Business Models

Question 1

The CGMA business model framework

Answer 1

• Define Value
  *Create Value
  *Deliver Value
  *Capture Value

Question 2

Defining value according to the CGMA business model framework

Answer 2

*Identify stakeholders -Relevant stakeholders include customers, shareholders, employees, and suppliers.
*Prioritise stakeholders - Each stakeholder is ranked on the attributes of power, legitimacy, and urgency
*Identify needs of stakeholders - identifies the needs of stakeholders who have been classified as high priority
*Formulate a value proposition - formulate value propositions that meet the needs of high priority stakeholders

Question 3

Creating value according to the CGMA business model framework

Answer 3

*Partners - Build trust and motivate partners identified when value was defined. (relevant stakeholders)
*Resources- Ensure that resources are available in the right quantities, at the right time, and for the right price.
*Processes- Organisations design, develop, and deploy processes that provide the infrastructure to convert resources (inputs) into goods and services (outputs).
*Activities -Activities bring processes to life. Processes are empty without activities. The flow of activities within a process is called the workflow. The design of effective workflows enables organisations to streamline processes, drive efficiency, and avoid gaps and duplication efforts.
*Outputs -By progressing through processes and activities, resources are converted into outputs. Outputs are in the form of products, services, and experiences that aim to meet the customer’s value proposition.

Question 4

Delivering Value according to the CGMA business model framework

Answer 4

• Segments-**
  **Divide the market into meaningful and measurable segments according to customer’s needs, their past behaviours or their demographic profiles.
  **Determine the profit potential of each segment by analysing the revenue and cost impacts of serving each segment.
  **Target someone according to their profit potential and the company’s ability to serve them in a proprietary (or distinct) way.
  **Invest resources to tailor product, service, marketing and distribution programmes to match the need of each target segment.
  **Measure performance of each segment and adjust the segmentation approach over time as market conditions change.

Question 5

What are high sought after customer segments?

Answer 5

*Purchase frequently
*Have relatively high average order values
*Make few (ideally no) returns
*Regularly leave product reviews
*Talk about their purchases on social media
*Regularly respond to special offers and promotions.