Deck 6: The Business Model

Question 1

The business model is a format for a story that explains a business' What? How? With whom? and What are the financial effects?

Answer 1

True

Question 2

Within an organization, there is a strategic level and an operational level (containing concrete processes and flows of activity). Where does the business model fit in this universe?

A) Between - connecting these two levels
B) Beneath - detailing processes and flows
C) Above - controlling the strategy

Answer 2

Between - connecting these two levels

Question 3

The book states that strategy focuses on opportunity and implementation, while the business model focuses on the market and competition.

Answer 3

False

Question 4

The business model can be said to form a bridge between the strategic and operational levels, indicating what in the way of ideas, resources, activities and relationships is needed to carry out a given strategy successfully.

Question 5

In an entrepreneurial context, a business model is often the result of entrepreneurial experimentation and learning. Effectuation and Lean Startup are examples of this successive logic.

Question 6

The book contains the following quote by Henry Chesbrough. "The economic value of a technology remains latent until it is commercialized via a business model. " In other words, technology alone is not enough - it must be translated into a business model that captures/extracts the financial value.

Question 7

In order to grasp the concept of the business model, the book lists various alternative definitions. Which three of the following are correct? A business model:

A) describes how all the elements in the system fit together to form a functional whole
B)describes how an organization creates, delivers and captures value
C) is the overall configuration of ideas, resources, activities and logics in the organization
D) is a model which states those businesses one should choose and those best avoided
E) is a tool which uses business as a model for the future

Question 8

The book emphasizes the idea of the business model as a system constructed to create value. What does this systematic school of thought believe?

A) it emphasizes the building blocks
B) it emphasizes the value-creating whole, its parts and the relations between the parts
C) it emphasizes the whole
D) it emphasizes the relations between the parts

Question 9

The contradictory expression "dynamically stable" is used to describe a quality of the business model (when viewed as a system). This implies that:

A) the bearing structure remains unchanged, whereas other, supporting parts can vary and adapt over time
B) in the business model, dynamics have a paradoxical relationship to stability
C) in order for something to be stable, one must slightly alter it
D) stability requires that all parts are flexible and changeable

Question 10

The business model can be seen as providing an answer to certain key questions, including: What will the customer be provided? Who is the customer? How or with whom should the offering be produced? How will it be financially sustainable?

Question 11

The book states that the many proposals boil down to the conclusion that a business model should contain four dimensions. Which two are incorrect?

A) profit formula
B) mission
C) key resources
D) key processes
E) strategic analysis
F) value proposition

Question 12

One of the roles of a good model is to simplify reality so that it becomes easier to understand and easier to discuss.

Question 13

When creating a business model, the work of answering questions and calibrating responses is called business modelling or business model design. These words reflect the nature of creating a business model as:

A) a part-analytical/part-creative process
B) a strictly analytical process
C) a strictly creative process

Question 14

Creating a business model often demands imagination, judgment and an eye for the parts and the whole.

Question 15

When people in a certain sector or branch use approximately the same business model, this is referred to as industrial wisdom/industrial logic - a generally accepted idea of how things are done in a certain branch (and how things aren't done).

Question 16

Match the business model headings with the question addressed beneath each heading.

-Value Proposition

A) For whom are we creating value ?
B) How do we establish and maintain our relation to the customer?
C) How do we communicate and deliver?
D) What activities are needed to create and deliver our proposition?
E) Which income and costs can we expect once we transform the model into reality?
F) What resources are needed to create and deliver our proposition?
G) What partners and networks are needed to create and deliver the offering?
H)What is the offering to the customer?

Question 17

Match the business model headings with the question addressed beneath each heading.

-Customer Segments

A) For whom are we creating value ?
B) How do we establish and maintain our relation to the customer?
C) How do we communicate and deliver?
D) What activities are needed to create and deliver our proposition?
E) Which income and costs can we expect once we transform the model into reality?
F) What resources are needed to create and deliver our proposition?
G) What partners and networks are needed to create and deliver the offering?
H)What is the offering to the customer?

Question 18

Match the business model headings with the question addressed beneath each heading.

