Question 1

Amy has missed class for the past two weeks. She learned that the class discussion during her absence focused on building successful business models. She is unsure of the meaning of a business model. She comes to you for a better definition and conceptualization of a business model. You would probably tell her that a business model is ____________________________.

A) A firm's plan of action.
B) A firm's intention to further pursue a business opportunity.
C) A firm's plan or diagram for how it competes, uses its resources, structures its relationships, interfaces with customers, and creates value to sustain itself on the basis of the profits it earns.
D) A firm's ability to generate profits once it is started.

C

Accepted Answer

A business model is a comprehensive plan or diagram that outlines how a firm will compete, utilize its resources, structure its relationships, interact with customers, and maintain itself based on the profits it generates. It is a strategic blueprint that encompasses all aspects of running and growing a business, from revenue streams to cost structure, from customer segments to value propositions. A business model is the foundation upon which a successful enterprise is built, and it provides a roadmap for achieving sustainable profitability over time.

Question 2

Which of the following is not an element of the business model cycle?&#10;A) Specification.&#10;B) Provision.&#10;C) Refinement.&#10;D) Adaptation.

Accepted Answer

The business model cycle typically consists of four elements: specification, refinement, adaptation, and provision. Provision is not typically considered an element of the cycle, as it refers more to the actual delivery of goods or services rather than the development or refinement of the business model itself.

Question 3

If you are concerned about how you would change the lives of the beneficiaries of your social venture, you would probably focus on the ________________.&#10;A) Social value proposition.&#10;B) Economic value proposition.&#10;C) Revenue model.&#10;D) Cost structure.

Accepted Answer

The social value proposition focuses on the impact and benefits your social venture brings to the beneficiaries. It addresses the needs and concerns of the target audience and aims to create positive change in their lives. The economic value proposition, revenue model, and cost structure are also important aspects of a social venture, but they primarily focus on generating income and sustaining the business.

Question 4

Which of the following is not part of the design element of a business model?&#10;A) Content.&#10;B) Structure.&#10;C) Efficiency.&#10;D) Governance.

Accepted Answer

Content, structure, and governance are all design elements of a business model. Efficiency is more of a performance or implementation element.

Question 5

A social venture that includes in its business model generating revenue through grants, donations, and earned income can best be described as ___________.&#10;A) Purely philanthropic.&#10;B) Commercial.&#10;C) Non-government organization.&#10;D) Hybrid.

Accepted Answer

A social venture that generates revenue through a combination of grants, donations, and earned income is considered a hybrid model. This model combines elements of both traditional for-profit businesses and non-profit organizations, and has a mission-driven focus on making a positive social impact while also sustaining financial viability.

Question 6

In describing a business model, the elements that have the greatest impact on the firm becoming profitable are best known as _____________.&#10;A) Revenue sources.&#10;B) Critical success factors.&#10;C) Investment size.&#10;D) Cost drivers.

Accepted Answer

Critical success factors are the elements of a business model that have the greatest impact on a firm becoming profitable. These factors can include things like customer acquisition, cost structure, and distribution channels, among others. By focusing on these critical success factors, businesses can ensure that they are allocating their resources effectively and maximizing their chances of success.

Question 7

The following reasons are given to explain the importance of a business model except:&#10;A) Focuses attention on how all the elements of a business fit together and how they constitute a working whole.&#10;B) Describes why the network of participants needed to make a business idea viable is willing to work together.&#10;C) Articulates a company's core logic to all stakeholders, including the firm's employees.&#10;D) Allows the transformation of the new venture into a social venture.

Accepted Answer

The importance of a business model does not include the transformation of a new venture into a social venture. The other options all describe important aspects of a business model, including its ability to provide a holistic view of a business, explain why participants are willing to work together, and communicate a company's core logic to stakeholders.

Question 8

Which of the following is not part of the design elements of a business model?&#10;A) Content.&#10;B) Management.&#10;C) Structure.&#10;D) Governance.

Accepted Answer

Content, structure, and governance are all considered key design elements of a business model, while management is typically seen as a separate functional area within a business.

Question 9

Which of the following is not a component of a business model?&#10;A) Critical success factors.&#10;B) Revenues.&#10;C) Investment size.&#10;D) General accounting principles.

Accepted Answer

General accounting principles are not a component of a business model. A business model typically includes critical success factors, revenues, and investment size, among other components, that describe how a company creates, delivers, and captures value. General accounting principles, on the other hand, are a set of guidelines and best practices used for financial reporting and record-keeping, which are important for a company's financial management but are not directly related to its business model.

Question 10

Which of the following is not an element of the design theme of a business model?&#10;A) Novelty.&#10;B) Lock-in.&#10;C) Complementarities.&#10;D) Governance.

Accepted Answer

The elements of the design theme of a business model include novelty, lock-in, complementarities, and governance. Therefore, option D is not an element of the design theme of a business model.

Deck 6: Creating Effective Social Venture Models