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Barter

(n.) an exchange in trade; (v.) to exchange goods PepsiCo - entered the USSR in 1972 by exchanging soft drink for vodka Honda, Kia and Subaru - bartered cars for media trade credits Magnolia Hotels in US - exchanged hotel rooms (off-peak season) for goods such as flat screen TVs, laptops, construction work and room renovations. Proctor & Gamble - uses bartering in marketing of Pampers (diapers) by providing these products free of charge in maternity wards.

Direct Selling

- skipping the middleman e.g Tupperware - kitchen and household products sold via 'Tupperware parties' organised in homes for small groups of people

Systematic Analysis of the Business Model Components

1. Aligning the components on the right hand side of the canvas with the central VPs to ensure the business model delivers value: Specific value propositions for each customer segment Specific distribution channels for each customer segment Specific customer relationship processes for each customer segment 2. Identifying revenue streams for each customer segment 3. Developing the components on the left hand side of the canvas to link all the creation activities that are needed to deliver the VPs: Key activities needed to deliver the VPs Key resources needed for all the key activities Key partners needed to complement the internal resources to deliver the VPs 4. Identifying the cost structure for delivery of key activities 5. Ensuring the revenue streams cover all the cost structure elements - to capture value for the business venture

Business Model Navigator: WHAT?

1. What customer problems do we solve and what needs do we meet? 2. What are the products and services we put in place to accomplish this? 3. What is the perceived customer value? (not necessarily the same as the technical specs) 4. What value or benefit do we create for customers? How do we communicate it? 5. How do our offerings differ from those of our competitors? What alternatives for customers have? 6. Does our current business model meet our customers' needs fully?

Business Model Navigator: WHO?

1. What customers and customer segments do we mainly serve? 2. What kinds of relationships do our customers expects and how do we maintain them? 3. Who are our most important customers? 4. Who are the other important stakeholders that need to be considered? 5. What distribution channels do we use to serve our customers? 6. Who influences our customers (opinion leaders, stakeholders, users)? 7. Do different departments address the same customer segments differently? 8. What people are behind our customers? Will the same people be here for the next 10 years?

Business Model Navigator: HOW?

1. What key resources are behind our offerings and value proposition? 2. What competencies and key activities do we need? 3. Does our value chain make full use of our competencies? 4. Who are our most important partners? What is their relation to our business and what do they bring? 5. Who are our most important suppliers and partners and what do they contribute?

Business Model Navigator: WHY?

1. Why will the customer pay for our product or service? 2. What are our main sources of income? 3. How is the income generated? What are customers willing to pay for? 4. What are our main costs and the most significant cost drivers? 5. What are the main financial risks in our current revenue model?

Robin Hood

2 tiers, wealthy and strugglong take from the rich and give to the poor

The business model canvas provides a framework or tool Select one or more: a. For identifying the linkages between the primary and support activities in the value chain b. Which shows the key factors involved in creating, delivering and capturing value c. For identifying the key players in a value network d. For identifying the linkages between the key components in the business model e. Which shows the key factors involved in the business value chain

A , D

Razor Blade Model

A business tactic involving the sale of dependent goods for different prices - one good is sold at a discount, while the second dependent good is sold at a considerably higher price.

Business model

A logic or formula of how a business creates and delivers value to customers in a profitable way. A graphical representation can be seen through the BMC

Auction

A public sale in which property or items of merchandise are sold to the highest bidder

performance based contracting b2b

A type of Contract whereby requirements are specified in terms of performance and output and generally include performance incentives and penalties.

flat rate

All you can eat' restaurants - pay fixed price. Annual season tickets - for transportation (Swiss Federal Railways), entertainment or sports. Fixed monthly plans for mobile phones or internet streaming of films and TV shows (e.g. Netflix)

A written Business Plan normally includes a) The same content for every purpose b) At least 50 pages of detailed notes c) A blueprint for the business venture d) Details of Osterwalder's (2005) nine building blocks e) All of the above

C

Leverage Customer Data

Collecting customer data, then analysing it and using it to increase effectiveness of advertising or selling it to others (connects with Hidden Revenues

From Push to Pull

Customer is king' approach - company keeps customers central to decision making; to respond to 'customer needs' value chain has to be efficient (TQM style produce to order) Examples:

Lock-in

Customers are locked into a specific company's products/services by technology or interdependencies of products/services; difficult to switch to another company (costs, training, etc.). Based on principle that it is cheaper to keep existing customers than to get new ones.