-Customer Relationships

A) For whom are we creating value ?
B) How do we establish and maintain our relation to the customer?
C) How do we communicate and deliver?
D) What activities are needed to create and deliver our proposition?
E) Which income and costs can we expect once we transform the model into reality?
F) What resources are needed to create and deliver our proposition?
G) What partners and networks are needed to create and deliver the offering?
H)What is the offering to the customer?

Question 19

Match the business model headings with the question addressed beneath each heading.

-Channels

A) For whom are we creating value ?
B) How do we establish and maintain our relation to the customer?
C) How do we communicate and deliver?
D) What activities are needed to create and deliver our proposition?
E) Which income and costs can we expect once we transform the model into reality?
F) What resources are needed to create and deliver our proposition?
G) What partners and networks are needed to create and deliver the offering?
H)What is the offering to the customer?

Question 20

Match the business model headings with the question addressed beneath each heading.

-Key Activities

A) For whom are we creating value ?
B) How do we establish and maintain our relation to the customer?
C) How do we communicate and deliver?
D) What activities are needed to create and deliver our proposition?
E) Which income and costs can we expect once we transform the model into reality?
F) What resources are needed to create and deliver our proposition?
G) What partners and networks are needed to create and deliver the offering?
H)What is the offering to the customer?

Question 21

Match the business model headings with the question addressed beneath each heading.

-Key Resources

A) For whom are we creating value ?
B) How do we establish and maintain our relation to the customer?
C) How do we communicate and deliver?
D) What activities are needed to create and deliver our proposition?
E) Which income and costs can we expect once we transform the model into reality?
F) What resources are needed to create and deliver our proposition?
G) What partners and networks are needed to create and deliver the offering?
H)What is the offering to the customer?

Question 22

Match the business model headings with the question addressed beneath each heading.

-Key Partners/Networks

A) For whom are we creating value ?
B) How do we establish and maintain our relation to the customer?
C) How do we communicate and deliver?
D) What activities are needed to create and deliver our proposition?
E) Which income and costs can we expect once we transform the model into reality?
F) What resources are needed to create and deliver our proposition?
G) What partners and networks are needed to create and deliver the offering?
H)What is the offering to the customer?

Question 23

Match the business model headings with the question addressed beneath each heading.

-Financial Aspects

A) For whom are we creating value ?
B) How do we establish and maintain our relation to the customer?
C) How do we communicate and deliver?
D) What activities are needed to create and deliver our proposition?
E) Which income and costs can we expect once we transform the model into reality?
F) What resources are needed to create and deliver our proposition?
G) What partners and networks are needed to create and deliver the offering?
H)What is the offering to the customer?

Question 24

Which of the following are NOT main elements of the Business Model Canvas?

A) Effects
B) Stakeholders
C) Revenue streams
D)Channels
E) Cost structure
F) Customer relationships
G) Customer segments
H)Mission
I)Key activities
J)Key partners/networks
K)Key resources
L)Society
M)Our values
N)Value proposition

Question 25

The financial aspect of the BMC consist of two parts. Which of the following?

A) revenue streams
B) cash flow
C) cost structure
D) break-even analysis
E) profit and loss budget
F) value chain

Question 26

The book states that revenue and costs are mutually interdependent. Without costs, no revenue and without revenue, no ability to cover costs.

Question 27

The book states that one should always strive to maximize revenue and minimize costs.

Question 28

In some cases, often entirely web-based, the costs of reaching the customer with both information about the product/service and the product itself are practically non-existent. The variable costs, thereby, are nearly zero.

Question 29

The book discusses two tools, namely the Value Curve and The Four Questions. They are used to ensure that the proposition is sufficiently differentiated.

Question 30

In the book Blue Ocean Strategy (2005), the authors argue that in highly competitive situations, one should not try to outprice one's competitors, but instead develop radically different value propositions that render the competition irrelevant. Development and implementation of this radical approach is called:

A) blue ocean innovation
B) competition mix innovation
C) creative competition strategy
D) value innovation

Question 31

Blue Ocean Strategy is a book on management and strategy that argues that in highly competitive situations, where the pressure to cut prices is often very high, one should try to outprice one's competitors.

