Business Models Overview

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Questions and Answers

What is a defining characteristic of a social enterprise business model?

  • It emphasizes the importance of making a positive social impact. (correct)
  • It focuses strictly on maximizing profits for shareholders.
  • It relies solely on government funding for its operations.
  • It primarily aims to compete in global markets.

Which of the following is NOT an example of a company that follows a social enterprise business model?

  • TOMS Shoes
  • Soapbox Soaps
  • Warby Parker
  • Deloitte (correct)

What type of business model does a company using hidden revenue rely on for income?

  • External investments from venture capitalists.
  • Direct user payments for services.
  • Alternative revenue streams like advertising. (correct)
  • Subscription fees from users.

What is the primary purpose of a business model?

<p>To describe how an organization creates, delivers, and captures value (A)</p> Signup and view all the answers

Which of the following statements about the agency-based business model is true?

<p>The model is ideal for companies lacking internal expertise. (D)</p> Signup and view all the answers

Which of the following is not a component of a business model?

<p>Marketing analysis (C)</p> Signup and view all the answers

Which of these companies is known for providing shoes to underprivileged children for every pair sold?

<p>TOMS Shoes (A)</p> Signup and view all the answers

Why is understanding the problem you are solving for customers crucial?

<p>It ensures the product or service meets market needs (D)</p> Signup and view all the answers

What should a subject matter expert (SME) consider when selecting a consulting business model?

<p>The uncertainty in the client's requirements. (A)</p> Signup and view all the answers

How does a business plan differ from a business model?

<p>A business model outlines revenue generation while a plan details operation strategies (A)</p> Signup and view all the answers

What type of industries typically use the agency-based business model?

<p>Marketing and public relations. (B)</p> Signup and view all the answers

What key aspect does a business model help to identify?

<p>The services that customers value (A)</p> Signup and view all the answers

What is a characteristic of consulting firms like Mckinsey and BCG?

<p>They often work without defined project durations. (C)</p> Signup and view all the answers

What essential question should a business model answer?

<p>What problems does the business solve for its customers? (D)</p> Signup and view all the answers

What does the process of creating a business model aim to simplify?

<p>The revenue generation process (C)</p> Signup and view all the answers

Which of these statements correctly reflects the relationship between a business model and a business plan?

<p>A business plan is a comprehensive guide that includes the business model (D)</p> Signup and view all the answers

What is the primary purpose of a multi-brand business model?

<p>To create economies of scale and build an empire (D)</p> Signup and view all the answers

Which of the following companies exemplifies a vertically integrated supply chain business model?

<p>Unilever (A)</p> Signup and view all the answers

How does the e-commerce business model primarily benefit consumers?

<p>By allowing transactions to occur through an online platform (C)</p> Signup and view all the answers

What key aspect does the drop-shipping business model emphasize?

<p>Shipping products directly from suppliers to customers (A)</p> Signup and view all the answers

What is a significant drawback of a distribution based business model?

<p>Higher costs due to multiple markups in the supply chain (D)</p> Signup and view all the answers

Which element is essential for the functionality of blockchain technology?

<p>Decentralized network systems (C)</p> Signup and view all the answers

Which of these is NOT a characteristic of the e-commerce business model?

<p>Use of physical stores for transactions (C)</p> Signup and view all the answers

What would you expect from a company using a multi-brand strategy?

<p>To launch competing products under different brand names (B)</p> Signup and view all the answers

What is the primary advantage of the drop-shipping business model?

<p>It allows the business owner to sell products without holding inventory. (B)</p> Signup and view all the answers

What characterizes a combination of chains and franchise business model?

<p>A mix of operated chains and licensed stores. (B)</p> Signup and view all the answers

Which of the following correctly describes the data licensing business model?

<p>Licensing access to critical information for revenue generation. (D)</p> Signup and view all the answers

What is an example of a company that utilizes the attention merchant business model?

<p>Instagram allowing organic marketing through ad placements. (C)</p> Signup and view all the answers

Which element is central to the high-touch business model?

<p>Highly personalized customer interactions. (B)</p> Signup and view all the answers

How do businesses like Kickstarter and Unilever utilize crowdsourcing?

