mgmt 160: midterm ALL

What does the Three-Dimensional Business Landscape represent and why are they talking about it?

*** · A useful way to conceptualize where and how a business can compete. · An understanding of the business landscape and the choice of position on this landscape are the two requirements for creating a successful competitive advantage. · The business landscape informs where the firm chooses to engage with its competition. · The firm's positioning shapes the choice of a business model and the underlying set of activities that sustains it.

The text discusses the idea "Same Customer, Different Contexts" when discussing value propositions. What are the authors talking about? Hint: If you remember the example in the book when discussing "Same Customer, Different Contexts", you can use it here to help you answer.

*** · Customers priority changes based on context, nature of jobs/aims

What are the three steps used to test ideas, assumptions, and "minimal viable products" (MVPs)?

0. (generate a hypothesis) 1. Design and build 2. Measure and test 3. Learn

The text describes approximately 12 experiments types in the "Experiment Library". Name and describe each in a sentence.

1) Call to action (CTA): prompts a subject to perform an action; used in an experiment in order to test one or more hypotheses 2) Ad tracking: use to explore your potential customer's jobs, pains, gains, and interests for a new value proposition 3) Unique link tracking: to verify potential customers' or partners' interest beyond what they might tell you 4) MVP catalog: representation or prototype of a value proposition designed specifically to test the validity of one or more hypotheses/assumptions 5) Illustrations, storyboards, scenarios: share with your (potential) customers to learn what really matters to them 6) Life-size experiments: rapid, low-cost; prototypes 7) Landing page: a single web page/website that describes a value proposition or some aspect of it 8) Split Testing: technique to compare performance of two or more options 9) Innovation games: methodology to help you design better value propositions by using collaborative play with your (potential) customers 10) Mock sales: test sincere customer interest 11) Presales: to explore customer interest; Kickstarter

Sketch the "Business Model Canvas" and label each of the nine blocks. For each labeled block, describe it in a sentence or two.

1) Customer Segments: Defines the different groups of people/organizations an enterprise aims to reach and serve 2) Value Propositions: Describes the bundle of products and services that create value for a specific Customers Segment. 3) Channels: Describes how a company communicates with and reaches its Customer Segments to deliver a Value Proposition. 4) Customer Relationships: Describes the types of relationships a company establishes with specific Customer Segments. 5) Revenue Streams: Represents the cash a company generates from each Customer Segment. 6) Key Resources: Describes the most important assets required to make a Business Model work. 7) Key Activities: Describes the most important things a company must do to make its Business Model work. 8) Key Partners: Describes the network of suppliers and partners that make the business work. 9) Cost Structures: Describes all costs incurred to operate a Business Model.

The VPC text describes six techniques to gain customer insights. These techniques help you understand the customer's perspective when designing value propositions. Name and describe each.

1) Data detective: build on existing work within desk research 2) Journalist: talk to potential customers to gain customer insights 3) Anthropologist: observe potential customers in the real world to get good insights into how they really behave 4) Impersonator: "be your customer" and actively use products and services 5) Co-creator: integrate customers into the process of value creation to learn with them 6) Scientist: get customers to participate in an experiment (J-ACIDS)

What are the three Generic Strategies for businesses of all types?

1) Differentiation: creating something that is perceived industrywide as being unique 2) Overall cost leadership: offering a combination of cost benefits industrywide 3) Focus: targets a particular buyer group, segment of the product line, or geographic market with differentiation, cost leadership, or both.

The VPC text discusses that value propositions in business-to-business (B2B) transactions typically involve six stakeholders in the search, evaluation, purchase, and use of a product or service. Each one has a different profile and a different value proposition canvas. Stakeholders can tilt the purchasing decision in one direction or another. List the six stakeholders given in the VPC text and describe each in a sentence.

1) Economic buyers: individual(s) who controls the budget and makes the actual purchase 2) Decision makers: individual(s) with ultimately responsibility for the choice and ordering the purchasing decision 3) Influencers: individual(s) whose opinion might count and whom the decision maker might listen to 4) Recommenders: people carrying out the search and evaluation process and who make a formal recommendation for or against a purchase 5) Saboteurs: people and groups who can obstruct or derail the process of searching, evaluating, and purchasing a product or service 6) End users: the ultimate beneficiaries of a product or service

What were the two historical "Schools of Thought" on the way to define entrepreneurship according to Stevenson? According to Stevenson, what is the major flaw to each of the two?

