Developing an Effective Business Model (Lec 04) Flashcards
What is a business model and the two main types?
A business model is a firm’s plan for how it plans to create, deliver and capture value.
- The are developed after the
feasibility analysis stage.
Types:
- Standard Business Models
- Disruptive Business Models
What is the standard business model category?
- This category comprises of
existing plans firms use to
determine how they will create,
deliver and capture value.
What are five standard business models?
- Advertising Business Model
- Auction Business Model
- Bricks and Clicks Business
Model - Franchise Business Model
- Freemium Business Model
- Low-Cost Business Model
- Manufacturer/Retailer
Business Model - Peer-to-Peer Business Model
- Razor and Blades Business
Model - Subscription Business Model
- Traditional Retailer Business
Model
What is the disruptive business model category?
- This category comprises of
plans that do not fit into a
standard business model.
What are two disruptive business models?
- Direct-to-Consumer Computer Sales(Dell)
- Online Text Ads on Search Engines (Google, Yahoo)
- Software as a Service (SaaS)
- Cloud-based Service to Connect Riders and People Willing to Provide Rides (Uber, Lyft)
What are the four components of the Barringer/Ireland Business Model Template?
Core Strategy:
Describes how the firm plans to compete against/(relative to) competitors.
Resources:
The inputs a firms uses to produce, distribute and service.
Financials:
Describes how a firms business model earns it’s money.
Operations:
Describes the day-to-day operation of a firm.
What are the primary elements of the Core Strategy component?
&
Describe each briefly.
Business Mission:
- A description of what it’s
business model is supposed
to accomplish.
- Acts as a financial and moral
compass for the business.
Basis of Differentiation:
- How the business
differentiates itself from
competitors (benefits).
- Generally two to three key
points.
Target Market:
- Identification of the target
market the firm will compete
in.
Product/Market Scope:
- The scope of the products and
markets the company will
focus.
- Most companies start small.
- Anticipated expansion should
be laid out for the next 3-5
years.
What are the primary elements of the Resources component?
&
Describe each briefly.
Core Competencies:
- A factor or capability that
supports a firm’s business
model.
E.g.
Technical know-how, efficient processes, etc.
Key Assets:
- Assets that are critical for the
functionality of the model.
(Intellectual, Physical, Human,
Financial)
What are the primary elements of the Financials component?
&
Describe each briefly.
Revenue Streams:
- Description of how the firm
makes money.
Cost Structure:
- Describes the most important
costs to support its business
model.
Financing/Funding:
- Identifying where the business’
funding is coming from and
how much is needed.
What are identified in the Cost Structure element of the Financials component?
- Identify whether the business is a cost-driven or value-driven business.
- Identify the nature of a business’s costs.
- Identify the business’s major cost categories.
What are the three categories of costs to consider for Funding/Financing?
- Capital costs.
- One-time expenses, e.g. building a Web site and training initial employees.
- Provisions for ramp-up expenses.
What are the primary elements of the Operations component?
&
Describe each briefly.
Product/Service Production:
- How the products/services are
produced.
Channels:
- Describes how the product will
be distributed to customers.
Key Partners:
- Partners that are critical for the
functionality of the model.
List three different Types of Business Partnerships.
&
Describe each briefly.
Joint venture:
An entity created by two or more firms pooling a portion of their resources to create a separate, jointly-owned organization.
Network:
A hub-and-wheel configuration with a local firm at the hub organizing the interdependencies of a complex array of firms.
Consortia:
A group of organizations with similar needs that band together to create a new entity to address those needs.
Strategic alliance:
An arrangement between two or more firms that establishes an exchange relationship but has no joint ownership involved.
Trade associations: Organizations (typically nonprofit) that are formed by firms in the same industry to collect and disseminate trade information, offer legal and technical advice, furnish industry-related training, and provide a platform for collective lobbying.