Customer Loyalty Programs

Customers are retained and loyalty assured by providing value over and above the actual product or service itself, e.g. incentive schemes. Creates emotional connection and rewards with special offers, discounts etc. - customers stay voluntarily and this protects the company's future revenue.

The Business Model canvas can be used to provide a template for a) Examining the current business model b) Investigating changes and new strategies for the future c) Designing a new business venture d) Providing a detailed business plan e) All of the above

E

Pay Whatever You Want

Examples: One World Everybody Eats, Salt Lake City, US, 2003 Music industry - British rock band Radiohead marketed album "In Rainbows" in 2007 using this approach Online music service NoiseTrade founded in 2006 with this approach; artists upload their songs (free) and music fans made donations when downloading them.

Business Plan

Outlines the overall blue print of a business and describes the current state and proposed future activities It includes the strategic goals/objectives and how they will be achieved

Business Model Analysis: Types and Objectives

To examine the current business model - as a structure for reviewing performance. To investigate changes and new strategies for the future - as a structure for exploring strategic options and new opportunities or redesigning the business model. To design a new business venture - as a structure for considering the key business activities. To provide details showing how a business operates as part of a business plan - as a structure for planning and reporting on a business.

Shop in Shop

When a company establishes an independent store within another company's retail space; provides synergies win-win for both companies.

The Business Model Navigator is summarised in terms of Select one: a. Four core dimensions including: Who? What? How? Why? b. Four core dimensions including: What? Where? Why? Who? c. Nine core components or building blocks d. Seven core competencies e. Four key factors including: Product? Process? Positioning? Place?

a

The Crowdfunding business model involves Select one: a. Outsourcing funding for projects, products or ventures to external investors b. Using a competition to find the best innovations and providing a reward or incentive c. A collaborative approach to creating value from external sources d. Inviting people to contribute to a shared platform for product design e. Obtaining ideas and solutions to problems from a 'crowd' of people

a

The motivation for establishing customer relationships with each segment of the business model is to acquire and retain customers, or to increase sales. Select one: True False

a

The motivations for creating key partnerships include Select one: a. Reducing costs through economies of scale, accessing resources or reducing risks b. Establishing repeat customer purchases through strong relationships c. Creating new revenue streams from new customer groups d. Creating friends and strategic networks e. Strategic alliances and joint ventures

a

The over-riding purpose of the systematic analysis of business model components is Select one: a. To ensure the business model creates, delivers, and captures value b. To identify and evaluate trends and issues in the business environment c. To calculate the break even point for a new venture d. To develop a business plan with specific goals and objectives e. To develop an effective organisation structure and HR system

a

The process involved in designing completely new business models includes Select one: a. Searching, experimenting and learning about all the key factors/building blocks b. Market research c. Detailed business plans with sales and growth forecasts d. Focusing on execution e. Copying the business model of a potential competitor

a

To design and develop the Hydrofoiler XE-1, Manta5 have Select one: a. Systematically experimented with prototypes of all the key components in this product b. Have been able to incorporate some components from cycles that 'plug in' to their design c. Used reverse engineering to get ideas from jet skis d. Used reverse engineering to get ideas from motor bikes e. All of the above

a

When a company chooses to combine a new business model in the current business but in a separate unit or division, this is called Select one: a. Autonomy b. Separation c. Integration d. Combination e. Collaboration

a

ingredient branding b2b

a type of branding in which branded materials become "component parts" of other branded products. key feature of marketing to increase profile

