[BU121] - Final Exam Guide - Ultimate 105 pages long Study Guide!

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29 Mar 2017
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BU121
FINAL EXAM
STUDY GUIDE
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BU- Lecture
What is a Business Model?
A business model describes the rational of how an organization creates, delivers, and captures
value
o How a company intends to make money/the logic by which it sustains itself financially
Reflects the strategic decisions and trade-offs that entrepreneurs make to earn
a profit
A produt is the etre of a usiess odel, ut it is ot a usiess i ad of itself, it a’t
succeed without a great business model
o Different companies can have similar offerings but different business models
3 Ways to make Money in Water Filtration
Q Water
o Rents water filtration systems for a monthly fee to restaurants
AquaOvo
o Sells water filtration systems with a stylish cooler for a one-time fee to individuals
Event Water Solutions
o Rents water filtration systems for a per-event fee to event holders
Impact of Business Model
Model affects strategy/ways of operating
o Blueprint describing how an organization operates
o Example: Subscription-Based vs. Advertising-Based Revenue Model
Why does it Matter?
Business Models are at heart stories, stories that explain how enterprises work
o All the elements of a good story
Precisely delineated characters
Plausible motivations
Plot that twists
o A successful business model represents a better way than the existing alternative
o Whe usiess odels do’t ork, fail arratie test or uers test
Narrative: Flawed logic, limited strategic choices, and incorrect assumptions
about the value chain
Numbers: Imperfect value creation and capture assumptions
Building a Business Model
Create Value
o Value Proposition
o Customer Segments
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o Distribution Channels
Deliver Value
o Business Activities and Associated Resources
o Strategic Partners
Capture Value
o Revenue Sources and Costs Drivers
The Business Model Canvas
Business Model Patterns
Multi-Sided Platform
o Value is created by facilitating interactions between 2 or more distinct but
interdependent groups of customers
o Of value to 1 group only if the other group of customers are also present, and
grows in value to the extent that it attracts more users: network effect
o Often solv3d by one segment subsidizing another
o Examples
Credit cards
Video games
Ebay
Free
o At least one substantial customer segment is able to continuously benefit from a
free offer, financed by another part of the business model or by another customer
segment
o Different patterns make the free offer possible
Advertising (Newspapers, social networking sites etc.)
Freemium (Skype, Apps)
Bait and Hook (Razors)
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