Deck 4: Developing an Effective Business Model

Question 1

Which of the following firms introduced a disruptive business model?

A) Salesforce.com
B) eBay
C) Panera Bread
D) Barnes & Nobel
E) J. Crew

Answer 1

A

Question 2

There are two types of disruptive business models - ________ and ________.

A) low-end; high-end
B) new-product; new-market
C) new-market; low-end
D) new-channel; high-quality
E) standard; unique

Answer 2

C

Question 3

Southwest Airlines is an example of a ________ disruptive business model.

A) low-end
B) new-market
C) high-quality
D) new-product
E) new-channel

Answer 3

A

Question 4

Which of the following firms has a peer-to-peer business model?

A) Dell
B) Dropbox
C) Airbnb
D) Salesforce.com
E) Google

Question 5

Brandon Jones has crafted a business model for his firm that is based on an existing plan or template for how firms in his industry create, deliver and capture value for their shareholders. Brandon has crafted a ________ business model.

A) standard
B) disruptive
C) customary
D) normal
E) temporary

Question 6

Which of the following statements about business models is incorrect?

A) There are two general types of business models.
B) There is no perfect business model.
C) Most of the standard business models have been in place for some time.
D) A firm's business model is confined to its own boundaries.
E) Firms should guard themselves against thinking that one particular business model is a "home run" regardless of circumstances.

Question 7

________ refers to the number of subscribers that a subscription-based business loses each month.

A) Agitate
B) Churn
C) Erosion
D) Attrition
E) Stir

Question 8

A business model is a firm's plan or recipe for how it creates, delivers, and captures value for its stakeholders.

Question 9

Her Campus Media, the focus of the opening feature of Chapter 4, features a vibrant online magazine, with feature articles targeted toward all aspects of college life and survival. According to the feature, Her Campus's business model focuses on connecting companies with college females. The key to making this work is ________.

A) the strength of Her Campus Media's management team
B) the strength of Her Campus Media's brand
C) the quality of the online content that Her Campus Media produces
D) the functionality and vibrancy of the company's Web site
E) Her Campus's unparalleled access to college females

Question 10

Google and its AdWords program is an example of a ________ disruptive business model.

A) low-end
B) new-market
C) high-quality
D) low-price
E) new-channel

Question 11

The Partnering for Success feature in Chapter 4 focused on Web-based platforms, including Odesk, Elance, and Guru, that make it easy to identify and hire experienced ________.

A) part time employees
B) freelancers
C) interns
D) virtual assistants
E) full-time employees

Question 12

________ business models are ones that do not fit the profile of standard business models, and are impactful enough that they disrupt or change the way business is conducted in an industry or an important niche within an industry.

A) Disruptive
B) Normal
C) Unique
D) Incomparable
E) Exceptional

Question 13

A ________ is a firm's plan or recipe for how it creates, delivers, and captures value for its stakeholders.

A) commercialization plan
B) business model
C) business plan
D) launch plan
E) tactical model

Question 14

In regard to business models, which of the following statements is incorrect?

A) There is a standard business model that most firms follow.
B) A firm's business model is inherently dependent on the collection of resources it controls and the capabilities it possesses.
C) It is dangerous for a company to assume that it can be successful by simply copying the business model of another firm.
D) A firm's business model is its plan or diagram for how it competes.
E) It is often difficult to determine what another firm's business model is.

Question 15

Tyler Smith founded a firm that has a subscription-based business model. Although Tyler has averaged 600 new subscribers per month, she also loses 450 subscribers per month. The number of subscribers that Tyler loses each month is referred to as ________.

A) erosion
B) churn
C) destruction
D) attrition
E) agitation

Question 16

Which of the following is the proper sequence for when a firm should develop a business model?