1) Entrepreneurship defined as an economic function and entrepreneur is defined by the role in society. · Major Flaw: Doesn't make sense to decide what economic functions are "entrepreneurial." 2) Entrepreneurs have a common set of individual traits. · Major flaw: Single psychological profile of an entrepreneur doesn't exist.

The book describes "five data traps to avoid". Name and describe each in a sentence or two.

1) False-positive traps: seeing things that are not there 2) False-negative traps: not seeing things that are there 3)The "local maximum" trap: missing out on the real potential 4) The exhausted maximum" trap: overlooking limitations 5) The wrong data trap: searching in the wrong place

What are the two pricing mechanisms for revenue streams?

1) Fixed Menu Pricing: predefined prices that are based on static variables 2) Dynamic Pricing: prices change based on market conditions

List the four characteristics of "Cost Structures" as discussed in the BMC text and define in a sentence.

1) Fixed costs: Costs that remain the same despite the volume of goods or services produced. 2) Variable costs: Costs that vary proportionally with the volume of goods or services produced. 3) Economies of scale: Cost advantages that a business enjoys as its output expands. 4) Economies of scope: Cost advantages that a business enjoys due to a larger scope of operations.

What are the three criteria that define a good blue ocean strategy?

1) Focus 2) Divergence 3) A compelling tagline that speaks to the market

Three Potential Rewards for Entrepreneurs

1) Growth Rewards: What people get from facing and beating challenges. 2) Income Rewards: Money made by owning one's own business. 3) Flexibility Rewards: Ability of business owners to structure life in a way that suits their needs.

List the three types of "fit" discussed in the text. List the "name" and the "slang" term used for each. Describe the key attributes of each fit in a sentence of two.

1) On Paper: Problem-Solution Fit · Have customers care about certain jobs, pains, and gains. · Designed a value proposition that addresses those jobs, pains, and gains. 2) In the Market: Product-Market Fit · Have evidence that your products and services, pain relievers, and gain creators are actually creating customer value and traction in the market. 3) In the Bank: Business Model Fit · Have evidence that your value proposition can be embedded in a profitable and scalable Business Model.

What are the three possible outcomes of an MVP test?

1) Persevere: MVP test validates a business model hypothesis, test remaining hypotheses or prepare to scale. 2) Pivot: MVP test invalidates an aspect of the business model hypothesis, change some business model elements while retaining others. 3) Perish: MVP test decisively rejects a crucial business model hypothesis, and there isn't a plausible pivot, shut down the business.

The article discusses the "Four Actions Framework." Describe the four forces and discuss how you can use the framework to develop a business strategy.

1) Reduce: Which factors should be reduced well below the industry's standard? 2) Eliminate: Which of the factors that the industry takes for granted should be eliminated? 3) Raise: Which factors should be raised well above the industry's standard 4) Create: Which factors should be created that the industry has never offered? · Allows a company to reconstruct buyer value elements across alternative industries to offer buyers a new experience while simultaneously keeping its cost structure low.

What are the two other Frameworks and Perspectives described in the reading?

1) Resource-based view (RBV): Focuses on a company's resources and capabilities as the key determinants of a successful strategy 2) Emergent strategy: The view that a successful strategy is less the product of deliberation and planning than of the collision of intentions and reality, whether internal or external.

The article discusses "Porter's Forces that Shape Industry Competition." As discussed in the article, what are the six forces? Sketch a simple diagram showing the six forces. In a sentence, define and describe each force.

1) Rivalry: Aggressive competition will decrease the available profit pool for everyone. 2) Suppliers: Want to be paid more and deliver less. 3) Customers/Buyers: Want to pay less and get more. Powerful if they are concentrated or free to direct their purchases elsewhere. 4) Substitute Products: Meet same basic needs you do; may come from different industries. 5) New Entrants: Can quickly erode profits by increasing competition, introducing alternative products, and capturing market share. (Most important determinant of profitability.) 6) Complements: Can be bundled with your own products and services to reach more customers or sell more volume. Buyers who cannot easily switch to another platform give complements significant power.

What are the limits the the Lean Startup method? When is the approach not recommended?

1) When mistakes must be limited. 2) When uncertainty about customer demand is low. 3) When long product development cycles precludes launching early and offer. 4) When resources are plentiful.

What are the five distinct phases of Channels?

