Week 8 - business plans

Question 1

• How can you define a business model?

Answer 1

a firm’s plan for how it uses resources and relationships to create value for the customer while generating profits.

Question 2

• Why is having a business model important?

Answer 2

A well thought out business model:

1. Continually asks ‘does this make sense?’.
2. Focusses attention on elements of business working together.
3. Describes how and why the elements of a business work together.
4. Communicates company logic to stakeholders.

Question 3

• Why is there a diversity of business models?

Answer 3

Firms approach their markets in different ways and devise different ways to make money due to different pools of resources and different operating environments.

Question 4

• What is the value chain? Draw one.

Answer 4

A series of processes each of which add value to a product or service as perceived by the customer.

Question 5

• What is the difference between primary and support activities?

Answer 5

The primary activities have to do with the physical creation, sale, and service of a product or a service,.

Support activities provide reinforcement for the primary activities.

Question 6

• What are the four components of an effective business model?

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Answer 6

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• Core strategy (how a firm competes)
• Strategic resources (how a firm acquires and uses its resources
• Partnership network (how a firm structures and nurtures its partnerships)
• Customer interface (how a firm interfaces with its customers

Question 7

• What is core strategy? List it’s primary elements.

Answer 7

How a firm competes relative to it’s competitors. Elements are:

Mission statement

Product/market scope

Basis of differentiation

Question 8

• Why is it important for a new venture to differentiate itself?

Answer 8

Differentiating a product in a way that is important to customers will make them our customers.

Question 9

• What do we mean by strategic resources?

Answer 9

The pool of resources used or needed to achieve the organisations strategy.

Question 10

What are core competencies?

Answer 10

A resource or capability that serves as a source of a firm’s competitive advantage over its rivals.

It is a unique skill or capability that transcends products or markets, makes a significant contribution to the customer’s perceived benefit, and is difficult to imitate.

Question 11

• What are strategic assets?

Answer 11

Anything rare or valuable that a firm owns.

Question 12

• What is a partnership network?

Answer 12

Cooperation with other parties to supply the resources needed to make a business work.

Question 13

• What are the different types of business partnerships?

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Answer 13

• Joint venture – 2 or more firms, joint ownership.
• Network – central hub, an array of interdependants.
• Consortia – group w/similar needs creating a new entity to serve them.
• Strategic alliance – an exchange relationshop, no joint ownership.
• Trade association – peak body, lobbies, trains & represents member orgs.

Question 14

• What is a customer interface?

Answer 14

How a firm interacts w customers. Elements:

Question 15

• What are the primary elements of a customer interface?

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Answer 15

• Target market
• Fulfilment / support – how a company ‘goes to market’. incl distribution channels & service.
• Pricing Structure – dependant on target market & pricing philosophy.