Business Strategy TEST 2

Benefits of Differentiation in power of suppliers

protection against increase in input prices which can be passed onto customers

Benefits of Cost Leadership in Rivalry Among existing competitors

protection against price wars because lowest cost firm will win

Benefits of Cost Leadership in threat of substitutes

protection against substitute products through further lowering of prices

Benefit of Cost Leadership in threat of entry

protection due to economies of scale

Benefit of Differentiation in threat of entry

protection due to intangible resources like innovation reputation, quality, or customer service

freemium

provides basic features free of charge but charges for premium services like addons

upstream to downstream

raw materials components/intermediate goods final assembly/manufacturing marketing/sales after sales service and support

business models

value proposition (CVP) profit formula key resources key processes

cube scale rule

volume of a body such as a pipe increases disproportionately more than its surface

three major choices that determine firm boundaries

1. diversification: range of products/services 2. geographical expansion: regional/national/global market 3. vertical integration: stages of industry value chain participated

cost leadership strategy

focus attention on reducing cost to manufacture a product or lowering the operating cost to deliver a service (attempts to optimize value chain to achieve low cost)

differences in complexity

learning effects minimal while economies of scale differ greatly

Polygon, a fictitious company, sells its e-book readers at a price of $40 each, which is below the manufacturing cost. However, the company makes profits when users buy books online and download them to their e-readers. Which of the following business models is Polygon using? -bundling -subscription-based -pay-as-you-go -razor / razor-blade

razor / razor-blade

internal costs

recruiting retaining paying resource development acquiring resources

Benefits of Differentiation in Rivalry Among existing competitors

protection against competition if product has enough differential appeal to command premium price

Benefits of Differentiation in power of buyers

protection against decrease in sales prices because well differentiated products are not perfect imitations

Benefits of Cost leadership in power of buyers

protection against decrease in sales prices which can be absorbed

Benefit of Cost Leadership in power of suppliers

protection against increase in input prices which can be absorbed

Benefits of Differentiation in threat of substitutes

protection against substitutes due to differential appeal

two key variables of coordinated diversification

% of revenue from primary business relationship of core competencies

Firm Disadvantages

- Administrative costs - Low-powered incentives - Principal-agent problem

managerial implications

- No best strategy exists - only better ones(interpret metrics as relative) - Goal of strategic management is to integrate and align each business function; Competitive advantage is best measured by Criteria that reflect overall business unit performance and NOT the performance of specific departments - Both quantitative and qualitative performance dimensions matter. - A firm's business model is critical to achieving a competitive advantage.

firm advantages

- command and control (fiat and hierarchy) - coordination of tasks - transaction specific investments - community of knowledge

Benefits of Vertical Integration

- lower costs - improves quality - facilitates scheduling and planning - facilitates investments in specialized assets - secures critical supplies and distribution channels

Market advantages

-High powered incentives -Flexibility

Blue Ocean Strategy

-Successfully combining differentiation and cost-leadership activities -Uses value innovation to reconcile trade-offs

taper integration involves EITHER

-backward integration AND relying on others for supplies -forward integration AND relying on others for distribution `

unique product features

-better job -do more jobs -unique jobs

Strategy leaders should:

-clearly understand business model ---well defined and attainable cost and revenue streams ---self reinforcing components -develop strategy with each component -develop robust elements that sustain business model effectiveness -have supporting components developed ----complementary with other firms business models -when making a change to subcomponents, understand its overall impact on all business model components

blue ocean pt 2

-compete in uncontested market space - market competition irrelevant by creating new demand -successfully reconcile tradeoffs between value positions through value innovation

Risks of Cost Leadership in threat of entry

-erosion of margins -replacement

Risks of Differentiation in threat of entry

-erosion of margins -replacement

resource velocity

-explains how quickly resources need to be used to support target sales volume and anticipated profit margins -considers lead times, throughput amounts, inventory turnover, asset utilization

benefits of taper integration

-exposes in house suppliers and distributers to market competition so that performance comparisons are possible -enhances firms flexibility -combine internal and external knowledge

Risks of Differentiation in Rivalry Among existing competitors

-focus of competition shifts to price -increased differentiation of product features that don't create value, just increase costs -increased differentiation to raise cost above accepted threshold

Risks of Cost Leadership in Rivalry Among existing competitors

-focus on competition shifts to non-price attributes -lowering costs to drive value creation below acceptable threshold

success of strategy depends on:

-how well strategy leverages the firm's internal strengths while mitigating its weaknesses -how well it helps the firm exploit external opportunities while avoiding external threats

why do firms expand?