Business model innovation can be difficult to implement. Factors which make it more likely to succeed include: Select one or more: a. Creating a small incubator or separate division outside the core business b. Generating lots of novel ideas c. Having a champion to lead the development and access to resources d. Focusing on the core business e. Senior leaders who are committed to the status quo

a, c

The Open Source business model is illustrated by Select one or more: a. The development of the Netscape browser b. GE's First Build online and physical community c. The online encyclopedia known as Wikipedia d. Obtaining funds to buy Awaroa Beach in the Abel Tasman Park e. The Connect + Develop scheme by Proctor & Gamble

a, c

The St Gallen approach to business model innovation Select one or more: a. Assumes that recombining existing business model elements can be very successful b. Recommends three strategies for generating new business models (from the 55) including: Cost leadership, Differentiation and Niche strategies c. Recommends three strategies for generating new business models (from the 55) including: Transferring, Combining and Leveraging d. Assumes that innovations need to be completely new and original

a, c

Two of the key business model patterns illustrated by the Zara case study are Select one or more: a. Integrator b. Self-Service c. Orchestration d. Prom Push to Pull e. Customer Loyalty

a, d

Ethique is a Christchurch-based company that Select one or more: a. Develops, manufactures and sells zero-waste, 100% solid beauty bars made from natural and sustainably-sourced ingredients b. Has partnered with the Body Shop to increase sales c. Only sells products online and in some specialist stores in New Zealand d. Sells eco-friendly cosmetics in recyclable plastic bottles e. Exports to the USA, Australia, Japan, Hong Kong and Taiwan

a, e

The business model navigator is Select one or more: a. Developed by Gassmann, Frankenberger & Csik b. Identifies activities using a canvas of nine building blocks c. A systematic four-step approach for developing business models d. Developed by Osterwalder and co-authors

a,c

Add on model

additional charge for extras e.g Airlines - low price ticket, but 'add on' food, baggage, credit card fees Luxury car brands - Mercedes-Benz S class - basic model for set price, then customisation from >100 premium options can increase price by >50% Sega -video game publisher, software and hardware developer was first in this industry to use the Add-on business model - selling the game and also downloadable extras

SWOT analysis of Manta5's business model shows this start-up company faces which of these threats? Select one: a. Customer demands b. Potential imitators may appear c. The inability to recruit engineers d. Customer services staff needed e. Lack of institutional support of their Intellectual Property

b

Some of the key factors involved in Zara's 'fast fashion' approach include Select one: a. Premium pricing for luxury customer segments b. Many designs, quick turnover, low inventory and premium store locations c. Extensive marketing campaigns d. Large batch production of the same styles for economies of scale e. Decentralised warehousing and outsourced production

b

The building blocks most impacted by Airbnb's expansion into 'experiences' were: Select one: a. Value proposition, cost structure and revenue streams b. Customer segments, value proposition and revenue streams c. Value proposition, key activities, and key resources d. Customer segments, distribution channels and key activities e. Customer segments, customer relationships and key partners

b

The equivalent dimension for the Value Proposition in the Business Model Navigator is called Select one: a. When? b. What? c. Why? d. Who? e. How?

b

The key building blocks in Gillette's business model include: Select one: a. Key Activities, Key Resources and Cost Structure b. Value Proposition, Customer Relationships and Revenue Streams c. Value Proposition, Customer Segments and Revenue Streams d. Value Proposition, Customer Segments and Customer Relationships e. Key Activities, Key Resources and Value Proposition

b

The key building blocks of the business model canvas for the 'pricing/target market' business models are: Select one: a. Cost Structure and Customer Segments b. Value Proposition and Customer Segments c. Value Proposition and Revenue Streams d. Value Proposition and Key Partners e. Value Proposition and Customer Relationships