Question 32

Blue Ocean Strategy is a book on management and strategy which argues that in highly competitive situations, where the pressure to cut prices is often very high, one should develop radically different value propositions that render the competition irrelevant.

Question 33

The Value Curve is a diagnostic tool to identify the most important value-creating components in one's proposition and to clarify its strategic profile.

Question 34

Which of the following questions are NOT included in the Four Actions Framework? What happens if we change the offering by….

A) reducing all factors to their lowest possible levels?
B) eliminating factor X?
C)combining factor X and factor Y?
D)adding more where the competition is superior?
E) reducing factor Y distinctly below the branch standard?
F) adding/creating a new factor, unique in the industry?
G) increasing factor Z distinctly above the branch standard?

Question 35

The Four Actions Framework provides companies with four critical ways (eliminate, reduce, increase, create) designed to help a company at least temporarily modify their competitive situation.

Question 36

Proponents of the value pyramid claim that one should think in terms of value constellations when composing a proposition. This expression can be defined as a combination of value elements that together constitute a unique and attractive proposition.

Question 37

Social impact is at the top of the value pyramid. This can be defined as…

A) contributing to some form of positive change in society
B) making an impression on social media
C) having an impact on the company's social reputation and brand
D) developing one's social skills

Question 38

A section in the book is entitled From Pipes to Platforms - toward a new value-driving logic. Pipes are linear one-way flows with active producers and passive receivers/customers.

Question 39

Platforms focus on achieving positive network effects and economy of scale.

Question 40

A platform offers users (producers and consumers) a meeting place that creates value by facilitating an exchange and interaction between the parties.

Question 41

Michael Porter's value chain is an example of how one can exploit network effects.

Question 42

Michael Porter and his value chain presented a means for seeing actors "out there" as potential assets and partners in a value-generating collaborative and innovative strategy.

Question 43

The concept of platform governance is developed in the book. This term can be defined as the way in which the platform owner directs the platform environment, for example arranging a space for attractive meetings (technicalities, legalities, meeting rules, marketing, etc.).

Question 44

Open innovation and closed innovation are two innovation principles addressed in the book. Which concepts and ideas are connected to open innovation? (four are correct)

A) The smart people in our industry work for us.
B) In order to benefit from research and development, we must discover, develop and release products on the market on our own.
C) If we use both internal and external ideas in the best manner, we'll come out ahead.
D) If we pave the way in research in our branch, we'll come out ahead.
E) We will benefit when the competition uses our innovations, and will use the competition's innovations when it strengthens us.
F) We must work with smart people both in our company and in other companies.
G) We must control our innovation process, so that the competition is unable to benefit from our ideas.
H)We do not have to do the research in order to benefit from the research results others have uncovered.

Question 45

Social enterprise means that people see new opportunities to solve social problems in new ways, that resources are deployed in new combinations and new ways, and that the new vision is pursued in ways that create social value.

Question 46

Social enterprise means that people conduct socially beneficial work using many of the same ideas and tools that make entrepreneurship economically stable and efficient.

Question 47

The main difference between traditional enterprise and social enterprise is the motive behind the venture.

Question 48

Social enterprise means that profits are excluded.

Question 49

Social enterprise means that a person does not maximize profits.

Question 50

In social enterprise, the prime mission is to create social value for others rather than economic value for those behind the venture.

Question 51

In social enterprise, profit is a means, not the goal.

Question 52

In order to apply the BMC (business model canvas) to social enterprise, two additional components have been recommended as criteria. What are they?

A) shared values
B) social and environmental benefits
C) social and environmental costs
D) what one wishes to change in the world
E) which stakeholders should be involved

Question 53

The final paragraph in Chapter 6 (Business Model) states that a perfect business model on paper is no guarantee of success. It continues by stating that it is probably better to have a mediocre business model with a strong X than a mediocre X of even the very best of business models! What is the condition (X)?

A) execution of the business model
B) extremely uncertain future
C) if the overall whole is greater than the sum of the parts
D) if one can't get the numbers to add up