-increase profits -lower costs -gain market power -reduce risk -managerial reasons

success of a strategy depends on

-leveraging internal strengths while mitigating its weaknesses -ability to exploit external opportunities while avoiding external threats

diversification

-offer > 1 service -compete in > 1 market/geographical region (% rev. from core business, connection among business, major diversification strategies)

economies of scale allows firms to:

-spread fixed costs over a larger output -employ specialized systems and equipment -take advantage of certain physical properties

subscription

-traditionally used in print/newspaper -users pay for product/service access whether or not they use it during the term

The metaphor of blue ocean means:

-untapped market space -the creation of additional demand -the opportunity for highly profitable growth

TCE

-views firm as a collection of transactions -both internal/external transactions are associated with costs -choices that involve investment into transaction specific assets tend to favor the firm as the ideal governance structure over market in presence of uncertainty, bounded rationality, and opportunism

effective strategy addresses the following questions

-who will we serve? -what customers' needs will we satisfy -how will we satisfy customers' needs? -what unique value do we offer

Four Options to Formulate Corporate Strategy via Core Competencies

1. leverage existing core competencies to improve current market position 2. build new core competencies to protect and extend current market position 3. redeploy and recombine existing core competencies to compete in future market 4. build new core competencies to create and compete in future markets

single business

95% or more of revenue comes from a single business -company leverages core competencies in a single product market/industry

Outsourcing

A decision by a corporation to turn over much of the responsibility for production to independent suppliers.

Which of the following products/services is consistent with a subscription business model? -A $10.99 carwash at a gas station -Fortnite game offered for free and advanced player equipment offered for a fee -A 24-pack of 12 fl oz. Coca--Cola purchased from Wal-Mart for $20 -Access to Netflix shows via Netflix.com for $8.99 per month

Access to Netflix shows via Netflix.com for $8.99 per month

taper integration

Alternative to vertical integration. Way of orchestrating value activities in which a firm is backwardly integrated but also relies on outside market firms for some of its supplies and or is forwardly integrated but also relies on outside market firms for some of its distribution.

Which of the following is NOT among the key components of business models? -Key processes -Cost structure -Customer value proposition -Asset diversity -Profit formula

Asset diversity

strategic trade-offs

Choices between a cost or value position. (blue ocean is only successful if firm can implement some type of value innovation to reconcile trade off)

dynamic nature of business models

Combination Evolution Disruption Response to Disruption Legal Conflicts

Red Ocean

Compete in existing market space; beat the competition; exploit existing demand; make the value-cost trade-off; align the whole system of a firm's activities with its strategic choice of differentiation or low cost.

Which of the following is LEAST likely to help managers develop an effective business model? -Continually seeking to add new revenue streams -Creating mechanisms that protect the firm against competitor imitation -Creating and maintaining consistency among the key components of the business model -Eliminating costs without fear of compromising customer value proposition

Eliminating costs without fear of compromising customer value proposition

Read the following statements and then select the correct answer: Statement I: Economies of scale are savings from producing more than one product using same resources or capabilities in multiple domains; Economies of scope are reductions in per-unit cost with an increase in manufacturing volume of a specific product. Statement II: Effective corporate strategy answers the question of whether a firm should pursue a cost-leadership or differentiation strategy. -Only statement I is correct -Only statement II is correct -Both statement I and statement II are correct -Neither statement I nor statement II is correct

Neither statement I nor statement II is correct

Tesla's Model X is an all-electric SUV that has very unique features such as falcon doors that open vertically. With Model X, Tesla targets environmentally conscious customers who tend to be high-income young professionals. Which of the following strategies is MOST consistent with Tesla's Model X? -Broad cost leadership strategy -Broad differentiation strategy -Focused cost leadership strategy -Focused differentiation strategy -Blue ocean strategy

Focused differentiation strategy

The decision by Luis Vuitton, a luxury fashion brand, to buy out a large majority of its distribution partners around the world and gain control over the channels by which it distributes its products is best described as -Backward integration -Horizontal integration -Outsourcing -Forward integration

Forward integration

business level strategy

Goal-directed actions managers take to achieve competitive advantage in a single product market

