Digital Business Models Flashcards
Gassmann et al. introduced the “Magic Triangle” of Business Models that should make your business model comprehensible, while laying out the foundation for future innovation. Which of the following statements regarding the theory around the “Magic Triangle” are true/false?
Successful business model innovation captures not only value for your company but also creates value for your customers.
The internal aspects of a business model are addressed through the components WHO and VALUE of the “Magic Triangle”.
As a rule of thumb, product and process innovation differ from business model innovation in that they significantly affect at least two of the four components of WHO-WHAT-HOW-VALUE and not only one.
The Profit Mechanism dimension answers how the business model generates value for the shareholders and stakeholders.
Successful business model innovation captures not only value for your company but also creates value for your customers. TRUE
The internal aspects of a business model are addressed through the components WHO and VALUE of the “Magic Triangle”. FALSE
- The internal aspects are addressed by the components HOW and VALUE.
As a rule of thumb, product and process innovation differ from business model innovation in that they significantly affect at least two of the four components of WHO-WHAT-HOW-VALUE and not only one. FALSE
- It is the other way around: Business model innovation normally significantly affect at least two of the four components.
The Profit Mechanism dimension answers how the business model generates value for the shareholders and stakeholders. TRUE
The business model patterns crowd funding and crowd sourcing are both based upon leveraging an anonymous crowd for a specific purpose.
Which of the following statements are true/false regarding each of these patterns?
People behind a crowdfunding campaign normally only get the raised money if a specific critical mass is achieved.
Contributors that participate in a crowdsourcing often receive some kind of reward, but sometimes no reward is offered at all and it is made possible solely by the participant’s personal interest in the topic.
The customer interaction and inclusion through a crowdsourcing can potentially foster a positive relationship between a company and the customers.
Investors in a crowdfunding project usually receive better rewards, the higher the amount of money they contribute.
People behind a crowdfunding campaign normally only get the raised money if a specific critical mass is achieved. TRUE
Contributors that participate in a crowdsourcing often receive some kind of reward, but sometimes no reward is offered at all and it is made possible solely by the participant’s personal interest in the topic. TRUE
The customer interaction and inclusion through a crowdsourcing can potentially foster a positive relationship between a company and the customers. TRUE
Investors in a crowdfunding project usually receive better rewards, the higher the amount of money they contribute. TRUE
Which of the following statements are true/false regarding the business model pattern “Long Tail”?
When applying the BMP “Long Tail” the company still focuses on mass products but also offers some niche products that should account for a small share in revenue.
When a company sells physical products and applies the BMP “Long Tail”, the storage of the products can become a problem.
It is crucial to be able to handle the complexity of product diversity to successfully apply the BMP “Long Tail”.
The BMP “Long Tail” concentrates on offering a small number of niche products that sell relatively rarely.
When applying the BMP “Long Tail” the company still focuses on mass products but also offers some niche products that should account for a small share in revenue. FALSE
- While a company can apply “Long Tail” and still offer mass products, mass products are no longer the sole focus. Moreover, niche products should then account for a large share of the revenue.
When a company sells physical products and applies the BMP “Long Tail”, the storage of the products can become a problem. TRUE
It is crucial to be able to handle the complexity of product diversity to successfully apply the BMP “Long Tail”. TRUE
The BMP “Long Tail” concentrates on offering a small number of niche products that sell relatively rarely. FALSE
- It concentrates on offering a LARGE number of niche products that sell relatively rarely.
Google applies various business model patterns across the broad variety of services it offers (e.g. search engine, Gmail, etc.). Two prominent business model patterns (BMP) applied by Google include “Leverage Customer Data” and “Hidden Revenue”.
Which of the following statements are true/false regarding these two BMPs?
The BMP “Leverage Customer Data” refers to companies, where the end-user is not paying, but customer data is sold to third parties to finance other parts of the offering.
The BMP “Hidden Revenue” refers to companies that instead of selling their offerings for a fixed amount, charge fees on each performed transaction.
The BMP “Hidden Revenue” describes the ability of companies to expand their portfolio and generate new revenues that previously have been neglected.
The BMP “Leverage Customer Data” describes the ability of companies to use data generated by customers in order to gain a competitive advantage.
The BMP “Leverage Customer Data” refers to companies, where the end-user is not paying, but customer data is sold to third parties to finance other parts of the offering. FALSE
- The BMP “Leverage Customer Data” is not about selling the data but using it as an aid for decision making to gain a competitive advantage. It can, however, be combined with the BMP “Hidden Revenues” by using customer data to create customer profiles that allow to show them targeted ads.
The BMP “Hidden Revenue” refers to companies that instead of selling their offerings for a fixed amount, charge fees on each performed transaction. FALSE
- Charging fees on transactions is not a hidden revenue stream.
The BMP “Hidden Revenue” describes the ability of companies to expand their portfolio and generate new revenues that previously have been neglected. FALSE
- While the revenue generated through the BMP “Hidden Revenue” can theoretically allow a company to expand its portfolio, the expansion of the portfolio is not an inherent part of the BMP.
The BMP “Leverage Customer Data” describes the ability of companies to use data generated by customers in order to gain a competitive advantage. TRUE
Steam is a video game digital distribution service developed by Valve Corporation. Aside from their own games, they distribute and sell applications (mostly games) developed by third parties. From each sale they generally take 30% of revenue.
Which of the following business model patterns describes this strategy BEST?
Open Source
Crowdsourcing
User Designed
Long Tail
User Designed
The BMP “E-Commerce” is comparably old and has been successfully applied by many companies (e.g., Amazon). Which of the following statements are true/false regarding this BMP?
One big disadvantage of the BMP is that customers cannot directly test or evaluate the products. However, this problem can be fully solved by incorporating user reviews.
One of the biggest advantages of the BMP is the increased reach with minimal additional costs.
The BMP allows companies to have a bigger offering of products because the customers can search and filter the products more efficiently.
Applied in B2B settings the BMP increases cost efficiency that much that the light increase in transaction costs can normally be neglected.
One big disadvantage of the BMP is that customers cannot directly test or evaluate the products. However, this problem can be fully solved by incorporating user reviews. FALSE
- The problem cannot be fully solved. User reviews only mitigate it.
One of the biggest advantages of the BMP is the increased reach with minimal additional costs. TRUE
The BMP allows companies to have a bigger offering of products because the customers can search and filter the products more efficiently. TRUE
Applied in B2B settings the BMP increases cost efficiency that much that the light increase in transaction costs can normally be neglected. FALSE
- The BMP does not increase transaction costs, it decreases them too.
The Freemium business model pattern gives away a basic version of an offering for free and tries to persuade customers to pay for a premium version.
Which of the following disparities between the physical and the digital worlds is MOST IMPORTANT for the Freemium business model pattern?
Speed
Customer Usage Data
Zero Marginal Production and Distribution Cost
Field Updateability
Zero Marginal Production and Distribution Cost
In Platform as a Service (PaaS) solutions, certain customer activities are managed by the PaaS solution, while some activities are still managed by the customers.
Please indicate which of the below processes are “self-managed” by the customer and which are managed by the “PaaS”.
Runtime
Applications
Data
Storage
Runtime PaaS Managed
Applications Self-Managed
Data Self-Managed
Storage PaaS Managed
The Value Proposition Map can be considered an “add-on” to the Business Model Canvas.
It maps the section “Value Proposition” to which section of the Business Model Canvas:
Customer Segments
Key Resources
Cost Structure
Revenue Streams
Customer Segments