<p>By gathering ideas and feedback from the public. (D)</p> Signup and view all the answers

What type of businesses are often targeted in the enterprise business model?

<p>Large clients with specific needs. (D)</p> Signup and view all the answers

Which of the following platforms represents a successful example of the high-touch business model?

<p>Local coffee shops providing personalized service. (D)</p> Signup and view all the answers

What is a significant benefit of the business model canvas in terms of representation?

<p>It provides a visual representation for decision makers. (C)</p> Signup and view all the answers

How does the business model canvas facilitate team collaboration during evaluations?

<p>By using sticky notes for suggestions and tweaks. (C)</p> Signup and view all the answers

Which feature of the business model canvas helps teams maintain clarity during brainstorming sessions?

<p>The encouragement to keep suggestions short and succinct. (C)</p> Signup and view all the answers

What aspect of the business model canvas contributes to its ease of circulation and shareability?

<p>Its poster-sized format allows easy access and portability. (A)</p> Signup and view all the answers

What advantage does understanding the relationship between the 9 blocks of the business model canvas provide?

<p>It allows teams to identify opportunities for innovation and efficiency. (C)</p> Signup and view all the answers

What is the primary focus of the quantitative category of value propositions?

<p>Efficiency or price of the product or service (C)</p> Signup and view all the answers

Which value proposition category is characterized by a close interaction between the customer and the company?

<p>Dedicated Personal Assistance (D)</p> Signup and view all the answers

Which of the following best describes Self-Service in value propositions?

<p>Providing tools for customers to serve themselves (B)</p> Signup and view all the answers

What element is NOT typically a part of the value proposition attributes?

<p>Employee salary (D)</p> Signup and view all the answers

How can creating communities benefit a company in terms of value propositions?

<p>By allowing direct communication and experience sharing (C)</p> Signup and view all the answers

What is the first question an entrepreneur should ask when creating a product's value proposition?

<p>What problem is being solved? (B)</p> Signup and view all the answers

What do automated services in value propositions rely on?

<p>Historical customer preferences (D)</p> Signup and view all the answers

Which of the following attributes is LEAST likely to provide value in a value proposition?

<p>Fluctuating prices (D)</p> Signup and view all the answers

Flashcards

Hidden Revenue Model

A business model where users don't pay directly for services, but revenue comes from other sources, like advertising.

Consulting Business Model

A business model where expert services are offered and payment depends on project duration and client requirements.

Agency-based Business Model

Hiring an outside firm for specific tasks or projects.

High-Value Deal Model

Focuses on securing large deals with substantial budgets, often with Fortune 500 companies.

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Social Enterprise Model

A business model incorporating social and environmental impact in its operations.

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TOMS Shoes Example

A social enterprise providing shoes to underprivileged children, one pair for every pair sold.

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Example Consulting Firms

McKinsey, BCG, Deloitte, and others.

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Example of Hidden Revenue Model

Google, generating revenue from advertisements.

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Business Model

The core idea and workings of a business, describing how it creates, delivers, and captures value. It outlines how a company makes money.

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Business Model Purpose

To show how a company creates, delivers, and captures value, focusing on making money. It identifies customer needs and the mechanisms for profit.

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Customer Needs

Understanding what customers want and how a product addresses their needs. It is vital to success.

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Profit Generation

The process of achieving income through business activities.

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Value Creation

The process of creating a product or service that satisfies or addresses a customer's need or want.

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Value Capture

The process of securing revenue for the product or service.

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Business Plan

A detailed description of a business's idea, showing how it will work in practice.

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Customer Value

Understanding what services or products address or satisfy customer needs and wants.

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Multi-brand business model

A business model that markets multiple, similar products under different brand names.

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E-commerce business model

A business model enabling buyers and sellers to connect and trade through an online platform.

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Distribution-based business model

A business model focused on a few key distribution channels to reach customers.

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Drop-shipping business model

A business model where a company doesn't keep products in stock, instead shipping them directly from the supplier to the customer.

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Vertically integrated supply chain

A company controls all aspects of its product's supply chain (manufacturing, distribution, and retail).

