Chapter 2 - Alternative approaches to business models Flashcards
What are the four key aspects of a traditional business model?
Define value
Create value
Deliver value
Capture residual value
What does define value mean?
Firms look at who they create value for and what counts as value for them
What does create value mean?
Firms look at how resources are sourced and turned into outputs that customers and others desire
What does deliver value mean?
Firms find ways to get value to those it was created for
What does capture residual value mean?
For themselves and others to share between the firms, their shareholders and others (i.e. stakeholders)
What are stakeholders?
Stakeholders are the individuals and groups who have an interest in the organisation and as such may wish to influence its mission, objectives and strategy.
What are the characteristics of value?
Financial or non-financial - not the same as price, cost, profit or cash flow
Tangible and intangible - intangible value growing in importance
Not limited to the past
Short term and the long term - short term survival and long-term prospects
Is about people - it is about how their needs are met
Creates shared value - goes beyond just shareholders
What are the five key elements of creating value that must connect and align?
Partners - Includes suppliers, employees, contractors and other partners
Resources
Processes
Activities
Outputs
How do we deliver value through customer segments?
Divide the market into meaningful and measurable segments
Determine the profit potential of each segment
Target segments
Invest Resources
Measure performance of each segment
What channels do firms deliver value?
Communication
Distribution
Sales
What do touch points include?
Phones
Tablets
Retail Outlets
Social Media
What must channels be to turn shopping into a seamless experience?
Integrated
What do customers expect the buying journey to be?
Relevant and Personalised
When is value captured?
When revenue earned from delivering value exceeds the costs of creating value
What four key factors are involved when the cost architecture is established when defining value?
Efficiency (of the processes)
Levels of activity
Resources consumed during activities
Price paid for resources
