EEE 370 Chapter 4
supplier (or vendor)
A _____ (or vendor) is a company that provides parts or services to another company.
new market disruption
A _____ addresses a market that previously wasn't served. One of the two disruptive business models.
core strategy
A _____ describes how the firm plans to compete relative to its competitors. One of the four components of the Barringer/Ireland Business Model Template.
business model
A _____ is a firm's plan or recipe for how it creates, delivers, and captures value for its stakeholders.
target market
A _____ is a place within a larger market segment that represents a narrower group of customers with similar interests. One of the four parts of core strategy.
consortia
A group of organizations with similar needs that band together to create a new entity to address those needs. One of the five business partnerships.
Advertising Business Model
Business model based on providing advertisers access to highly targeted customer niches. One of the eleven standard business models.
Auction Business Model
Currently synonymous with eBay, the _____ has been around since 500 BC. The idea is to provide a platform for individuals and businesses to sell items in an auction format. One of the eleven standard business models.
Executive Summary
Goal: Bait the hook to attain first meeting Answer all the basic questions (who, what, how, why...) Execution: -Very high level (requires very succinct writing) -2 - 3 pages -Include team information & top-line financials -Plain English -Word or PDF document
customer relationships
How do you Get, Keep and Grow Customers? Relational? Transactional? One of the nine components of the business model canvas.
financing/funding
Many business models rely on a certain amount of _____ to bring their business model to life. One of the three parts of financials.
Business Model Canvas
One widely used framework is the _____, popularized by Alexander Osterwalder and Yves Pigneur in their book, Business Model Generation. The _____ consists of nine components that show the logic of how a firm intends to create, deliver, and capture value for its stakeholders.
Initial validation of the business idea, Preparation of the business model, Fleshing out the operational details of the company
Proper time to determine a company's business model: ___1___ -> ___2___ -> ___3___
nine revenue streams
The _____ are as follows: 1. Advertising 2. Commissions 3. Download Fee 4. Licensing 5. Matchmaking 6. Product Sale 7. Renting/Leasing 8. Service Sale 9. Subscription Service
eleven standard business models
The _____ are as follows: 1. Advertising Business Model 2. Auction Business Model 3. Bricks and Clicks Business Model 4. Franchise Business Model 5. Freemium Business Model 6. Low-Cost Business Model 7. Manufacturer/Retailer Business Model 8. Peer-to-Peer Business Model 9. Razor and Blades Business Model 10. Subscription Business Model 11. Traditional Retailer Business Model
six rules for writing business missions
The _____ are as follows: 1. Define its "reason for being" 2. Describe what makes the company different 3. Be risky and challenging but achievable 4. Use a tone that represents the company's culture and values 5. Convey passion and stick in the mind of the reader 6. Be honest and not claim to be something that the company "isn't"
two categories of business models
The _____ are as follows: 1. Standard business models 2. Disruptive business models
reason for being, what makes the company different, risky and challenging but achievable, tone, culture and values, passion, honest
The six rules for writing business missions are as follows: 1. Define its "___1___" 2. Describe ___2___ 3. Be ___3___ 4. Use a ___4___ that represents the company's___5___ 5. Convey ___6___ and stick in the mind of the reader 6. Be ___7___ and not claim to be something that the company "isn't"
concept, stakeholders, Operating guide
The three main reasons/audiences for developing a (business) plan are as follows: 1. Flesh out the ___1___ for the founders 2. To attract ___2___ (financiers, managers, distributors) 3. ___3___ for Entrepreneur and staff
search, execution
The two stages of the customer development process (in order) are as follows: 1. ___1___ 2. ___2___
customer creation, company building
The two steps of the execution stage (in order) are as follows: 1. ___1___ 2. ___2___
Subsistence Model
Uninteresting to us. One of the four investment models.
value proposition
What Are You Building and For Who? Notice we don't ask "What are you selling"? It's NOT about your idea or product! It's about solving a need or problem. One of the nine components of the business model canvas.
key activities
What are the most important things the company must do in order to make the business model work? One of the nine components of the business model canvas.
Perquisites
car, travel, housing, etc.
pro forma
projected
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, furnish industry-related training, and provide a platform for collective lobbying. One of the five business partnerships.
