BU121- Final Exam Guide - Comprehensive Notes for the exam ( 47 pages long!)

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30 Nov 2017
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BU121
FINAL EXAM
STUDY GUIDE
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What%is%a%business%model?%
Why%is%it%important%to%understand%your%model?%
How%do%you%build%a%business%model?%
%%
%%
Business%model:%Describes%the%rationale%of%how%a%organization%creates,%delivers,%and%captures%value%
How%a%company%intends%to%make%money%
Decisions%and%trade%offs%
Advantages%%
%%
Patterns:%Business%models%that%have%been%used%by%multiple%companies%because%they%work.%How%a%model%
fits%across%multiple%firms%
%%
Ex.%Gillette%
Electric%razors%make%money%up%front%
Manual%razor%makes%money%off%of%new%blades%
%%
Model%Styles%
Renting%(recurring%payments%monthly)%
Selling%right%up%front%%
Per%use%fee%
Etc.%
**The%value%here%is%not%compared,%it%is%per%user.%
%%
Different%models%satisfy%different%business%styles,%and%align%with%different%marketing%methods%
%%
Magazine%
Vogue%:%advertising%revenue%
Consumer%report:%Subscription%revenue%
%%
Why%Does%it%Matter?%
Business%models%are%stories%that%explain%how%enterprises%work%
Elements%of%a%good%story%
Characters%(customers)%
Motivation%(desire%for%product)%
Plot%that%twists%(evolving%and%growing)%
%%
Travelers%Checks%
Characters:%Travelers%
Motivation:%Stores%will%accept%for%foreign%business%
Plot%twist:%Bank%earns%money%before%covering%costs%
%%
Good%business%models%present%better%ideas%than%the%alternative%
Failure%occurs%when%narrative%doesn't%make%sense%
Business%model%must%satisfy%all%parts%of%the%narrative%
Abilities%must%be%satisfied%as%well%
Imperfect%assumptions%(numbers%don't%make%sense)%
Motivation%of%those%paying%is%very%important%
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%%
%%
Components)of)a)business)model%
%%
Value%Prop%%%%%%%%Customer%segment%%%%%%%Distribution%Channel%
%%
Activities%%%%%%%%%%%Resources%%%%%%%%%%%%%%%%%%%%%%Partners%
%%
Costs%%%%%%%%%%%%%%%%%%Revenue%
%%
Each%block%in%the%business%model%must%relate,%the%narrative%must%flow.%
%%
%%
Multi-Sided%Platform%
Value%is%created%by%facilitating%interactions%between%two%or%more%distinct%but%interdependent%
groups%of%customers%
Value%to%a%group%ONLY%if%the%other%groups%are%present%
o Network%effect%
Often%solved%by%segments%subsidizing%one%another%
%%
%%
Business%Model%Platforms%
%%
The%Long%Tail%
Y%axis%=%#%of%sales%
X%axis%=%#%of%products%
Selling%"less%of%more"%
Focusing%on%offering%large%number%of%niche%products,%which%sell%relatively%infrequently%
RATHER%than%small%number%of%products%in%high%volume%
Examples%
Lego%
Netflix%
eBay%
%%
Lulu.com:%Publishing%Company%
%%
Traditional)publishing)model%
Sell%hits%to%a%broad%audience%
Distribute%through%retailer%
Wholesale%revenue%
They%must%find%the%best%selling%hits%
Cost%structure%is%publishing%and%marketing%
%%
Long)Tail)Model:%Multi-Sided%Platform%
Self%publishing%
Marketplace%for%niche%content%
Niche%authors%
Niche%audiences%
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