HOW

How are the offerings to customers being created? (linkage of activities)

unrelated diversification

Less than 70% of revenue comes from the dominant business, and there are no common links between businesses -company unites generally do not share resources/capabilities

related linked

Less than 70% of revenue comes from the dominant business, and there are only limited links between businesses -UNITS share resources/capabilities -more corporate than operational

Read the following statements and then select the correct answer: Statement I: A cost leadership strategy may result in competitive disadvantage if the firm's cost focus prevents it from delivering adequate levels of differentiation. Statement II: Firms following a blue ocean strategy place significantly more emphasis on unique value creation through new product/service features than overall cost reduction. -Only statement I is correct -Only statement II is correct -Both statement I and statement II are correct -Neither statement I nor statement II is correct

Only statement I is correct

popular business models

Razor-razorblades Subscription Pay as you go Freemium Wholesale Agency Bundling

key resources

Resources needed to deliver the customer value proposition profitably

Bison Autos and Sparrow Co. are automobile manufacturers that both incur $9,000 to manufacture a vehicle. Recent numbers indicate that the economic value created by Sparrow Co. is significantly higher than that created by Bison Autos. What does this difference indicate? -Bison Autos has a competitive advantage over Sparrow Co. -Bison Autos and Sparrow Co. have achieved competitive parity. -Sparrow Co. is capable of charging a premium price for its automobiles. -Bison Autos has achieved a differentiation advantage over Sparrow Co.

Sparrow Co. is capable of charging a premium price for its automobiles.

cost of input factors

access to lower-cost input factors such as raw materials, capital, labor, and IT services (outsourcing helps lower)

Red oceans

The known market space of existing industries; rivalry among existing firms is cut-throat because the market space is crowded and competition is zero-sum game

parent-subsidiary relationship

The most-integrated alternative to performing an activity within one's own corporate family. The corporate parent owns the subsidiary and can direct it via command and control.

Competitive Scope

The scope of the market in which a firm chooses to compete (broad vs narrow)

vertical market failure

Transactions within the industry value chain are too risky, and alternatives to integration are too costly or difficult to administer

Which of the following BEST describes a subscription-based business model? -The company sells two or more products or services for which demand is negatively correlated at a discount -The company provides the basic features of a product or service free of charge, but charges the user for premium services (e.g., advanced service features) -The initial product is sold at a loss or given away for free in order to drive demand for more profitable complementary goods or replacement parts -Users pay for access to a product or service whether they use the product or service during the payment term or not

Users pay for access to a product or service whether they use the product or service during the payment term or not

Which of the following is MOST consistent with the definition of operational linkages? -Using the same manufacturing facilities to produce products of multiple business divisions within the company -Buying underperforming firms and making them more profitable by appointing new managers who better understand the industry dynamics -Acquiring a new firm with very similar culture and values to those of the focal firm -Transferring technological know-how from one business unit to another

Using the same manufacturing facilities to produce products of multiple business divisions within the company

range of choices available to firms from least integrated to most

[BUY- arms length market transactions] short term contracts long term contracts(licensing/franchising) equity alliances joint ventures parent subsidiary relationship [MAKE- activities performed in house]

complements

add value when consumed together

product features

adjustments can increase perceived value of product/service offering (can turn commodities into differentiated products)

value innovation

aligning innovation with total perceived consumer benefits, price and cost (leap in innovation opens new uncontested market space)

transaction costs

all costs associated with economic exchange -provides useful theoretical guidance to explain/predict firm boundaries

site specificity

assets required to be co-located, such as the equipment necessary for mining bauxite and aluminum smelting

equity alliance

at least one partner takes partial ownership in the other partner

value curve

basic component of strategy canvas -depicts relative performance across its industry factors of competition (strong curve focuses on divergence)

strategic position

basis on which the firm chooses to compete (cost vs differentiation)