30-35, 15, Longer, DIRECTLY
Stakeholders Want No More Than ___1___ Pages Many Venture Capitalists Want a ___2___ Page BP Abstract The Plan as Operating Guide for the Business Will be ___3___ PLAN SHOULD BE DEVELOPED BY THE ENTREPRENEUR ___4___ (NOT USING SOFTWARE "PLUG-N-CHUG")
customer discovery, customer validation
The two steps of the search stage (in order) are as follows: 1. ___1___ 2.___2___ One can pivot between these.
low-end market disruption
This is possible when the firms in an industry continue to improve products or services to the point where they are actually better than a sizable portion of their clientele needs or desires. One of the two disruptive business models.
core competency
A _____ is a specific factor or capability that supports a firm's business model and sets it apart from its rivals. One of the two parts of resources.
Bricks and Clicks Business Model
A business model by which a company integrates both offline (bricks) and online (clicks) presences. One of the eleven standard business models.
Traditional Retailer Business Model
A business model calling for a firm to sell its products or services, made by others, directly to consumers at a markup from the original price. Can be sold online or offline. One of the eleven standard business models.
Freemium Business Model
A business model in which a firm provides a basic version of its service for free, and makes money by selling a premium version of the service. One of the eleven standard business models.
Franchise Business Model
A business model in which a firm that has a successful product or service (franchisor) licenses its trademark and method of doing business to other businesses (franchisees). One of the eleven standard business models.
Manufacturer/Retailer Business Model
A business model in which a manufacturer both produces and sells (online, offline, or both) a product. One of the eleven standard business models.
Subscription Business Model
A business model where the customer pays a monthly, quarterly, or yearly subscription fee to have access to a product or service. One of the eleven standard business models.
cost structure
A business's _____ describes the most important costs incurred to support its business model. One of the three parts of financials. What are the costs to operate the business model? How do they interrelate? One of the nine components of the business model canvas.
business mission (or mission statement)
A business's _____ or mission statement describes why it exists and what its business model is supposed to accomplish. One of the four parts of core strategy.
product/market scope
A company's _____ defines the products and markets on which it will concentrate. One of the four parts of core strategy.
channels
A company's _____ describe how it delivers its product or service to its customers. One of the three parts of operations. How does the product get from our company to the customer? Web? Brick-n-Mortar? Wholesale? Direct? One of the nine components of the business model canvas.
basis of differentiation
A company's _____ is what causes consumers to pick one company's products over another's. One of the four parts of core strategy.
revenue streams
A firm's _____ describe the ways in which it makes the money. One of the three parts of financials. How does the company make money from each customer segment? One of the nine components of the business model canvas.
network
A hub-and-wheel configuration with a local firm at the hub organizing the interdependencies of a complex array of firms. One of the five business partnerships.
Peer-to-Peer Business Model
A model in which a business acts acts as a matchmaker between individuals with a service to offer and others who want the service. One of the eleven standard business models.
Low-Cost Business Model
A well-established business model that relies on driving down costs and making money by servicing a large number of customers. One of the eleven standard business models.
strategic alliance
An arrangement between two or more firms that establishes an exchange relationship but has no joint ownership involved. One of the five 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. One of the five business partnerships.
key partners
In most cases, a business does not want to do everything itself because the majority of tasks needed to build a product or deliver a service are outside a business's core competencies or areas of expertise. One of the three parts of operations. Who are your Partners and Suppliers? How do you relate to/with them? One of the nine components of the business model canvas.
Download Fee
Revenue generated by allowing a user to download a digital product, such as a smartphone app, an e-book, or a software product. One of the nine revenue streams.
Commissions
Revenue generated by bringing two parties together to complete a sale. Etsy and eBay generate revenue in this manner. The money usually comes from taking a small percentage of the sale price. One of the nine revenue streams.
Matchmaking
Revenue generated by matching someone who wants temporary access to an asset or competency with someone who owns an asset or has a competency and is willing to make it available. This is how peer-to-peer networks work. Examples include Airbnb, TaskRabbit, and Uber. One of the nine revenue streams.
Renting/Leasing
Revenue generated by renting or leasing an asset such as a rental car, a copy machine, or a piece of specialized machinery. One of the nine revenue streams.
Advertising
Revenue generated from advertising a particular product or service in a newspaper, magazine, website, or in some other manner. One of the nine revenue streams.
Licensing
Revenue generated from charging for the use of a protected intellectual property, such as a software product. One of the nine revenue streams.
Product Sale
Selling a physical good - such as a product in a retail store or on a website. One of the nine revenue streams.
Service Sale
Selling a service - such as a meal in a restaurant or a car repair. One of the nine revenue streams.
