ISOM 351 Unit 1
What does alignment mean? - Answer-- Strategy, business model, and execution must be connected and
consistent
- Decisions about one must be made with consideration of each of the others (aka interconnectedness,
consistency)
What does the BMC do? - Answer-Helps align strategy & execution; helps align internal capabilities to
market expectations
4 elements of strategy - Answer-Decisions, tradeoffs, activities, resources
What are the goals of strategy? - Answer-- Competitive advantage
- Create, capture, and deliver value
4 questions that a business model answers - Answer-Who is the customer? What does the customer
value? How do we make money in this business? What is the underlying economic logic that explains
how we can deliver value to customers at an appropriate cost?
Business model vs strategy - Answer-Business model describes how your business runs, while strategy
explains how you will do better than your rivals
Right side of the BMC - Answer-Who are our customers (segments), what problem do they want solved
(value proposition), how do they want to interact with us (relationships), and how do they want to get
access to our service or product (channels)?
, Left side of the BMC - Answer-key partners, key activities, key resources, value propositions
- "the operating model," how the firm executes strategy
Bottom of the BMC - Answer-Economic logic = cost structure, revenue streams
Willingness to pay - Answer-Belongs to the customer; the maximum amount of money a customer
would spend in order to solve their problem; aka benefits
Price - Answer-the amount of a money a customer actually spends to buy the product/service
Total cost - Answer-the total cost incurred by the company in order to make the service or product
available to the customer
Input cost - Answer-the cost incurred by the company in order to acquire all basic materials and
equipment needed to deliver the service or product
WTP - TC = ? - Answer-value created
Price - TC = ? - Answer-value captured by the firm
WTP - Price = ? - Answer-consumer surplus: the amount of value, created by the business and the
customer, that the customer gets to keep
TC - IC = ? - Answer-value delivered (transformation costs): the cost incurred to deliver a product or
service; value is delivered through the operating model
What does alignment mean? - Answer-- Strategy, business model, and execution must be connected and
consistent
- Decisions about one must be made with consideration of each of the others (aka interconnectedness,
consistency)
What does the BMC do? - Answer-Helps align strategy & execution; helps align internal capabilities to
market expectations
4 elements of strategy - Answer-Decisions, tradeoffs, activities, resources
What are the goals of strategy? - Answer-- Competitive advantage
- Create, capture, and deliver value
4 questions that a business model answers - Answer-Who is the customer? What does the customer
value? How do we make money in this business? What is the underlying economic logic that explains
how we can deliver value to customers at an appropriate cost?
Business model vs strategy - Answer-Business model describes how your business runs, while strategy
explains how you will do better than your rivals
Right side of the BMC - Answer-Who are our customers (segments), what problem do they want solved
(value proposition), how do they want to interact with us (relationships), and how do they want to get
access to our service or product (channels)?
, Left side of the BMC - Answer-key partners, key activities, key resources, value propositions
- "the operating model," how the firm executes strategy
Bottom of the BMC - Answer-Economic logic = cost structure, revenue streams
Willingness to pay - Answer-Belongs to the customer; the maximum amount of money a customer
would spend in order to solve their problem; aka benefits
Price - Answer-the amount of a money a customer actually spends to buy the product/service
Total cost - Answer-the total cost incurred by the company in order to make the service or product
available to the customer
Input cost - Answer-the cost incurred by the company in order to acquire all basic materials and
equipment needed to deliver the service or product
WTP - TC = ? - Answer-value created
Price - TC = ? - Answer-value captured by the firm
WTP - Price = ? - Answer-consumer surplus: the amount of value, created by the business and the
customer, that the customer gets to keep
TC - IC = ? - Answer-value delivered (transformation costs): the cost incurred to deliver a product or
service; value is delivered through the operating model
