Strategic Management: Business Models: Test 2

Razor-razorblades Business Model:

(Gillette) focuses on selling products at a loss or a very low price with selling razor blades and razor cartridges -Gillette sold the razor container at a loss and sold the cartridges at a significant margin - where they make most of their money

Other examples of the razor-razorblade model

-Computer printers, gaming consoles, tools

Examples of the Bundling Business Model:

-Microsoft Office -DirectTV and AT&T -Fast Food -Online traveling agencies

EXAMPLE: Revenue Model of a PS4

-Sales Revenue - Can also make money from accessory sales -Accessory royalty: compatible with Sony products - Royalty: Most valuable sources of revenue: allows other companies to make games for the PS4 (EA Sports) -Fees for online memberships

A business model forms: (2)

-form eliminated forms strategy -forms a basis to understand how a firms strategy can be modified

What are the components of a business model?:

5 components 1. Customer value concept 2. Revenue model 3. Expenditure Model 4. Margin Model 5. Asset Turnover Model

Revenue Model:

All the different ways and organization can earn money by offering that product to the customers

Disruption:

Amazon e-books Beer distributorships Breweries don't allow other brands "in-house" Craft beers and non-alcoholic products demanded locally Failed Business Models Blockbuster and Kodak

Evolution:

Change as time passes, and revenue comes in Razor Razorblade to Freemium

The Dynamic Nature of Business Models

Combination Evolution Disruption

Freemium Business Model examples:

Dropbox Gaming- angry birds, pokemonGo

Examples of the Pay as you go Business Model:

Electric companies Redbox Zipcar Google Project Fi- amount of data that they use

Other examples of the Subscription Business Model:

HBO Now Netflix 24 hour fitness

Examples of the Agency Business Model:

Modeling agencies Movie agencies Actor Agencies App Store Google Play

What are the different kinds of business models: (7)

Razor-razorblades Subscription Pay as you go Freemium Whole Sale Agency Bundling

Elements of a successful business model:

Reinforcing activities: maintaining customers Innovation: should never be static

Developing a business model: 2 steps

Step one: develop a plan of actions and initiatives that support the company's overarching goals- fall in line with long term strategic outlook and long term goals Step two: implement the plan through structure, processes, culture, and procedures

Examples of Whole Sale Business Model:

Tyson Foods sells to Walmart Purina Book Industry

Combination:

Very Common Many firms employ multiple business models Example: Apple

Expenditure Model:

What are the different places we have to spend money to see that the PS4 is made and provides value to the customer -Multiple outflows

What is a business model:

a representation of how an organization makes money with a given product or product family

Freemium Business Model:

basic product or feature for free, customers pay for premium upgrades

Peer to peer:

connects individuals to goods that they want (Airbnb, Uber)- more affordable options

Pay as you go Business Model:

customers only pay for the amount that you use

Expenditure Model: __________ & _____________ Costs

direct and indirect

Whole Sale Business Model:

firms who usually manufacture a specific product then sell that product to a retailer, who sells it to the consumers

Margin Model:

helps understand the costs that are associated that are not directly related to the sales of products or services -accounting and financial measures of the company -breakdown as a % of revenue- what it takes money

Agency Business Model:

individual would go to agency and the agency connects them to opportunities, and then takes cut of what individual gets paid

A business model explains how the firm intends to

make money

Example Expenditure Model of a PS4

manufacturing, raw materials, seminars and training for game makers, seminars for accessory makers

Margin Model analyzes impact of

multiple revenue streams

Because a business model is associated with a given product or a product family you can have more than

one business model

Asset Turnover:

options/ value of investment in fixed assets to meet business needs

The Margin Model helps us

price the products and services better

EXAMPLE: CVC of a PS4:

provides entertainment, engage in a community, streaming videos, playing dvds -How will you continue to provide value in the future, what are the changes in customer needs, what are your competitions doing?

Has to have more than one source to bring in

revenue

Subscription Business Model:

signing the customers up for a subscription, whether or not the use it print media sources

A business model is not a

strategy by itself

Bundling Business Model:

taking multiple products and bundling them together and selling them at a reduces price

Revenue Model: Traditionally, the money you earn from a product is what you get from selling

the product or services

Customer value concept:

what about the product provides value to the customer when compared to the competition