1. Awareness 2. Evaluation 3. Purchase 4. Delivery 5. After Sales

Sketch and label the "Value Proposition Canvas." Provide a few sentences describing each of the sections.

1. Customer Profile: clarify your customer understanding; describes a specific customer segment in your business model in a more structured and detailed way · Jobs · Pains: anything that annoys your customers or prevents them from getting a job done · Gains: describes the outcomes and benefits your customers want 2. Value Map: describe how you intend to create value for that customer · Produces and Services · Pain Relievers · Gain Creators

What are Customer Relationships driven by?

1. Customer acquisition 2. Customer retention 3. Boosting sales (upselling)

The four main areas of business covered by the Business Model Canvas.

1. Customers 2. Offer 3. Infrastructure 4. Financial viability

The VPC text describes the "Testing Process". The following figure was discussed in class. Label each of the six images below to indicate the steps in the testing process.

1. Extract hypotheses 2. Prioritize hypotheses 3. Design tests 4. Prioritize tests 5. Run tests 6. Capture learnings

The article discusses that "strategy is a firm's answer to two fundamental questions". What are the two questions?

1. How should we compete? 2. Where should we compete?

What are the four steps on the Learning Card?

1. Hypothesis 2. Observations 3. Learnings and insights 4. Decisions and actions

What are the four steps on the Test Card?

1. Hypothesis 2. Test 3. Metric 4. Criteria

What are the four common threats to competitive advantage?

1. Imitation 2. Substitution 3. Holdup: increase in the bargaining power of firm's buyers, suppliers, or complements, allowing them to capture more value. 4. Slack

Some Common Risks for Entrepreneurial Firms

1. Market risks 2. Competitive risks 3. Technology and Operational risks 4. Financial risks 5. People risks 6. Legal and Regulatory risks 7. Systemic risks

What are the five types of Customer Segments?

1. Mass market 2. Niche market 3. Segmented 4. Diversified 5. Multi-sided platforms/markets

What are the three methods of gaining Key Resources?

1. Owned 2. Leased 3. Acquired from partners

What are the ten testing principles?

1. Realize that evidence trumps opinion 2. Learn faster and reduce risk by embracing failure 3. Test early; refine later 4. Experiments ≠ reality 5. Balance learnings and vision 6. Identify idea killers 7. Understand customers first 8. Make it measurable 9. Accept that not all facts are equal 10. Test irreversible decisions twice as much

What are the four types of partnerships in the BMC?

1. Strategic alliances between non-competitors 2. Coopetition: strategic partnerships between competitors 3. Joint ventures to develop new businesses 4. Buyer-supplier relationships to assure reliable supplies

What are the six critical dimensions of business practice as defined by Stevenson?

1. Strategic orientation 2. Commitment to opportunity (What is an opportunity?) 3. Resource commitment process (What resources are necessary) 4. Control of Resources (What do I need to own, borrow, or steal?) 5. Management Structure (How do we manage the operation?) 6. Reward Philosophy (How and when do we harvest?)

Ideation

A creative process for generating a large number of business model ideas and successfully isolating the best ones.

The article discusses the purpose of strategy is to create a "competitive advantage". What is competitive advantage?

A firm's ability to create a large gap between the amount its customers are willing to pay and the costs it incurs.

Define "strategy" as given in the article.

An integrated set of choices that allows a business to generate superior financial returns over the long run.

According to Osterwalder & Pigneur, what is the definition of a "business model"?

Describes the rationale of how an organization creates, delivers, and captures value.

According to the text, Steve Blank coined the term "Earlyvangelist". What is an "Earlyvangelist"?Lists the five traits of an Earlyvangelist.

Earlyvangelist: Early adopters of your product or service willing to take a risk on your product or service because they can envision its potential to solve a critical and immediate problem. 1. Has a problem or need 2. Is aware of having a problem 3. Is actively looking for a solution 4. Has put together a solution out of piece parts 5. Has or can acquire a budget

In the article, Prof. Stevenson defines "Entrepreneurship as a _______ Phenomenon".

Entrepreneurship as a behavioral phenomenon

Define strategic positioning.

Finding and occupying a point on the landscape.

Brainstorming

Group discussion in which criticism is suspended in order to generate the maximum number ideas.

What is the Hypothesis-Driven Entrepreneurship/Lean Startup movement?

Idea to eliminate slack and uncertainty from product development by continuously building, testing, and learning in an iterative process.

What is the range of Customer Relationships?

