Business Models Flashcards
How does the CGMA framework use business models?
It is used to explain how an organization creates and delivers value and how value is shared between stakeholders.
Business model
It is the way in which an organization creates long term value and sustained success.
It shows how a firm continually defines, creates, delivers and captures value, for, with and to its key stakeholders as necessary over time according to the CGMA Business Model Framework
How value is delivered to stakeholders?
When their needs are met
What is the primary purpose of most business organizations?
To create value that can be sold to customers to generate long term profit.
What is at the heart of business model?
Value
When is value created?
Value is created whenever the outcome of an activity, process or decision results in a net benefit for one or more groups of stakeholders.
Which groups are central to value creation?
Groups like suppliers and employees that provide resources and turn them into output.
Why is it important to understand an organization’s business model?
An effective business model answers 4 questions which all businesses must understand to be successful.
- Who is the customer?
- What does the customer value?
- How do we generate revenue in the business?
- How can we deliver value at an appropriate cost?
How can a business model be effective?
Business model must represent a better way of delivering value to customers than the existing alternatives.
The model may offer more value( than competitors model) to a discrete group or segment of customers or it may completely replace the old way of doing things.
How can owners and managers gain understanding of their business model?
By thinking rigorously about their business
How does a business model function as a planning tool?
It encourages the consideration of how all the elements of the model create an efficient working whole.
What’s the benefit of knowing the business model?
Entrepreneurs and business leaders who understand their business model are better placed to judge the potential of the idea that the model is founded on and to make better informed decisions.
As a variation of a generic value chain, how many parts does the CGMA business model have?
Two parts
Part one
It includes all the activities associated with making sth
That is design, purchase of raw materials and manufacture
Part two
It includes all the activities involved in selling sth
That includes find and reach customers, transact a sale, distribute a product, deliver a service.
