BAD120/200: Business Models Quiz

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Questions and Answers

What defines a variable cost?

A cost that changes in direct proportion to production or selling activity. (correct)

A cost associated with fixed assets.

A cost that remains the same regardless of production levels.

A cost that is incurred only when a product is sold.

Which of the following is an example of a fixed cost?

Rent paid for office space. (correct)

Raw materials used in production.

Wages paid to hourly workers.

Electricity bills that vary by usage.

What are operating revenues primarily derived from?

Renting out surplus property.

Sales of products or services. (correct)

Investment gains.

Financial transfers from partners.

How can a business segment its customers?

By analyzing their purchasing habits and demographics. Signup and view all the answers

What type of costs must a business calculate to understand its overall cost structure?

Both fixed and variable costs. Signup and view all the answers

Which of the following best describes non-operating revenues?

Revenue earned from side activities like interest or investments. Signup and view all the answers

What role do key partners play in a business model?

They provide essential resources and support for operations. Signup and view all the answers

What is a customer value proposition?

A promise of the value that a product or service will provide to customers. Signup and view all the answers

What is the primary purpose of a business model?

To create, capture, and deliver value to consumers Signup and view all the answers

Which of the following is NOT considered a key element of a business plan?

Revenue streams Signup and view all the answers

What does the term 'basis of differentiation' refer to in a business model?

The unique aspects that make consumers choose one product over another Signup and view all the answers

Which of the following describes a 'target market' in a business model?

A narrower group of customers with similar interests Signup and view all the answers

What are 'key assets' in the context of a business model?

Assets that enable the business model to function effectively Signup and view all the answers

Which of the following statements about business models is true?

A business model describes the complete operations and partnerships of a business. Signup and view all the answers

Which building block refers to the distribution of expenses in a business model?

Cost structure Signup and view all the answers

In developing a business model, addressing which element can significantly improve customer satisfaction?

Basis of differentiation Signup and view all the answers

Study Notes

Developing an Effective Business Model

Lecture 7, presented by Dr. Iman Boseila at October University
A quiz (BAD120/200) on the business model will be given on December 9th
Lectures for the quiz cover from 4:00 PM to 7:00 PM

Lecture 7 Outline

Business models and their importance
Definition of a Business Model

Learning Objectives

Students will understand the importance of business models
Students will understand the definition of a business model

Business Models and their Importance

A business model is a firm's plan for how it creates, captures, and delivers value to customers
A business model is a simplified representation of a business's complex reality
Three crucial components of a firm's business models are: target market, basis for differentiation, and key assets

Key Elements of a Business Plan: Target Market

Target market represents a narrower segment of a larger market
Customers within this segment share similar interests
Most new businesses begin by identifying a specific underserved niche within a broader market, rather than directly targeting the whole market

Key Elements of a Business Plan: Basis of Differentiation

Differentiation is what makes a company's products stand out from competitors, solving problems or satisfying customer needs
Points of differentiation that focus on product benefits are more effective than those focusing on product features

Key Elements of a Business Plan: Key Assets

Key assets are vital resources that enable a business model's operation
These assets can be physical, financial, intellectual, or human
Success of a business model often depends significantly on a single key asset

What is a Business Model?

A business model includes nine building blocks:
Key partners
Key activities
Value proposition
Customer relationships
Channels
Customer segments
Revenue streams
Cost structure
Key resources

Key Resources

Identify resources needed for value propositions, distribution channels, customer relationships, and revenue streams.

Key Activities

Identify key activities necessary for value propositions, distribution channels, customer relationships, and revenue streams.

Key Partners

Identify partners required for key resources and activities to support value propositions, distribution channels, customer relationships.

Value Propositions

Identify the value provided to satisfy customer needs and solve customer problems.

Customer Relationships

Define the desired relationship type and how it integrates into the business model.

Channels

Identify how customer segments prefer to be reached and how channels can be integrated with customer routines

Customer Segments

Identifying ideal customer segments who benefit from the provided value proposition

Revenue Streams

Determine value customers are willing to pay for and the various ways revenue is generated

Cost Structure

Determine the most important costs embedded in the business model, including those for key resources and activities.

Google Business Model (Example)

Key Partners: Distribution Partners, Open Handset Alliance, OEMs (for Chrome OS devices)
Key Activities: R&D, Building new/improving existing products, Managing Infrastructure
Key Resources: Datacenters, IPs, Brand
Value Propositions: Web Search, Gmail, Google+, Targeted Ads
Customer Relationships: Automation (where possible), Dedicated Sales for Large Accounts
Channels: Global Sales and Support Teams, Multi-product Sales Force
Customer Segments: Internet Users, Advertisers, Ad Agencies, Mobile Device owners, Developers, Enterprises
Revenue Streams: Ad Revenue (Google websites and Google Network websites), Enterprise Product Sales, Free (website access)
Cost Structure: R&D costs (personnel), Traffic acquisition costs, Data center operations

Workshop 7

Brainstorm as a group to create a product or service with a strong competitive advantage.
Present your idea.

References

Burrow, J., Kleindl, B., Everard, K., 2008; Business principles and management
Fatehi, K., 2019; International Business Management
Aldrich, H.E., 2008; Organizations and Environments
Ansoff, I.H., 2007; Strategic Management

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Description

Prepare for the upcoming quiz on business models presented in Lecture 7 by Dr. Iman Boseila. This quiz will cover the significance of business models, their definitions, and key elements like target markets and differentiation strategies. Join us on December 9th from 4:00 PM to 7:00 PM for an insightful assessment.