Chapter 4: Developing an Effective Business Model

Question 1

CH4 What are 2 categories of business model?

Answer 1

1. “Standard business models”: depict existing plans or recipes firms can use to determine how they will create, deliver, and capture value for their stakeholders.
   (Advertising business model, auction BM, freemium BM, low-cost BM, peer-to-peer BM, subscription BM,..)
2. Discruptive BM: which is RARE, do NOT FIT the profile of standard BM, and are IMPACTFUL ENOUGH that they change the way business is conducted. 2 types:
   - new market discruption: addresses a market that PREVIOUSLY WASNT SERVED.
   - low-end market discruption:

Question 2

CH4 What is a “churn”?

Answer 2

• It is a disadvantage of subscription BM
• Its refers to the number of subscribers that a subscripiton-based business loses each month.
• It is the reason why subscription-based businesses usually offer high level of customer service.

Question 3

CH4 What is “value proposition/basis of differentiation”?

Answer 3

• It is what causes consumers to pick one company’s products over others
• It is what solve a problem or satisfies a customer’s need.
• It focuses on benefits, not products’ features.

Question 4

CH4 What is “resources?

Answer 4

• they are anything that a firm holds and can be used to produce value for the firm
• THey can be TANGIBLE and INTANGIBLE (brand,..)
• A firm must have a sufficient amount of resources to enable its business model to work
• a firm’s most important resources must be difficult to imitate and hard to find a substitute for in order for a firm to be COMPETITIVE.