Dominant Business

between 70% and 95% of revenue comes from a single business -company's dominant and minor businesses shares core competencies

stuck in the middle strategy

blue ocean gone bad(firm has neither differentiation nor cost leadership)

bounded rationality

bounded by information, cognitive limitations to evaluate and process all available information, time available to make a decision

differences in timing

businesses gain efficiency by producing large amounts of a product at one time

internal capital markets

can be a source of value creation in a diversification strategy if the conglomerate's headquarters does a more efficient job of allocating capital through its budgeting process than what could be achieved in external capital markets

asset builders

companies that build, develop, lease physical assets to make, distribute, sell physical products

network orchestrators

companies that create a network of peers in which the participants interact and share in value creation -most traditional firms are run by strategic leaders adept in asset development/hiring/etc -running large scale business networks is a unique capability -higher valuation is based on: ---intangibles such as knowledge base of firm ---relationship developed with network partners ---non management, non ownership competencies associated with governing a network of peers/their assets/relationship among peers

technology creators

companies that develop and sell intellectual property such as software, analytics, pharmaceuticals, and biotech

service providers

companies that hire employees who provide services to customers or produce billable hours for which they charge

profit margin

contributions needed from each sale given expected volume considers impact of multiple revenue streams in portfolio

related diversification strategy entails 2 costs

coordination influence costs

cost structure

cost incurred inputs are key controllable parts of cost structure managers goal is to decrease cost associated with product

combine strategic position (differentiation vs cost) with scope of competition (narrow vs broad) to get the two major broad business strategies:

cost leadership and differentiation

A firm that follows a focused cost leadership strategy _________________________________. -creates value for a specific group of customers by significantly reducing costs while paying adequate attention to developing unique product/service features -creates value for typical industry customers by significantly reducing costs while paying adequate attention to developing unique product/service features -creates value for a specific group of customers by developing highly unique product/service features while maintaining an adequate cost structure -creates value for typical industry customers by developing highly unique product/service features while maintaining an adequate cost structure

creates value for a specific group of customers by significantly reducing costs while paying adequate attention to developing unique product/service features

An effective differentiation strategy can protect the firm against the threat of substitutes because____________________. -customers incur low switching costs when they switch to a substitute -customers are most likely to switch to products sold at lower prices -a differentiating firm can always lower its costs without affecting product quality -customers are likely to show an appreciation of the differentiating firm's brand and remain loyal to it

customers are likely to show an appreciation of the differentiating firm's brand and remain loyal to it

corporate level strategy

decision and actions taken to gain and sustain competitive advantage in several industries and markets simultaneously

implications for strategic leaders

degree of vertical integration diversification type geographical scope

bundling

demand for products is negatively correlated at a discount

business model

details the firm's competitive tactics and initiatives (translation of strategy into action takes place here) -explains how a firm intends to make money -stipulates how firm conducts business with buyers/suppliers/partners

cash cow

earnings: high, stable cash flow: high, stable strategy: hold

star

earnings: high/stable/growing cash flow: neutral strategy: hold or invest for growth

question mark

earnings: low, unstable, or growing cash flow: negative strategy: increase market share or harvest/divest

DOG

earnings: low/unstable cash flow: neutral/negative strategy: harvest/divest

cost drivers

economies of scale learning curve/experience curve effect cost of input factors new business model

Walmart, the world's largest retailer, is a low-cost leader in its industry and is partly shielded from the threat of new entrants primarily due to its ________________. -superior customer service. -luxury goods. - economies of scale. - premium pricing.

economies of scale.

Risks of Cost Leadership in power of buyers

erosion of margins

Risks of Cost Leadership in power of suppliers

erosion of margins

Risks of Differentiation in power of buyers

erosion of margins

Risks of Differentiation in power of suppliers

erosion of margins

Horizontal Integration

expansion of a given value chain activity

economies of scale

factors that cause a producer's average cost per unit to fall as output rises

When pursuing a Blue Ocean strategy, a firm in a crowded marketplace attempts to out-compete rivals on both cost and product features, usually with the goal of gaining market share at the expense of other competitors in the same industry.

false

learning curve effects

firms learn how to do things better by doing them repeatedly over time

spread fixed costs over larger output

larger outputs allow firms to spread their FC over more units (most costs happen before sale of product)