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Blockchain Technology

A decentralized, secure way to record transactions across a network, used with cryptocurrencies like Bitcoin.

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Decentralized Network Systems

Network systems that operate without a central server or authority.

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Economies of Scale

Cost advantages companies experience by producing large amounts of goods resulting in lower per-unit production costs.

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Enterprise Business Model

A business model that focuses on large clients and caters to their specific needs.

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Data Licensing Business Model

A business model that focuses on selling data to other companies, often in tech.

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Attention Merchant Business Model

A business model where companies focus on grabbing a target audience's attention for advertising purposes.

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Combination of Chains and Franchise

A business model with a combination of company-owned stores and licensed stores (franchises).

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Crowdsourcing Models (Example)

Business models that solicit ideas and contributions from many people, often using the internet.

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High-Touch Business Model

A business model emphasizing personalized customer interactions.

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Niche E-commerce

A type of online store that focuses on a specific area or product category.

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Visual Thinking

The Business Model Canvas makes it easy to visually understand a business plan and its key elements, making it helpful for decision-making.

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Iterate Quickly

Using the Business Model Canvas, teams can easily test changes and adapt by using sticky notes and seeing the impact on the overall model.

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Relationship Between Blocks

The Business Model Canvas highlights interconnectedness - how each part of a business influences others and how changes in one can affect the whole.

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Spot Opportunities

By analyzing the different parts of a business model, using the canvas, new ideas can be discovered and opportunities can be identified.

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Short and Succinct

The Canvas encourages concise ideas, encouraging teams to use short descriptions or phrases, fitting on sticky notes.

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Value Propositions (VP)

The bundle of products/services creating value for a specific customer group.

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Quantitative VP

Focuses on the price or efficiency of the product/service.

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Qualitative VP

Highlights the product/service's experience and results.

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Dedicated Personal Assistance

A close customer/company interaction with a dedicated representative.

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Self-Service

Customer-centric approach using tools for self-help.

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Automated Services

Customized self-service based on customer history

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Communities (VP)

Creating online groups for customer interaction and support.

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Value Proposition Creation

Identifying the problem solved, improving the product, and defining core value.

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Study Notes

Business Models

  • A business model describes how an organization creates, delivers, and captures value.
  • Key components include target customers, market analysis, organizational strengths/weaknesses, product details, and sales strategies.
  • A successful model generates more revenue than expenses.

Business Model vs. Business Plan

  • A business model is the fundamental idea and operational structure.
  • A business plan provides detailed strategy and financial projections.
  • The business model is the foundation upon which the business plan is built.

Revenue Models

  • Franchise: Franchisors license resources and brand for franchisees to sell. (e.g., McDonald's)

  • Multi-Sided Platform: Companies offer services to multiple groups, creating value for each side. (e.g., LinkedIn)

  • Cash Machine: Focuses on quickly converting cash to goods and then back to cash. (e.g., Amazon)

  • Freemium: Offers free services with optional paid upgrades. (e.g., Zoom)

  • Subscription: Fixed fees for recurring services or content access. (e.g., Netflix)

  • Peer-to-Peer: Connects two parties, with the company acting as a middleman. (e.g., Airbnb)

  • One-for-One: Businesses address social issues through profit-making initiatives. (e.g., TOMS Shoes)

  • Hidden Revenue: Company earns revenue with no direct user payment for services. (e.g., Google)

  • Razor and Blade: One low-priced item that requires expensive replacement components. (e.g., Printers)

  • Reverse Razor and Blade: Low-priced items to drive purchases of higher-cost items. (e.g., Apple devices and apps)

  • Direct Sales: Products sold directly to customers, often personal interaction.

  • Affiliate Marketing: Making money by promoting third-party products or services.

  • Consulting: Providing expertise with fees or percentage-based compensation.

  • Agency-Based: Project-based work where companies lack specialized skills internally.

  • Many other models exist (e.g., Social enterprise, Family-owned, etc.)

Business Model Canvas

  • A tool for visualizing a business model's components.
  • Includes nine building blocks, grouped into customer, offer, infrastructure, & financial viability categories.
  • Useful for developing or evaluating existing business strategies.

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