A) Preparation of the business model, initial validation of the business idea, opportunity recognition
B) Initial validation of the business idea, establishing a growth plan, preparation of the business model
C) Initial validation of the business idea, preparation of the business model, fleshing out the operational details of the firm
D) Opportunity recognition, fleshing out the operational details of the firm, preparation of the business model
E) Opportunity recognition, preparation of the business model, establishing a growth plan for the firm

Question 17

________ business models depict existing plans or recipes firms can use to determine how they will create, deliver, and capture value for their stakeholders.

A) Revolutionary
B) Normal
C) Customary
D) Disruptive
E) Standard

Question 18

What is a business model? Why is it important? Provide an example to illustrate your answer.

Question 19

The two general categories of business models are ________ and ________.

A) normal; unique
B) standard; disruptive
C) ordinary; revolutionary
D) customary; unique
E) ordinary; disruptive

Question 20

The Savvy Entrepreneurial Firm feature in Chapter 4 focuses on the ways in which Quirky creates, delivers and captures value for its stakeholders. According to the feature, Quirky would be a business that would be difficult to copy. According to the feature, it would be difficult to copy because ________.

A) it has raised over $91 million and has over 550,000 people in its network
B) it has a highly-functional Web site and has a talented management team
C) it has a savvy marketing plan and has over 550,000 people in its network
D) it has raised over $91 million and has a talented management team
E) it has an excellent Internet domain name and has a first-mover advantage

Question 21

Kaitlyn Harris is opening up a women's fashion boutique that will focus on professional women that are 18-30 years old. The age range of women that Kaitlyn plans to focus on is referred to as her ________ market.

A) controlled
B) ambitious
C) identifiable
D) target
E) aspirational

Question 22

When completing the basis of differentiation box in the Barringer/Ireland Business Model Template, it is best to limit the description to ________.

A) two to three points
B) one point
C) five to10 points
D) two to three points for manufacturing firms and five to 10 points for service firms
E) five to 10 points for manufacturing firms and two to three points for service firms

Question 23

What is the difference between standard business models and disruptive business models? Include examples of both in your answer.

Question 24

It is important to understand that there are several perfect business models.

Question 25

A business's ________ describes why it exists and what its business model is supposed to accomplish.

A) values statement
B) importance statement
C) differentiation statement
D) mission statement
E) significance statement

Question 26

Disruptive business models are impactful enough that they disrupt or change the way business is conducted in an industry or an important niche within an industry.

Question 27

A firm's ________ market is a place within a larger market segment that represents a narrower group of customers with similar interests.

A) aspirational
B) ambitious
C) constrained
D) target
E) objective

Question 28

According to the textbook, Southwest Airlines introduced a new market disruption type of disruptive business model.

Question 29

Which of the following is not one of the four elements of the core strategy section of the Barringer/Ireland Business Model Template?

A) Business mission
B) Key assets
C) Basis of differentiation
D) Target market
E) Product/market scope

Question 30

Erin Hill is working on the box in the Barringer/Ireland Business Model Template that defines the products and markets on which her firm will concentrate. Erin is working on the ________ scope portion of the business model template.

A) offering/market
B) offering/industry
C) business/market
D) business/industry
E) product/market

Question 31

The Barringer/Ireland Business Model Template has five major categories and 14 individual parts.

Question 32

The first box in the Barringer/Ireland Business Model Template is ________.

A) product/market scope
B) revenue streams
C) business mission
D) target market
E) channels

Question 33

The Barringer/Ireland Business Model Canvas consists of ________ major category(ies) and ________ parts.

A) 1; 12
B) 3; 9
C) 6; 18
D) 4; 12
E) 2; 6

Question 34

Which of the following is not one of the four major categories in the Barringer/Ireland Business Model Template?

A) Operations
B) Resources
C) Channels
D) Core strategy
E) Financials

Question 35

A company's ________ scope defines the products and markets on which it will concentrate.

A) product/market
B) offering/industry
C) business/market
D) business/industry
E) offering/market

Question 36

The four major categories in the Barringer/Ireland Business Model Template are ________.

