Module 5

Question 1

What are the key attributes of an effective business model?

Answer 1

Profitability, Scalability, Repeatability, Strategic alignment, robustness

Question 2

What is a profitable business?

Answer 2

generates sufficient income to cover its expenditure

businesses are not expected to be profitable immediately

Question 3

What is the cost of acquiring customers?

Answer 3

the expense associated with acquiring the customers divided by number of customers expected to be acquires

Question 4

What is the lifetime value of customers?

Answer 4

The net profit a businessman make from a customer over the time they continue to be a customer of the business

Question 5

What us the relationship between LTV and CAC for a profitable business?

Answer 5

LTV more than CAC

Question 6

How can a business maximise LTV?

Answer 6

• attract more customers
• retain for longer
• increase spend

Question 7

What is a scaleable business?

Answer 7

One that has the potential to multiply revenue with minimal incremental cost

Question 8

What is a repeatable business model?

Answer 8

One which a business can apply to consistently new products and new markets to generate sustained growth

one way:

• consistency of the product/ service e.g. franchise
• have key factors/principals - we are good at..

Question 9

What is strategic alignment?

Answer 9

When organisational structure is aligned with the mission statement, strategy and business environment

Question 10

What is robustness?

Answer 10

Continue to deliver effective performance even when underlying conditions change

Question 11

what is a pipe business model?

Answer 11

pushes goods towards potential customers with the hope that they will buy these goods

Question 12

What is a platform business model?

Answer 12

Provides a platform for users to interact and create value

Question 13

What is a bricks and clicks business model?

Answer 13

Specific pipe model where there are shops and online channels. Can also involve flicks i.e. catalogues

Question 14

What is a disintermediation business model?

Answer 14

cutting out the middleman

Question 15

What is the Razor and blades business model?

Answer 15

given or sold at low margin Product A and sold product B which complementary and for a high profit margin. Product B is consumable and the business will have a dominant position in the market for product B.

Question 16

What is the franchising and licensing business model?

Answer 16

product, service or brand is licensed to a third party in return for a fee.

Question 17

What are the three key lessons when developing a business model?

Answer 17

1. Critical success factors should relate to customer needs - not the skill etc of the entrepreneur
2. performance must be measured relatively
3. CSF should change over time as customer values change

Question 18

What is market testing?

Answer 18

viability of a product in the market. can include market research or testing response to produce ton small scale.