13

o How to analyze business network:

Answer 13

 Identify core activities, resources, and capabilities needed to achieve goals
 Identify support activities, like payroll and recruiting, and infrastructure, like property and equipment
 Assess your capabilities and potential supplier capabilities in performing these activities
 Compare cost and risk of performing activities inhouse versus outsourcing
 Determine what you will do and what you will source
 Develop governance structures and systems for end-to-end processes

Question 14

o Question to ask about business network:

Answer 14

 What activities, capabilities, and resources are required to execute strategy?
 Which activities will my company perform and which will be outsourced?
 What relationships do we have with powerful individuals and organizations needed to execute strategy?

Question 15

• What are capabilities?

Answer 15

o Enable a company to execute current strategy while providing a platform for future growth
o Define resources needed to execute strategy and define cost model of an organization
o Define the assets of a firm and the efficiency with which those assets are used

Question 16

• Four areas of Business capability audit:

Answer 16

processes and infrastructure, people and partners, organization and culture, and leadership and governance

Question 17

Aspects of Process/Infrastructure:

Answer 17

a. In-depth analysis of core processes
b. Address core processes required to produce products, deliver services, serve customers, manage relationships with key stakeholders, and deliver new products, services, and innovations
c. Analysis activities performed at each stage of the value chain with the company, suppliers, distributors, customers, and business partners
d. Examine end-to-end support processes
e. IT networks form the foundation for sharing information and transacting with business partners and are the foundation for processes and infrastructure.

Question 18

o How to analyze process and infrastructure:

Answer 18

 Build on your business network analysis to identify key activities needed to execute strategy
 Group activities into roles that will be performed inside or outside your organization
 Identify coordinating mechanisms that will enable flow of goods and information through end-to-end processes
 Identify infrastructure requirements

Question 19

o Questions to ask about processes and infrastructure:

Answer 19

 What are key activities needed to execute strategy?
 How should activities be grouped together and what roles should be performed inhouse vs outsource?
 What infrastructure (facilities, equipment, technology) is needed to support end-to-end processes?

Question 20

Aspects of People(Leadership)/Partners:

Answer 20

a. Evaluate if the company has the expertise needed to carry out required activities and processes
b. IT is a powerful tool for defining, organizing, and building knowledge asset within a firm

Question 21

o How to analyze people and partners

Answer 21

 Identify expertise and skills needed to perform activities and roles with end-to-end processes
 Develop job descriptions for key roles
 For leadership roles, evaluate succession plans and implement leadership development
 Analyze labor markets and determine which expertise and skills should be available inside the organization and which should be outsourced
 Analyze compensation patterns within labor markets and determine cost of recruiting and retaining talent
 Develop and implement recruiting, hiring, development, and performance appraisal systems

Question 22

o Questions to ask about people and partners:

Answer 22

 What skills do we need to perform activities?
 How do we attract, develop, retain, and motivate employees?
 Do employees understand what is expected of them and do they have the resources they need to succeed?
 Do we have leaders at all levels that can balance creativity, innovation, and disciplined execution?