small business ch 4 – Flashcards
Unlock all answers in this set
Unlock answersquestion
Standard Business Models
answer
Depict existing plans or recipes firms can use to determine how they will create, deliver, and capture value for their stakeholders.
question
when is the proper time to develop a business model
answer
following the feasibility analysis, and prior to finishing out the operational details of the company
question
a business model is
answer
integral to whether a company is going to succeed short term and long term
question
Churn
answer
The number of subscribers that a subscription-based business loses each month.
question
strategy
answer
deals with a company's competitive initiatives and approaches
question
a business model then
answer
concerns whether revenues and costs flowing from the strategy demonstrate a business can be profitable and viable
question
what are the general categories of business models
answer
-standard business model -disruptive business models
question
Disruptive Business Models
answer
Ones 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.
question
New Market Disruption
answer
Addresses a market that previously wasn't served.
question
Low-end Market Disruption
answer
Possible when the 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.
question
barringer/ireland business model template
answer
all business models have a common set of attributes and can be laid out in a template
question
what are some common attributes
answer
1. financials 2. core strategy 3. resources 4. operations
question
what is the most important component of a business model
answer
financials, only sections that describes how it earns money
question
revenue streams describe
answer
all the ways a firm makes money, some have several and others have single ones
question
a cost structure describes
answer
the most important costs incurred to support its business model
question
the goal for this box in a firms business model template is threefold:
answer
1. identify whether business is cost driven or value driven 2. if the business cost are fixed or variable 3. identify businesses major cost categories
question
cost driven
answer
minimize costs whenever possible
question
value driven
answer
differentiation, where high quality or experience, personalized service is offered
question
many businesses rely on what to bring their business model to life
answer
financial funding
question
three categories of costs to consider
answer
1. capital costs 2. one time expenses 3. provisions for ramp up expenses
question
Core Strategy
answer
Describes how the firm plans to compete relative to its competitors.
question
the primary elements of core strategy are
answer
1. mission statement 2. basis of differentiation 3. target market 4. product/market scope
question
Mission Statement
answer
Describes why a business exists and what its business model is supposed to accomplish, can act as moral and financial compass
question
Target Market
answer
A place within a larger market segment that represents a narrower group of customers with similar interests.
question
Basis of Differentiation
answer
1. What causes consumers to pick one company's products over another's. 2. satisfies a need
question
you should limit basis of differentiation to
answer
two to three key points, refer to benefits rather than features
question
Product/Market Scope
answer
Defines the products and markets on which it will concentrate.
question
Resources
answer
Are the inputs a firms uses to produce, sell, distribute, and service a product or service.
question
how do most firms start
answer
with a narrow or limited product/market scope (3-5 years out)
question
Core Competency
answer
A specific factor or capability that supports a firm's business model and sets it apart from its rivals.
question
a firms important resources both tangible and intangible must be
answer
both difficult to imitate and hard to find a substitute for, necessary for an business to be competitive long term
question
what are some key forms
answer
1. technical know how 2. efficient process 3. trusting relationship with customers 4. expertise in design
question
Revenue Streams
answer
Describes the ways in which a company makes money.
question
Key Assets
answer
The assets that a firm owns that enable its business model to work, can be physical, financial, intellectual or human
question
physical assets
answer
include physical space, equiptment, vehicles, distribtion networks
question
intellectual assets
answer
patents, trademarks, copyrights, trade secrets, brand and reputation
question
financial assets
answer
cash, lines of credit, commitments from investors
question
human assets
answer
founder, key employees and advisor
question
Cost Structure
answer
Describes the most important costs incurred to support its business model.
question
Fixed Costs
answer
Costs that remain the same despite the volume of goods or services provided.
question
Variable Costs
answer
Vary proportionally with the volume of good or services provided.
question
Operations
answer
Both integral to a firm's business model and represent the day-to-day heartbeat of a firm.
question
Channels
answer
Describes how a firm delivers its product or service to its customers.
question
Supplier
answer
Is a company that provides parts or services to another company.
question
a business will either sell
answer
through intermediaries, or directly or a combination of both