b

There is one additional element in the Business Model Navigator that is not explicitly named in the Business Model Canvas: Select one: a. Incubators and co-working spaces b. Stakeholder groups c. Entrepreneurs d. Policy advisors e. Shareholders

b

Until the patents on their expresso coffee capsules (pods) expired, Nestle Nespresso was able to prevent competitors from making and selling coffee for their Nespresso machines. This illustrates the business model pattern called Select one: a. Make More of It b. Lock-in c. Cross-selling d. Leveraging IP e. Direct-selling

b

The benefits of the Layer Player business model include Select one or more: a. Controls most of the key steps in the value chain process b. Contributes to a variety of independent markets and industries c. Co-ordinates the other segments and directs the value chain d. Uses a systematic approach with segmented markets and hierarchical levels e. Achieves efficiency gains from specialisation and multiplies IP rights

b, e

There are several different types of business model analysis that can be done to achieve different objectives including: Select one or more: a. Analysis of competitors b. Exploring new strategic options - redesigning the business model c. Examining the current business model - reviewing performance d. Value chain analysis e. Evaluating trends in the business environment

b,c

The 'how' dimension of the Business Model Navigator focuses on Select one: a. None of these answers are correct b. Cost drivers and revenue streams c. Internal resources, activities & competencies, and partners d. The value proposition e. Customer segments, customer relationships, and distribution channels

c

The activities involved in the Crowdsourcing business model include: Select one: a. Getting groups together to brainstorm new ideas and solutions b. Finding partners who can work collaboratively together on specific projects c. Competitions for the best ideas that are selected and then given a reward d. Celebrating the milestones throughout the collaborative project activities e. Obtaining funds via the internet for a specific project, product or new venture

c

The business model that involves generating revenue by charging fees for the use of the company's Intellectual Property is called Select one: a. User Design b. Open Innovation c. Licensing d. Revenue Sharing e. Make More of It

c

Which of the business model building blocks has Amazon used repeatedly to innovate? Select one: a. Customer Segments b. Cost Structure c. Sales and delivery Channels d. Key Activities e. Revenue Streams

c

Nestle Nespresso represents a series of different business model patterns including Select one or more: a. Licensing and Mass Customisation b. Direct-selling c. Direct-selling and Cross-selling d. Razor & Blade and Lock-In e. Razor & Blade and Ingredient Branding

c, d

The characteristics of the Two-Sided Markets business model include: Select one or more: a. Interactions with two different customer segments b. Interactions between two companies to increase their revenues c. Interactions between two complementary groups via an intermediary or platform d. Resources are able to be shared by the members of both strategic networks e. The more people from one group who are active, the more attractive it is for the other group

c, e

The major innovations in Airbnb's business model include: Select one or more: a. Key resources - including the Airbnb brand, tech talent and IT platform b. Key partnerships - with local government regulators c. Customer segment innovation - allowing people to rent rooms in other people's homes d. Channels including the website, mobile app, word of mouth and search engine optimisation e. Innovation in the value proposition - based on trust, lower prices and variety of options

c, e

The customer segments for Nestle's Nespresso business include Select one or more: a. Young urban professionals b. Mass market c. Office market d. Geographic market segmentation e. Households (with relatively high incomes)

c,e

Target the Poor

customers at the base of the earnings pyramid

Analysis of Ethique's business model shows Select one: a. A series of Value Propositions linked to each Customer Segment b. A set of Key Activities which include manufacturing overseas c. A series of Customer Segments based upon personal factors such as age, gender, hair colour etc. d. A series of Customer Segments based upon where the products are purchased e. A series of Customer Segments based upon geographic markets and cultural factor

d

Business model patterns Select one: a. Are important to be able to imitate the competitors b. Include all the primary and support activities in the value chain c. Are not as likely to generate revenue as developing new products or processes d. Are important as a means to change and operate differently to others e. Are mostly different within an industry or sector