A) core strategy, resources, financials, and operations
B) core strategy, value proposition, customers and channels
C) value proposition, resources, customers and partners
D) activities, partners, customers, and competitors
E) value proposition, cost structure, financials, and operations

Question 37

Standard business models depict existing plans or recipes firms can use to determine how they will create, deliver, and capture value for their stakeholders.

Question 38

Jamie Finch is crafting the business model for her fashion design firm. She just completed the section that describes how her firm plans to compete relative to her rivals. Jamie just completed the ________ portion of her business model template.

A) operations
B) core strategy
C) resources
D) strategic plan
E) tactical strategy

Question 39

In the Barringer/Ireland Business Model Template, ________ describes how the firm plans to compete relative to its competitors.

A) strategic plan
B) grand strategy
C) tactical strategy
D) value proposition
E) core strategy

Question 40

Nathan Green is starting a firm in the organic produce industry. Nathan has developed a statement-"Helping Make Your Life Better, Healthier, and Fuller"-that describes the reason his company exists and what his business model is supposed to accomplish. In the terminology used in the Barringer/Ireland Business Model Template, Nathan's statement is referred to as his ________ statement.

A) values
B) uniqueness
C) differentiation
D) mission
E) task

Question 41

The Financials section of the Barringer/Ireland Business Model Template consists of three boxes. The boxes are titled ________.

A) economics of the business, startup-costs, and break-even
B) revenue streams, cost structure, and financing/funding
C) profit margins, revenue streams, and break-even
D) startup-costs, operating leverage, and financing/funding
E) fixed vs variables costs, financing/funding, and break-even

Question 42

Sarah Green, who plans to open a garden and lawn business, is working on the portion of the Barringer/Ireland Business Model template that focuses on how her products and services will be produced. Sarah is working on the ________ section of the template.

A) basis of differentiation
B) product/or service production
C) product/market scope
D) core competency
E) channels

Question 43

Advertising, commissions, download fees, licensing, and product sale are examples of ________.

A) revenue streams
B) basis of differentiation
C) key assets
D) channels
E) cost structure

Question 44

The operations quadrant in the Barringer/Ireland Business Model Template includes three sections. These are ________.

A) product (or service) production, channels, and key partners
B) product/market scope, cost structure, and key partners
C) key assets, cost structure, and channels
D) key partners, financing/funding, and target market
E) channels, core competency, and key partners

Question 45

Cynthia Hamilton is launching a chain of smoothie restaurants. Among Cynthia's key partners will be firms that provide her the ingredients needed to make her smoothies. In the terminology of the Barringer/Ireland Business Model Template, these partners are called ________.

A) dealers
B) suppliers
C) merchants
D) traders
E) brokers

Question 46

Mark White is the founder of a firm that builds iPhone apps. Mark is very technically savvy, which allows him to build apps quickly and with minimal bugs or problems. In the terminology of the Barringer/Ireland Business Model Template, Mark's technical savvy is a(n) ________ of his firm.

A) primary capability
B) core competency
C) essential asset
D) staple proficiency
E) key aptitude

Question 47

An entity created by two or more firms pooling a portion of their resources to create a separate, jointly-owned organization is called a ________.

A) trade association
B) network
C) joint venture
D) consortia
E) strategic alliance

Question 48

Jenna Franklin is completing the portion of the Barringer/Ireland Business Model Template that describes the most important costs that will be incurred to support her business model. Jenna is completing the ________ structure box in the business model template.

A) expense
B) outlay
C) payment
D) overhead
E) cost

Question 49

In the terminology of the Barringer/Ireland Business Model Template, ________ assets are the assets that a firms owns that enable its business model to work.

A) key
B) tactical
C) fundamental
D) primary
E) strategic

Question 50

Brad Jones is in the process of opening an electronics supply company and is working on the portion of his business plan template that describes how he will deliver his products and services to his customers. The portion of the business plan template that Brad is working on is referred to as ________.

