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Midterm

BU121 Study Guide - Midterm Guide: Operating Leverage, Direct Market, Rolex


Department
Business
Course Code
BU121
Professor
Laura Allan
Study Guide
Midterm

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George Haddad 1
BU121 MIDTERM REVIEW
25 M/C
SHORT ANSWER – 40 MARKS
PROBLEMS 15 MARKS (3 QUESTIONS / 5 PARTS; 1-5 MARKS
80 MARKS TOTAL
TOPICS TO BE COVERED:
BUSINESS MODELS (approx 15%) 13 MARKS SPLIT EQUALLY BETWEEN M/C AND
SHORT ANSWER
DISC & EMOTIONAL INTELLIGENCE (approx. 10%) 9 MARKS SPLIT BETWEEN M/C
AND SHORT ANSWER
BUSINESS COMMUNICATION (approx 10%) 7 MARKS SHORT ANSWER
MARKETING (approx 40%) 20 MARKS SHORT ANSWER 10 MARKS M/C
FINANCE (approx 25%) 3 MULTIPLE CHOICE, 3 MARKS SHORT ANSWER, 15
PROBLEMS
Main concepts from text and readings will be tested with multiple choice questions (as indicated
with blue text), unless otherwise indicated.
Lecture material & some lab manual material will be tested in more depth (as indicated in black
text) with a combination of multiple choice, short-answer questions, and problems. Material that
is testable through problems is indicated in red text. Cases are not covered on this exam
BUSINESS MODELS (approx 15%) 13 MARKS SPLIT EQUALLY BETWEEN M/C AND
SHORT ANSWER
Lecture Material
what is a business model
ODescribes the rationale of how an organization creates, delivers, and captures value
How a company intends to make money/the logic by which it sustains itself
financially.
How your idea actually becomes a success.
why it is important to understand your business model (Lab Manual – Why Business
Models Matter)****
oTelling good stories
Stories that explain how enterprises work
American Express and the travelers check
All new business models are variations on basic value chain underlying
business
1) Activities associated with making something
2) Activities associated with selling something
oTying Narrative to Numbers
With the spreadsheet, you could model the behavior of your business
Business modeling is the managerial equivalent of the scientific method –
experimentation and finding the right fit

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George Haddad 2
oTwo critical tests
When business models fail, they either fail the NUMBER test or the
NARRATIVE test
May internet grocers, in the early days, failed because their business models
were flawed
Priceline Webhouse Club tried to buy in bulk in order to negotiate the best
discounts for its customers
Priceline was wrong in the assumption that suppliers would want to engage in
their game of negotiation
oWhat about strategy?
Business, sooner than later, run into competition.
Competitive strategy explains how you will do better than your rivals
Sam Walton had the same model as Kmart, but a different Strategy that
distinguished WalMart
Walton put good-sized stores in little towns which were ignored by
everyone else
Wal-Mart promised national brands at affordable prices
how companies can have essentially the same product and different business models
OEx. Gillette VS Electronic Shavers
Both products offer the same functions
Gillette virtually gives away the handle and makes its money by selling a
steady supply of razor blades
Electronic Shavers have a larger initial cost (one time purchase)
OEx. Water Filtration
Q Water – Rents filtration systems for a monthly fee to restaurants
AquaOvo – Sells water filtration systems with a stylish cooler for a one-time
fee to individuals
Event Water Solutions – Rents water filtration systems for a per-event fee to
event holders. Rent per event.
OSame products, Different business models
implications of business model on operations*****
O
business model patterns and examples
OMulti-Sided Platform
Value is created by facilitating interactions between two or more distinct but
interdependent groups of customers
Ex. eBay, if there were many sellers on eBay, but no buyers, then eBay itself
is useless
OThe Long Tail
Selling less of more
Focus on offering a large number of niche products, each of which
sells relatively infrequently instead
Ex. Netflix has a huge variety of movies and shows.

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George Haddad 3
Ex. Amazon has a wide variety of products
O“FREE”
As mentioned before, can’t sell for free unless it is subsidized
If you want to sell your product for free, it has to be subsidized by
something else. For example, Google Search is free, but it is
subsidized by Ads on its site
Recent game changers
Bait and Hook ex. 1 handle purchase but frequent blade replacements
– high margin on razor blades
Freemium
Membership models – subscription box, member community, flash
sales
Crowdsourcing materials – crowdsourcing, crowdfunding, P2P
Sharing
value proposition design****
OA set of value proposition benefits that you design to attract customers must fit
with the set of customer segment characteristics that you assume, observe and
verify in the market
oGains – Outcomes customers want to achieve or concrete benefits they are seeking
oPains – Potential bad outcomes, risks and obstacles related to customer jobs
oCustomer jobs – What customers are trying to get done in their work and in their
lives, expressed in their own words
oCustomer jobs
Things customers are trying to get done in their life… the tasks they are trying
to perform and complete, the problems that are trying to solve or the needs
they are trying to satisfy
oTypes of jobs
Functional jobs: When they try to perform or complete a specific task or solve
a specific problem
Social jobs: When they want to look good or gain power or status; how they
want to be perceived by others
Personal/emotional jobs: When they seek a specific emotional state
oSupporting jobs:
Performed in context of purchasing and consuming value, and arise from 3
different roles: buying, co-creating or transferring value
oJob context
Context in which job is performed may impose constraints or limitations –
important to consider
oJob importance
oCustomer pains
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