d

Ensuring that the revenue streams cover all of the cost structure items is necessary for the business model Select one: a. To be productive b. To deliver value c. To be competitive d. To capture value e. To create value

d

One of the changes in the Fast Fashion industry that poses challenges for Zara is Select one: a. The costs of fabrics are increasing b. The business model for fast fashion is not a trade secret c. The costs of distribution and logistics are increasing d. Fast fashion challengers are getting smaller, faster and more nimble e. Large multinationals are entering this market

d

One of the key factors underlying the success of Nestle Nespresso's business model has been Select one: a. The high profit margins available in the luxury retail market b. Being the first company to sell expresso coffee in single serve machines c. The high profile branding and marketing campaigns d. The high profit margins on portioned coffee in capsules e. The economies of scale from operating a global business

d

SWOT analysis of Manta5's business model shows this start-up company has which of these weaknesses? Select one: a. Lack of potential markets beyond New Zealand b. The product is easy to imitate c. Design issues d. Challenges with production and delivery e. Lack of customer interest

d

The Crowdsourcing business model is demonstrated by Select one: a. Freedom Supercars' system for sharing high end-luxury cars b. Cassava Films obtaining funds to complete the film "Foreign Correspondents" c. IBM's computer user group exchanging technical programming, operating system & database information d. InnoCentive's online platform for finding solutions for R&D problems in engineering, science & business e. Mobility's approach to car sharing among members

d

The Make More of It business model is illustrated by Select one: a. ARM licensing its microprocessor chip designs to other companies b. Quirky accepting designs from individuals and selling them online c. GE Healthcare selling their portable ECG device in France, Germany and the USA d. Amazon's web services division providing internet infrastructure management services e. IBM's R & D department creating and patenting new technologies

d

The business model which involves simple inexpensive products developed within and for emerging markets and then being sold in industrialised countries is called Select one: a. Orchestration b. Social Innovation c. Reverse Engineering d. Reverse Innovation e. Licensing

d

The epicentre of business model innovation that is based upon 'customer needs, access or increased convenience' is called Select one: a. Consumer-driven b. Relationship-driven c. Resource-driven d. Customer-driven e. Offer-driven

d

The evaluation criteria for organisation of multiple business models include Select one: a. Potential for synergies b. Potential for conflicts c. Similarity of the nine building blocks d. all of the above e. Only (a) and (b) above

d

To address the issues associated with sustainabilty, Nestle Nespresso started reporting on a series of targets for their "Positive Cup" programme in 2014. This includes progress on goals in key areas such as: Select one: a. Economic, environmental, cultural and social dimensions of sustainable development b. Progress on the UNDP's Sustainable Development Goals c. Corporate social responsibility (CSR) goals d. Sourcing coffee, recycling aluminium from capsules and climate change impacts e. Stakeholder engagement and ethical practices

d

The Reverse Engineering business model is illustrated by Select one or more: a. Haier electronics company's 'Mini Magical Child' washing machine b. Developing inexpensive products in emerging markets and selling them in developed economies c. Getting the users of products to help with designing new products d. Pelikan stationery & office equipment company also making and selling ink cartridges for printers e. Taking a product apart to see how it is made, and then copying and selling it at a lower price

d, e

peer to peer

dealing with person to person

Nestle established Nespresso as a new subsidiary company as the new business model was quite different to their original business. This illustrates the organisational process known as Select one: a. Appropriability b. Add-on c. Agility d. Affiliation e. Ambidexterity

e

SWOT analysis of Manta5's business model shows this start up company has key strengths including Select one: a. Transactional revenues will flow from single purchases of the hydrofoil eBike b. R&D costs have been significant for the development of prototypes c. Digital marketing of the prototype has created demand before the product design is finalised d. The customer base is unsegmented e. Strong networks and relationships with a series of key partners

e

The 'Who' dimension of the Business Model Navigator includes: Select one: a. Target customers b. Stakeholder groups c. Distribution channels d. Customer segments e. All of the above

