EEE 370 Quiz 2

What are the four components of a business model?

1. Core Strategy 2. Strategic Resources 3. Partnership Network 4. Customer Interface

What are the 11 parts of a business plan?

1. Executive Summary 2. Industry Analysis 3. Company Description 4. Market Analysis 5. The Economics of The Business 6. Marketing Plan 7. Design and Development Plan 8. Operations Plan 9. Management Team and Company Structure. 10. Overall Schedule 11. Financial Projections.

The basic components of a business model should help identify:

1. How Will the Firm Create Value? 2. For Whom Will the Firm Create Value? 3. What are the Firm's Sources of Advantage? 4. How Will the Firm Differentiate Itself? 5. How Will the Firm Make Money? 6. What Are the Entrepreneur's Time, Scope, and Size Ambitions?

What is a 501c3?

A 501c3 organization is a nonprofit organization in the federal law of the United States, it is exempt from some federal income taxes.

What is a business Plan?

A business plan is a written narrative, typically 25 to 35 pages long, that describes what a new business will accomplish.

What is a business model?

A firm's business model is its plan for how it creates, delivers and captures value for its stakeholders. The emphasis is on a) creating value; and, b) building a competitive advantage.

Who reads the business plan, and what are they looking for?

A firms employees: Looking for a clearly written business plan that helps the employees of a firm operate in sync and move forward in a consistent and purposeful manner. Investors and other external stakeholders: Looking for a business plan that makes the case for why a firm is a good use of an investors funds or the attention of others.

What is the difference between a business model and a mission statement?

A mission statement describes the purpose of an organization. It guides its actions, spells out its overall goal, provides a sense of direction, and guides decision-making. It should provide the logic behind the business model. The business model, in turn, provides the framework or context within which the company's strategies are formulated.

Types of Business Models

Commission Based Advertising Based Referral Based Subscription Based Free for service Based

Core Strategy

Every good strategy includes: A "diagnosis" of the challenge. A "guiding policy"—the strategy—for dealing with that challenge. A set of "coherent actions" to carry out that policy.

Fixed Cost vs. Variable Cost

Fixed costs often include rent, buildings, machinery, etc. Variable costs are costs that vary with output. Generally variable costs increase at a constant rate relative to labor and capital. Variable costs may include wages, utilities, materials used in production, etc.

Why is the business model important?

It forces you to ask, "Does this business make sense? It focuses attention on how all the elements of the business fit together. It articulates the company's core logic to all employees, partners, and stakeholders. The business model determines the logic of a firm's strategic choices.

Types of Business Partnerships

Joint Venture: An entity created by two or more firms pooling a portion of their resources to create a separate, jointly owned organization. Network: A hub and wheel configuration with a local firm at the hub organizing the interdependencies of a complex array of firms. Consortia: A group of organization with similar needs that band together to create a new entity to address those needs. Strategic Alliance: An arrangement between two or more firms that establishes an exchange relationship but has no joint ownership involved. Trade associations: Organizations (typically nonprofit) that are formed by firms in the same industry to collect and disseminate trade information, offer legal and technical advice, exc.

Strategic Resources

Resources are the inputs a firm uses to produce, sell, distribute, and service a product or service. A firm is not able to implement a strategy without resources, so the resources a firm has affect its business model substantially.

Partnership Network

Startups typically do not have sufficient resources to perform all the tasks necessary to make their business models work. To meet their needs and accomplish their goals, they often rely on a network of key partners.

What are the three types of business plans?

Summary Business Plan: 10-15 pages, best for new ventures in early stages of development that wants to "test the waters" to see if investors are interested in their idea. Full Business Plan: 25-35 pages. Works best for new ventures who are at the point where they need funding or financing; serves as a "blueprint" for the company's operations. Operational Business Plan: 40-100 pages. Is meant primarily for an internal audience; works best as a tool for creating a blueprint for new ventures operations and providing guidance to operational managers.

Customer Interface

Target Customers Fulfillment and Support Pricing Structure

When should the business plan be written?

The business plan should be written after the feasibility analysis is completed.