Subscription Service
Selling a subscription - such as Netflix for DVDs or streaming of content, or Birchbox for lifestyle samples. One of the nine revenue streams.
two steps of the search stage, pivot
The ___1___ (in order) are as follows: 1. customer discovery 2. customer validation One can ___2___ between these when hypotheses do not match reality?
two stages of the customer development process
The _____ (in order) are as follows: 1. search 2. execution
three main reasons/audiences for developing a (business) plan
The _____ are as follows: 1. Flesh out the concept for the Founder 2. To attract stakeholders (financiers, managers, distributors) 3. Operating guide for Entrepreneur and staff
four investment models
The _____ are as follows: 1. Subsistence (uninteresting to us) 2. Income Model 3. Growth Model 4. Speculative Model
four parts of core strategy
The _____ are as follows: 1. business mission 2. basis of differentiation 3. target market 4. product/market scope
two parts of resources
The _____ are as follows: 1. core competency 2. key assets
four components of the Barringer/Ireland Business Model Template
The _____ are as follows: 1. core strategy 2. resources 3. financials 4. operations
five business partnerships
The _____ are as follows: 1. joint venture 2. network 3. consortia 4. strategic alliance 5. trade associations
two disruptive business models
The _____ are as follows: 1. new market disruption 2. low-end market disruption
three parts of operations
The _____ are as follows: 1. product (or service) production 2. channels 3. key partners
three parts of financials
The _____ are as follows: 1. revenue streams 2. cost structure 3. financing/funding
nine components of the business model canvas
The _____ are as follows: 1. value proposition 2. customer segments 3. channels 4. customer relationships 5. revenue streams 6. key resources 7. key partners 8. key activities 9. cost structure
Barringer/Ireland Business Model Template
The _____ is a tool that allows an entrepreneur to describe, project, revise, and pivot a business model until all four components and twelve parts are decided upon.
financials
This is the only section of a firm's business model that describes how it earns money - thus, it is extremely important. One of the four components of the Barringer/Ireland Business Model Template.
Razor and Blades Business Model
This model involves the sales of dependent goods for different prices - one good (a razor) is sold at a discount, with the dependent good (blades) sold at a considerably higher margin. One of the eleven standard business models.
product (or service) production
This section focuses on how a firm's products and/or service are produced. One of the three parts of operations.
key resources
What are the most important Assets required to make your business work? People? IP? Core competency? One of the nine components of the business model canvas.
customer segments
Who are your customers? What do they look like? What's in it for them? Do they need you? One of the nine components of the business model canvas.
Plans, Planning
___1___ are nothing. ___2___ is everything! ___2___ is most beneficial to the entrepreneur - more beneficial than ___1___ themselves.
operations
_____ are both integral to a firm's overall business model and represent the day-to-day heartbeat of a firm. One of the four components of the Barringer/Ireland Business Model Template.
Fixed costs
_____ are costs that remain the same despite the volume of goods or services provided.
Key assets
_____ are the assets that a firm owns that enable its business model to work. One of the two parts of resources.
resources
_____ are the inputs a firm uses to produce, sell, distribute, and service a product or service. One of the four components of the Barringer/Ireland Business Model Template.
Standard business models
_____ depict existing plans or recipes firms can use to determine how they will create, deliver, and capture value for their stakeholders. One of the two categories of business models.
Speculative Model
_____ is a company whereby the Entrepreneur forgets personal, ongoing income. He is looking to prove a concept, it's marketability, and intends to sell it within a 5-year window (often before profitability is achieved). Entrepreneur has less passion in this case. Sees something promising. More of a clinical guardianship (USA Datanet). One of the four investment models.
Growth Model
_____ is firm where company's growth is superior in need to Entrepreneur's wage needs. Cash is left in the business to help it grow. Plan is to build the firm to extreme profitability with an eye to sell it eventually. (Impelsys) Passionate but looking for the big capital gain. One of the four investment models.
Income Model
_____ is typical company where Entrepreneurs take home a livable wage (Hamilton). Entrepreneur has passion for creating her 'baby.' One of the four investment models.
Churn
_____ refers to the number of subscribers that a subscription-based business loses each month.
Variable costs
_____ vary proportionally with the volume of goods or services produced.
Disruptive business models
_____, which are rare, are ones that do not fit the profile of a standard business model, and are impactful enough that they disrupt or change the way business is conducted in an industry or an important niche within an industry. One of the two categories of business models.