e

The Integrator business model is illustrated by Select one: a. By Ponoko allowing customers to create products and sell them online b. By Airtel's focus on marketing, sales & finance, then outsourcing IT support c. By Wipro Technologies specialising in IT outsourcing and related consulting services d. By Dropbox's cloud storage, file synchronisation, personal cloud, and client software e. By Zara designing and producing most of its apparel & accessories in its own factories in Spain & Europe

e

The St Gallen approach to business model innovation includes Select one: a. SWOT analysis b. Ecosystem analysis c. Value chain analysis d. A cycle of creativity, analysis, and implementation e. A cycle of designing, prototyping, and testing of potential new business models

e

The customer segments for Nestle's Nescafe instant coffee business includes Select one: a. Direct-selling to consumers b. Geographic market segmentation c. Socio-economic profiling to align with pricing strategy d. Retail businesses such as supermarkets e. Mass market

e

Which of the business model building blocks was most important for Spotify's innovation in the music industry? Select one: a. Customer Relationships b. Key Activities c. Customer Segments d. Cost Structure e. Revenue Streams

e

trengths of Ethique's business model include: Select one: a. Efficient execution of key activities b. Strong network of key partners c. Revenue streams are increasing with geographic market growth d. Costs and revenues are mostly predictable e. All of the above

e

Ultimate Luxury

extreme premium pricing. upper class

The profit mechanism in the Business Model Navigator is called the 'What'? Select one: True False

false

Solution Provider

finding all you need in the one stop shop

Guaranteed Availability b2b

involves commitment to ensure constant product performance and avaliability - reducing costs of breakfown and targeting zero downtime Provides replacement equipment and machines, as well as repair and maintenance services. Involves strong long-term relationships with customers who will pay price premium; but need to be adept at solving unforeseen problems and crises expertly.

Supermarket

large selection and small prices under one roof

Mass Customisation

off the rack individualism

The long tail (e.g lego)

offers large numbers of niche products which sell in low volumes (sell less of more)

E-commerce

online business for transparency and savings e.g Amazon (1994) started selling books online, with larger selection than local book stores; has significantly expanded product line since then aims to 'deliver everything to anyone worldwide' Alibaba - the Amazon of China - major e-commerce company with large loyal customer base.

Pay Per Use

pay as you go Pay per click' for internet advertising - Google gets 90% of its advertising revenue with this type of ad. Daimler's car sharing Car2Go charges customers for renting by the minute, without any annual fees.

Experience Selling

products appealing to the emotions e.g Starbucks, coffee chain sells food and beverages (coffee, pastries, snacks, tea, sandwiches) - with wifi, relaxing music, cosy atmosphere and comfortable furniture in cafes Red Bull energy drink - focussed on active lifestyles and extreme sports (motorcross, windsurfing, BMX, snowboarding, Formula One)- sponsors extreme events; association of lifestyle themes with the drink itself.

Self-Service

putting the customer to work

cross-selling b2b

selling additional products or services to an existing customer

B2B - affiliation

support other companies to market their products and benefit from successful transactions using pay per sale or pay per display online systems provides promotion to a wider network, impacts scales channels and revenue streams without any extra scales or marketing efforts e.g. Amazon Associates Program (1996) Pinterest - social network sharing favourite pictures on theme-based virtual pinboards

subscription model

the customer pays a regular fee, typically on a monthlt or annual basis, in order to gain acces to a product/service on a regular basis

hidden revenue b2b

the primary source of revenue is from third party who cross finances free or low priced offerings eg from advertising

The Business Model Navigator was developed after the Business Model Canvas and it incorporates the nine building blocks from the Canvas. Select one: True False

true

The business model summarised by Gassmann et al. (2014) as "win-win with symbiosis" is called Two-Sided Market. Select one: True False

true

no-frills

whatever, as long as it is cheap


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