Handout 6

Question 1

a company’s method of making money relevant to its business environment. It involves the key structural and operational characteristics of a firm considering its target market, product
offerings, competitive advantage, and after-sales services.

Answer 1

business model

Question 2

Offers the basic version of the product or service for free to entice customers to purchase the more advanced features and add-ons.

Answer 2

Freemium

Question 3

Companies charge customers monthly or yearly fees to access their products or services. This model depends on loyal customers.

Answer 3

Subscription Based

Question 4

This model allows two (2) individuals to buy/sell products or services directly with each other without an intermediary third-party.

Answer 4

Peer-to-peer

Question 5

grants another person or business a license to use its trademarks and products in exchange for paying a royalty fee.

Answer 5

Franchise

Question 6

A company’s employee will be the one to demonstrate and sell the product or service being offered directly to the intended consumer.

Answer 6

Direct Sales

Question 7

A business model in which companies and individuals buy and sell products and services online. Because the business is entirely online, the products and services offered are nearly limitless.

Answer 7

E-Commerce

Question 8

A commission-based business model by advertising products or services of other companies on their websites.

Answer 8

Affiliate
Marketing

Question 9

Where a product is sold at a much lower price to make the consumer buy higher-priced items later.

Answer 9

Razor and Blade

Question 10

Companies use the consulting business model by hiring subject-matter experts who can offer advice to clients on specific organization areas

Answer 10

Consultation

Question 11

This is done by locking customers into a company’s product or service, making it difficult to abandon the company without dealing with negative consequences.

Answer 11

Lock-In

Question 12

The parent company will offer similar products with different brand names to increase its market share

Answer 12

Multi-brand

Question 13

There is no recurring bill or subscription necessary. This model should entice those who do not like to be tied down.

Answer 13

Pay-as-you-go

Question 14

represents a firm’s internal activities when transforming inputs into outputs

Answer 14

Value chain

Question 15

a process that involves identifying the primary and support activities of a particular organization or industry and capitalizing on these activities to reduce costs or increase differentiation.

Answer 15

Value Chain Analysis (VCA)

Question 16

It involves raw materials handling and warehousing.

Answer 16

Inbound logistics

Question 17

It involves machining, assembling, and testing.

Answer 17

Operations

Question 18

It involves warehousing and distribution of finished products.

Answer 18

Outbound logistics

Question 19

It involves advertising, promotion, and pricing channel relations.

Answer 19

Marketing and sales.

Question 20

It involves installation, repair, and parts.

Answer 20

Service.

Question 21

It involves general management, accounting, finance, and strategic planning

Answer 21

Firm infrastructure.

Question 22

It involves recruiting, training, and development.

Answer 22

Human resource management.

Question 23

It involves research and development and product or process
improvement.

Answer 23

Technology development.

Question 24

It involves purchasing raw materials, machines, and supplies.

Answer 24

Procurement

Question 25

This approach is used when organizations compete to achieve lower product and service costs

Answer 25

Cost advantage.

Question 26

It requires adequate knowledge of the company’s operations because value chain activities are not organized similarly to the company itself. All activities, from receiving and storing materials to marketing, selling, and after-sales support, must be identified and separated from each other.

Answer 26

Identify the firm’s primary and support activities.

Question 27

It involves identifying the total costs of producing a product or service. These costs must be broken down and assigned to each activity.

Answer 27

Establish the relative importance of each activity in the total cost of the product.

Question 28

It involves understanding the factors which drive costs and focusing on improving them.

Answer 28

Identify cost drivers for each activity.

Question 29

It involves reducing costs in a particular activity, which may lead to further reductions in subsequent activities.

Answer 29

Identify links between activities.

Question 30

It involves improving inefficient activities and cost drivers

Answer 30

Identify opportunities for reducing costs.

Question 31

This approach is driven by a firm’s desire to create superior products and services using innovation. Global companies like Apple, Google, and Starbucks use this approach

Answer 31

Differentiation advantage

Question 32

It involves identifying all value chain activities and improving those that contribute the most to creating customer value.

Answer 32

Identify the customers’ value-creating activities.

Question 33

It involves using strategies that increase product differentiation and customer value. These strategies include adding more product features, focusing on customer service and responsiveness, increasing customization, and offering complementary products.

Answer 33

Evaluate the differentiation strategies for improving customer value.

Question 34

It combines interrelated activities and strategies to create superior differentiation and customer value.

Answer 34

Identify the best sustainable differentiation.

Question 35

It has no functional or product categories and is appropriate for a small, entrepreneur-dominated company with one (1) or two (2) product lines that operate/sin a reasonably small, easily identifiable market niche. Employees here tend to be generalists and jacks-of-all-trades.

Answer 35

Simple structure.

Question 36

It is appropriate for a medium-sized firm with several product lines in one industry. Employees here tend to be specialists in the business functions important to that industry, such as manufacturing, marketing, finance, and human resources.

Answer 36

Functional structure.

Question 37

It is appropriate for a large corporation with many product lines in several related industries. Employees here tend to be functional specialists organized according to product/market distinctions.

Answer 37

Divisional structure.

Question 38

This strategy aims to increase profits by reducing costs while charging industry standard prices or increase market share by lowering the sales price while retaining profit

Answer 38

Cost leadership.

Question 39

This strategy aims to create products that are significantly different from the competition. In addition, the products and services must have a greater value to the public

Answer 39

Product Differentiation.

Question 40

This strategy aims to select a niche market to sell a company’s products and services. A niche is a small but profitable market segment suitable for marketers' focused attention.

Answer 40

Cost Focus

Question 41

This strategy aims to create new demand for a particular product. Companies that use this approach develop uncontested market space rather than fight over a shrinking profit pool.

Answer 41

Blue Ocean Strategy

Question 42

This strategy seeks the latest technology, strategies, and data to outpace your rival.

Answer 42

Information Advantage.