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