ENTR 422 Midterm || with Errorless Answers.
Business Model Definition correct answers A method and a set of assumptions that explain how
a business creates value and earns profits in a competitive environment
Customer Value Proposition correct answers What, exactly, is the customer paying for?
How do we increase the willingness to pay?
Profit Formula correct answers Revenue Model: Price x Volume
Cost Structure: Fixed vs Variable Costs
Margin Model
Resource Velocity
Value Chain Components correct answers Key Resources
Key Processes
Business Model: correct answers How a firm creates value and converts it into revenue
Value correct answers The amount that buyers are willing to pay for what a firm provides them
and is measured by total revenue
Value-Chain Analysis correct answers A strategic analysis of an organization that uses value
creating activities
Focus is on the key strategic activities that produce the value the customer is paying for
**Value-Added Activities Model correct answers Input Suppliers --> Inbound Logistics -
Production - Outbound Logistics - Sales and Service --> Output Customers
,*Above: Product Development, Marketing
*Below: Support Functions (Purchasing, Accounting, HR , Admin, etc.)
Value-Chain Analysis: Primary Activities correct answers -Contribute to the physical creation of
the product or service, its sale and transfer to the buyer, and its service after the sale
-Inbound logistics, operations, outbound logistics, marketing and sales, and service
Value-Chain Analysis: Support Activities correct answers -Activities of the value chain that
either add value by themselves or add value through important relationships with both primary
activities and other support activities
-Procurement, technology development, human resources management, and general
administration
Revenue Model = correct answers Price x Volume
Margin Model = correct answers Price - COGS
Cost Structure: correct answers -Required assets
-Fixed vs. Variable (Direct vs. Indirect) Costs
-Economies of Scale (and Economies of Scope)
Resource Velocity: correct answers -Inventory turns
-Lead-time
-Asset utilization
Value Creation and Appropriation Questions correct answers Does the business model create
value for shareholders, customers, or for society as a whole?
Does the company (or its primary customer) "capture" all of the value created?
, Is all of the customer's value created by one business?
Are there multiple ways to convert "value created" into revenue?
What are some of the business models built around "new media"; social networking; open-source
innovation; social entrepreneurship; etc.?
Total Value Created = correct answers Customer Revenues
Margin = Revenues - Cost of Value Creating Activities
Individual Customer Perception of Value: correct answers Perceived Value = Quality (or Utility
or Consumer Benefit) / Price
Competitive advantage comes from either correct answers -Higher perceived value
(differentiation)
-Lower conversion costs
9 Business Model Building Blocks correct answers 1) Customer Segments
2) Value Propositions
3) Channels
4) Customer Relationships
5) Revenue Streams
6) Key Resources
7) Key Activities
8) Key Partnerships
9) Cost Structure
Growth is viewed in terms of: correct answers -Organization Design
-Individual Behavior
-Strategy
Business Model Definition correct answers A method and a set of assumptions that explain how
a business creates value and earns profits in a competitive environment
Customer Value Proposition correct answers What, exactly, is the customer paying for?
How do we increase the willingness to pay?
Profit Formula correct answers Revenue Model: Price x Volume
Cost Structure: Fixed vs Variable Costs
Margin Model
Resource Velocity
Value Chain Components correct answers Key Resources
Key Processes
Business Model: correct answers How a firm creates value and converts it into revenue
Value correct answers The amount that buyers are willing to pay for what a firm provides them
and is measured by total revenue
Value-Chain Analysis correct answers A strategic analysis of an organization that uses value
creating activities
Focus is on the key strategic activities that produce the value the customer is paying for
**Value-Added Activities Model correct answers Input Suppliers --> Inbound Logistics -
Production - Outbound Logistics - Sales and Service --> Output Customers
,*Above: Product Development, Marketing
*Below: Support Functions (Purchasing, Accounting, HR , Admin, etc.)
Value-Chain Analysis: Primary Activities correct answers -Contribute to the physical creation of
the product or service, its sale and transfer to the buyer, and its service after the sale
-Inbound logistics, operations, outbound logistics, marketing and sales, and service
Value-Chain Analysis: Support Activities correct answers -Activities of the value chain that
either add value by themselves or add value through important relationships with both primary
activities and other support activities
-Procurement, technology development, human resources management, and general
administration
Revenue Model = correct answers Price x Volume
Margin Model = correct answers Price - COGS
Cost Structure: correct answers -Required assets
-Fixed vs. Variable (Direct vs. Indirect) Costs
-Economies of Scale (and Economies of Scope)
Resource Velocity: correct answers -Inventory turns
-Lead-time
-Asset utilization
Value Creation and Appropriation Questions correct answers Does the business model create
value for shareholders, customers, or for society as a whole?
Does the company (or its primary customer) "capture" all of the value created?
, Is all of the customer's value created by one business?
Are there multiple ways to convert "value created" into revenue?
What are some of the business models built around "new media"; social networking; open-source
innovation; social entrepreneurship; etc.?
Total Value Created = correct answers Customer Revenues
Margin = Revenues - Cost of Value Creating Activities
Individual Customer Perception of Value: correct answers Perceived Value = Quality (or Utility
or Consumer Benefit) / Price
Competitive advantage comes from either correct answers -Higher perceived value
(differentiation)
-Lower conversion costs
9 Business Model Building Blocks correct answers 1) Customer Segments
2) Value Propositions
3) Channels
4) Customer Relationships
5) Revenue Streams
6) Key Resources
7) Key Activities
8) Key Partnerships
9) Cost Structure
Growth is viewed in terms of: correct answers -Organization Design
-Individual Behavior
-Strategy
