reading 30: business models & risks Flashcards
A business model is least likely to include details about a company’s:
largest customers.
workforce characteristics.
revenue and expense estimates.
Detailed forecasts of revenue in expenses would be in a financial plan, but typically not in a business model. A firm’s largest customers and information about its workforce and its value are likely elements of a business model. (LOS 30.a)
Which of the following is most likely referred to as a firm-specific risk? A firm’s:
competitive position.
exchange rate uncertainty.
exposure to demographic trends.
Firms with a weak competitive position have more risk than firms with competitive advantages of large scale and brand name recognition. Uncertainty about macroeconomic variables, such as an exchange rate, and the effects of demographic trends are risks considered to be external to the firm. (LOS 30.b)
For an online seller of bouquets of flowers with same-day delivery through association with local florists, a decline in sales due to an increasing age of the population is an example of:
macro risk.
industry risk.
firm-specific risk.
The effects of demographic changes are considered a macro risk. Macro risks may affect different industries or sectors differently, but are not considered industry risk. (LOS 30.c)
A local pizza chain, Gino’s, has an exclusive relationship with a local cheesemaker for premium mozzarella and has contracted with a food delivery company for prompt delivery of its pies. Which of the following statements is most accurate?
The delivery service is part of Gino’s value chain.
The cheese maker is part of Gino’s value proposition.
The delivery service is not part of Gino’s supply chain.
Prompt delivery and premium ingredients are part of Gino’s value proposition. The delivery company is part of Gino’s supply chain as it is part of the process of getting the pies to the customers. However, the delivery service is not part of Gino’s value chain, which refers only to what Gino’s does itself. (LOS 30.a)
