Chapter 4: Developing An Effective Business Model – Flashcards
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A firm's plan or recipe for how it creates, delivers, and captures value for its stakeholders. It represents the core aspects of its business.
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Business Model
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Depicts existing plans or recipes firms can use to determine how they will create, deliver, and capture value for their stakeholders.
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Standard business Model
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The number of subscribers that a subscription-based business loses each month
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Churn
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Models that do not fit the profile of a standard business model, and are impactful enough that they disrupt or change the way business is conducted in an industry or an important niche within an industry.
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Disruptive Business Models
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Addresses a market that previously wasn't served
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New Market Disruption
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It is possible when firms in an industry continue to improve products or services to the point where they are actually better than a sizable portion of their clientele needs or desires. This "performance oversupply" creates a vacuum that provides an opportunity for simple, typically low-cost business models to exist.
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Low-End Market Disruption
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Consists of 4 major categories and 12 individual parts. These 12 parts make up a firm's business model.
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Barringer/Ireland Business Model Template
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Describes how the firm plans to compete relative to its competitors. The primary elements of core strategy are business mission, basis of differentiation, target market, and product/market scope
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Core Strategy
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It describes why the business exists and what its business model is supposed to accomplish.
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Mission/Mission Statement
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What causes consumers to pick one company's products over another's. It is what solved a problem or satisfies a customer need.
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Basis Of Differentiation
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A place within a larger market segment that represents a narrower group of customers with similar interests.
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Target Market
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Defines the products and markets on which it will concentrate.
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Product/Market Scope
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The inputs a firm uses to produce, sell, distribute, and service a product per service.
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Resources
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A specific factor or capability that supports a firm;s business model and sets it apart from its rivals.
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Core Competency
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The assets that a firm owns that enable its business model to work.
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Key Assets
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Describes the ways in which it makes money
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Revenue Stream
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Describes the most important costs incurred to support its business model.
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Cost Structure
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Costs that remain the same despite the volume of goods or services provided
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Fixed Costs
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Vary proportionally with the volume of goods or services produced.
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Variable Costs
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Represent the day to day actions of a firm.
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Operations
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How it delivers its product or service to its customers.
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Channels
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A company that provides parts or services to another company.
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Supplier