Employing Specialized Systems and Equipment

larger outputs allows this -taking advantage of certain physical properties

Organic Eats is a restaurant that caters to the needs of a small number of highly health-conscious consumers. It has an all-organic, vegan menu. Since there are very few restaurants that offer the same menu items, customers are willing to pay a premium price for Organic Eats' services. In this scenario, it can be said that Organic Eats is following a __________. -differentiation strategy -blue ocean strategy -broad cost leadership strategy -focused cost leadership strategy -focused differentiation strategy

focused differentiation strategy

Dropbox, a cloud storage services firm, offers 2GB free space to first time users who open an account. To get more cloud storage space (i.e., 1TB) and utilize additional feature on the website, users pay $8.25 per month. Based on this information, which of the following best describes Dropbox's business model? -Reverse Razor/Razor-Blade -Wholesale -Bundle -Freemium -Razor / razor-blade

freemium

coordination

function of number, size, and types of business that are linked

specialized assets

have high opportunity costs (have more value in their intended use than in their next best use) -site specificity -physical asset specificity -human asset specificity

transaction cost economics TCE

helps explain and predict boundaries of the firm and helps managers decide: -which activities to perform in house -which services and products to obtain from external market

experience curve

hold cumulative output constant while changing underlying technology (process innovation)

why do some models fail

imitation substitution obsolescence complacency hold up

Risks of Vertical Integration

increasing costs, reducing quality, reducing flexibility, increasing the potential for legal repercussions

competitive advantage is determined jointly by:

industry and firm analysis (two are interdependent)

Razor-razorblades

initial process sold at a loss or given away for free to drive demands for complementary goods -make money on the replacement part needed -invented by gilette

human asset specificity

investments made in human capital

cost leadership

key objective is to reduct the firm's cost below its competitors' while offering adequate value -products/services delivered at a lower cost -achieve an adequate level of differentiation -typically results in lower prices for customers

differentiation

key objective to enhance perceived value of products/services -seeks higher value creation than competitors -products/services with unique features -keeps firms' cost structure at moderate level -typically result in premium pricing

We discussed several factors in class that may lead to business model failure. Which of the following factors was NOTn considered in our discussion? -substitution - lack of financial resources -stakeholder hold up -obsolescence -imitation

lack of financial resources

Brass Watches is a company that manufactures wristwatches. Prior to 2007, the company's employees were manually assembling a wristwatch in eight hours. As production rates doubled in 2008, the number of hours spent on assembling a watch was reduced by 20%. By the end of 2008, this increase in productivity significantly reduced the company's cost per unit. It can be said that the company benefited from: -learning-curve effect -network effect -diseconomies of scale -financial economies

learning-curve effect

related constrained

less than 70% of revenue comes from the dominant business, and all businesses share product, technological, and distribution linkages -DIVISION share resources/capabilities -more operational linkage than corporate

principal agent theory

managers are more interested in pursuing their own interests than increase shareholder value

key processes

norms, rules, performance metrics needed to deliver CVP

influence costs

occur due to political maneuvering by managers to influence capital and resource allocation and the resulting inefficiencies stemming from suboptimal allocation of scarce resources

pay as you go

only pay for what you consume

offshoring

outsourcing to an international or foreign firm

integration

ownership of inputs or distribution channels

forward vertical

owning activities closer to customer

backwards vertical

owning input of the value chain

Utility services (e.g., electricity), hotels that rent their rooms hourly, UBER rides, are all examples of _______ business model. -razor / razor-blade -pay as you go -subscription-based -bundle -freemium

pay as you go

90% learning curve

per unit cost drops 10% each time output doubles

80% learning curve

per unit cost drops 20% each time output doubles

customer service

perceived value can increase in product by focusing on customer service

revenue model

price x volume managers goal to increase revenues from existing sources and add new streams

agency

producer relies on agent or retailer to sell the product at a predetermined percent commission

general diversification strategies

product diversification strategy geographical diversification strategy product market diversification strategy

Samsung Electronics has three business segments: consumer electronics (CE), information technology and mobile communications (IM), and device solutions (DS). In 2015, the CE, IM, and DS segments accounted for 25%, 48%, 27% of total revenues, respectively. Consumer electronics and mobile communications divisions share a number of intangible capabilities (e.g., know-how and expertise) in product design and development. It can be concluded that Samsung Electronics is pursuing a(n) _____________ strategy. -dominant business -single business -related-linked diversification -unrelated diversification -related-constrained -diversification

related-linked diversification

Risks of Cost Leadership in threat of substitutes

replacement, especially when faced with innovation

Risks of Differentiation in threat of substitutes

replacement, especially when faced with innovation

profit foluma

revenue model cost structure profit margin resource velocity

economies of slope

savings that come from producing two or more outputs at less costs than producing each output individually