A) channels
B) network
C) linkages
D) grids
E) conduits

Question 51

________ costs are costs that remain the same despite the volume of goods or services produced. ________ costs vary proportionally with the volume of goods or services provided.

A) Expense; Non-standard
B) Standard; Non-Standard
C) Fixed; Variable
D) Non-Standard; Standard
E) Variable; Fixed

Question 52

The Resources section of the Barringer/Ireland Business Model Template consists of the ________ and ________ boxes.

A) business mission; core competency
B) core competency; product/market scope
C) channels; key partners
D) core competency; key assets
E) revenue streams; key assets

Question 53

In the terminology of the Barringer/Ireland Business Model Template, a firm's ________ structure describes the most important costs incurred to support its business model.

A) expense
B) cost
C) budget
D) overhead
E) outflow

Question 54

According to the textbook, there are three categories of costs to consider when completing the "financing/funding" section of the Barringer/Ireland Business Model Template. These are ________.

A) setup costs, one-time expenses, and costs associated with incorporating the firm
B) capital costs, marketing costs, and provisions for ramp-up expenses
C) setup costs, marketing costs, and operating costs
D) capital costs, one-time expenses, and provisions for ramp-up expenses
E) operating costs, capital costs, and costs associated with setting up the firm

Question 55

Which section of the Barringer/Ireland Business Model Template is the only section that describes how it makes money?

A) Core strategy
B) Resources
C) Financials
D) Operations
E) Value proposition

Question 56

In the Barringer/Ireland Business Model Template, a(n) ________ is a specific factor or capability that supports a firm's business model and sets it apart from its rivals.

A) primary capability
B) core competency
C) essential asset
D) staple proficiency
E) key aptitude

Question 57

A firm's ________ describe(s) the ways in which it makes money.

A) proceeds account
B) break-even analysis
C) revenue streams
D) cash flow
E) income statement

Question 58

The four major categories in the Barringer/Ireland Business Model Template are: core strategy, resources, financials, and operations.

Question 59

In the Barringer/Ireland Business Model Template, key assets can be ________.

A) fixed, situational, variable, and permanent
B) tactical, strategic, fixed, and variable
C) tangible, intangible, variable, and fixed
D) temporary, permanent, fixed, and variable
E) physical, financial, intellectual, or human

Question 60

Core strategy describes what causes consumers to pick one company's products over another.

Question 61

A company's target market is a place within a larger market segment that represents a narrower group of customers with similar interests.

Question 62

A firm's revenue streams describe the ways in which it makes money.

Question 63

A company's product/market scope defines the products and markets on which it will concentrate.

Question 64

When competing the basis for differentiation portion of the Barringer/Ireland Business Model template, it is important to emphasize as many points of differentiation as possible.

Question 65

Briefly describe the four main components of the Barringer/Ireland Business Model Template. Identify the subcomponents of each the four main components of a business model.

Question 66

The resources section of the Barringer/Ireland Business Model Template includes three parts: core competency, key assets, and revenue streams.

Question 67

A strategic alliance is an entity created by two or more firms pooling a portion of their resources to create a separate, jointly-owned organization.

Question 68

A company's channels describe how it delivers its product or service to its customers.

Question 69

What are core competencies? Provide an example of the core competencies that are utilized by an entrepreneurial firm.

Question 70

In the terminology of the Barringer/Ireland Business Model Template, a key asset is a specific factor or capability that support a firm's business model and sets it apart from its rivals.

Question 71

Value-driven businesses focus on minimizing costs wherever possible.

Question 72

In the financing/funding section of the Barringer/Ireland Business Model Template, there are three categories of costs to consider: capital costs, one-time expenses, and provisions for ramp-up expenses.

Question 73

The operations section of the Barringer/Ireland Business Model Template includes three sections: product (or service) production, channels, and key partners.

Question 74

Describe the Barringer/Ireland Business Model Template and discuss its purpose.

Question 75

A business's mission or mission statement describes why it exists and what its business model is supposed to accomplish.