Personal to Automated

In the article, Prof. Stevenson discussed strategic orientation as a continuum from "_______" to "_______" as the level of controlled resources increased.

Promoter (driven by perception of opportunity) to Trustee (driven by resources currently controlled)

The Environment Map

The forces that constrain your business model 1. Key Trends 2. Industry Forces 3. Macro-Economic Forces 4. Market Forces

Define "Entrepreneurship" according to Stevenson.

The pursuit of opportunity without regard to resources currently controlled.

What is a Minimum viable product (MVP)?

The smallest set of features and/or activities needed to complete "Build-Measure-Lean" cycle and thereby test a business model hypothesis.

Explain dynamic consistency.

· A successful strategy that creates a competitive advantage for a firm requires an integrated set of choices that demonstrate internal and external consistency. · Maintaining dynamic consistency is about successfully dealing with threats

Reasons its harder to achieve business success:

· Access to international resources is harder. · Government regulation has made the full costs of doing business available. · Competition from overseas has put an end to American dominance in many industries. · Technological change has reduced product life in other industries.

What is a "strategy canvas" and how is it to be used? What do the horizontal and vertical axes represent? What is the "line" strategy canvas called and what does it represent?

· Both a diagnostic and action framework for building a compelling blue ocean strategy. · Captures the current state of the play in the known market space. · Horizontal Axis: factors the industry competes on and invests in. · Vertical Axis: offering level that buyers receive the factors at. · The Value Curve: a graphical depiction of a company's relative performance across its industry's factors of competition.

A successful firm is either:

· Capable of rapid response to changes that are beyond its control. · So innovative that it contributes to change in the environment.

Define the two broad classes of business model Cost Structures, as distinguished in the BMC text, in a sentence or two.

· Cost-driven: focus on minimizing costs wherever possible · Value-driven: focus on value creation more than cost implications

The VPC text discussed the "Customer Development" process as proposed by Steve Blank for hypothesis-driven entrepreneurship. Draw the figure and fill in all the blanks.

· Customer discovery (search) · Customer validation (search) · Customer creation (execute) · Company building (execute)

Explain the SWOT framework.

· Emphasizes the importance of fitting a firm's strategy with its environment. · Matches a company's Strengths against its Weaknesses and its Opportunities against its Threats.

List the three types of Customer Jobs to be done and briefly describe in a sentence.

· Main jobs 1) Functional jobs: perform/complete a specific task or solve a specific problem 2) Social jobs: to look good or gain power/status 3) Personal/Emotional jobs: seeking a specific emotional state · Supporting Jobs 1) Buyer of value: related to buying value 2) Cocreator of value: related to cocreating value within your organization 3) Transferrer of value: related to end of a value proposition's life cycle

True or false: In the article, Prof. Stevenson argues that entrepreneurship and intrapreneurship are very different. Why or why not?

· No. · Intrepreneurship: Entrepreneurship in the context of a larger cooperation. · Entrepreneurship: An approach to management that can be applied in start-up situations as well as within more established businesses.

What are the three motivations for creating partnerships in the BMC?

· Optimization and economy of scale · Reduction of risk and uncertainty · Acquisition of particular resources and activates

What are the four types/categories of Key Resources?

· Physical · Intellectual · Human · Financial

In the seven testing steps, why is "step" 4 necessary? That is, it initially may seem redundant to step #2 above, but it isn't. Explain.

· Prioritize your hypothesis: Find what could kill your business and test business killers first. · Prioritize tests: Prioritize quick and cheap tests to be done early in the process, when uncertainty is at its maximum.

As defined in the text, what is a "Call to Action"? How is a "call to action" used (i.e. why is it discussed in the text)?

· Prompts a subject to perform an action. · Used in an experiment in order to test one or more hypotheses.

Define the terms "red oceans" and "blue oceans" according to Kim & Mauborgne.

· Red oceans: Represent all the industries in existence today. Known as the market space. Overcrowded by competitors. · Blue Ocean: All the industries not in existence today. The unknown market space.

List the four types of customer gains and briefly describe each in a sentence or two.

· Required gains: without, a solution wouldn't work · Expected gains: relatively basic, but could work without · Desired gains: go beyond what we expect, but would love to have · Unexpected gains: go beyond expectations and desires

The text discusses that a business model can involve two different types of revenue streams. What are the two types?

· Transaction revenues: one-time payments · Recurring revenues: from ongoing payments