Market Disadvantages

search costs opportunism incomplete contracting (specifying and measuring performance, information asymmetries) enforcement of contracts

external costs

searching negotiating monitoring enforcing resolving

information asymmetry

sellers have more knowledge than buyers

corporate linkages

share core competencies such as managerial and technological knowledge/experience/expertise

operational linkages

sharing activities

business strategy is more likely to lead to a competitive advantage if it allows firms to either perform

similar activities differently or perform different activities

diversification discount

situation in which the stock price of highly diversified firms is valued at less than the sum of their individual business units

diversification premium

situation in which the stock price of related-diversification firms is valued at greater than the sum of their individual business units

The smartphone division of the large consumer electronics company, True Electra, has a significant market share in the fast-growing smartphone market. If the company invests further into this division, it will be able to generate significant cash flow. In the Boston Consulting Group (BCG) growth-share matrix, the smartphone division of True Electra is currently considered a: -question mark -star -cash cow -dog

star

In the WSJ article "Tesla should pull an Apple: Leave 'Production Hell' to other people," the author suggests that Tesla should focus on the value chain activities associated with the car's "software, design and operating system" and turn to a third party for the manufacturing. This is an example of _______________. -strategic outsourcing -reverse engineering -forward integration -backward integration

strategic outsourcing

Apple and Nike have their own retail outlets and also use other independent retailers, both the brick-and-mortar type and online, to sell their products. This is an example of ____________. -product diversification -geographic diversification -horizontal integration -taper integration

taper integration

For more than two decades United Launch Alliance's (ULA) rockets that carry U.S. government satellites into space have contained engines made by a Russian supplier. That practice is coming to an end, as the government has banned the import of the Russian-made engine, leaving ULA sufficient supplies until 2020. The company has established a long-term agreement with Blue Origin (a company founded by Jeff Bezos-Amazon's CEO) for a new engine. If ULA decides to manufacture some of its next generation rocket engines in-house, while maintaining its supply contract with Blue Origin, this will be an example of _________________. -forward integration -horizontal integration -product diversification -value chain disintegration -taper integration

taper integration

CVP

target customer job to be done (solve problem) product/service offering

Which of the following is an example of an external transaction cost? -the cost of setting up a production unit -the cost of searching for a contract manufacturer -the cost of recruiting and retaining employees -the cost of maintaining plant and machinery

the cost of searching for a contract manufacturer

A blue ocean strategy differs from a low-cost strategy in that_____________________________. -the focus of a blue ocean strategy is on lowering the economic value created, whereas a cost-leader focuses on increasing the economic value created -economies of scale are more important to a blue ocean strategy, while diseconomies of scale are more important to a cost-leader -a blue ocean's research and development focus is on process technologies, and a cost-leader's focus is on product technologies - the intent of a blue ocean strategy is not to be the absolute lowest-cost provider because a blue ocean must also increase perceived value

the intent of a blue ocean strategy is not to be the absolute lowest-cost provider because a blue ocean must also increase perceived value

diseconomies of scale

the property whereby long-run average total cost rises as the quantity of output increases

transaction specific assets

the set of unique assets, both tangible and intangible, required to perform the distribution tasks

wholesale

traditional model in retail -sell to retailers at a fixed price--> retailers set their own price and profit from difference

joint venture

two or more join to create a new organization

value drivers

unique product features, customer service, complements

W.M. Wrigley Jr. Co once made only chewing gum. When Wrigley bought Life Savers (a line of candy mints) and Altoids (a line of breath mints) from Kraft Foods, chewing gum then constituted 86% of Wrigley's revenues. Therefore, it can be said that Wrigley __________ -was moving away from a single-business strategy to a dominant strategy. -was moving away from a dominant strategy toward a related-linked strategy. -became a conglomerate since Life Savers and Altoids are unrelated businesses. -should restructure these companies and sell them off because they do not fit their core business.

was moving away from a single-business strategy to a dominant strategy.

WHAT

what activities need to be done to create and deliver offerings to customers

scope of competition

whether to pursue a specific, narrow part of the market or go after the broader market

Increasing perceives consumer benefits: create

which factors should be created that the industry has never offered?

lowering costs: reduce

which factors should be reduced well below industry standard?

lowering cost: eliminate

which factors the industry takes for granted should be eliminated?

Increasing perceives consumer benefits: raise

which of the factors should be raised well above industry standard?

WHO

who are the main stakeholders performing activities?

WHY

why does the business model create value? (revenue and cost model)