Q3: Business Models (pre-final) Flashcards

Question

What is the danger of not questioning the received business model?

Answer 1

Not questioning the business model can lead to failure, as seen with Polaroid, which was unable to imagine new business models despite being early in the digital camera market.

Answer 2

Polaroid failed to capture a large enough market share in the digital camera business and could not adapt its business model to the digital age.

Answer 3

They should adopt a business model mindset, considering creative new ways to engage with stakeholders to conceive, produce, deliver, and consume products and services.

Answer 4

In psychological research, this well-known phenomenon is captured by the notions “mental models,” “cognitive frames,” or “schemas.” In this chapter, we use these terms interchangeably. Cognitive structures that represent knowledge about a concept or type of stimulus, including its attributes and the relations among attributes”. They refer to “people’s theories and concepts of the world” For example, “Tesla was at first underestimated by Ford, where many employees dismissed the new entrant as a minor niche player with an eccentric leader”

Answer 5

A mindset is a mental attitude or inclination, or a fixed state of mind, closely linked with human cognition.

Answer 6

A mindset determines the cognitive frames people use to organize and interpret incoming information based on available memory.

Answer 7

A mindset determines what we expect to perceive and what we are prepared to perceive, which can lead to analytical blind spots.

Answer 8

They may not attribute business problems to the business model or seek business model solutions for opportunities.

Answer 9

Being stuck on a fixed business model can prevent managers from capitalizing on new technologies or emerging customer needs.

Answer 10

A business model mindset helps individuals consider the firm's entire activity system (What, How, Who, Why) as a solution to business problems or opportunities.

Answer 11

They think proactively and holistically about 'how to do business' and do not just focus on familiar units like the product or sales.

Answer 12

For founders and entrepreneurial managers, problems and opportunities are two sides of the same coin, both representing aspects of business dynamics.

Answer 13

A business model mindset helps managers better understand and react to changes, especially when these changes involve the development of new business models like Uber or Airbnb.

Answer 14

Being 'out-Ubered' refers to the fear of being surpassed by innovative competitors, particularly those with disruptive business models.

Answer 15

A business model mindset acts as a cognitive frame, helping managers adapt to changes by acquiring, assimilating, and reconfiguring knowledge and resources.

Answer 16

A business model mindset helps make better decisions in change management and improves the ability to explain the need for business model-related changes to others, thereby gaining their support.

Answer 17

Yes, a business model mindset is an attitude or inclination that can be developed and sharpened by managers to improve their own mindset and that of their team and organization members.

Answer 18

Mindsets are sticky and difficult to alter because they simplify complex realities, filter out noisy information, and facilitate connections with existing knowledge.

Answer 19

Mindsets tend to ignore discrepant information and fill gaps with typical data, making them self-reinforcing and resistant to revision.

Answer 20

The first trap is focusing on the product, technology, or process as a source of innovation instead of considering the business model, requiring a more system-level, holistic perspective.

Answer 21

The second trap is taking the business model as a 'given' and following a dominant template, such as the prevailing business model in an industry, without realizing the business model can and should be subject to change.

Answer 22

It involves getting trapped in the wrong 'level of analysis' by focusing too narrowly on products, technologies, or processes rather than the broader business model.

Answer 23

It involves failing to recognize that a business model is a variable that can change and should not be taken as a fixed template, even if it's dominant in the industry.

Answer 24

The level-of-analysis trap occurs when managers focus on individual components of the business model rather than considering the business model as a whole.

Answer 25

They have difficulty 'unlearning' old models and adopting new ones, resulting in incremental improvements rather than a fundamental overhaul of the business model.

Answer 26

Gestalt cognitive processes highlight that recognizing the whole business model is different from focusing on individual parts, which is crucial for effective business model innovation.

Answer 27

1) Failure to pay attention to fundamental business logic, 2) Failure to consider long-term trends in markets and technologies, 3) Failure to think strategically about the business model.

Answer 28

Thomas Cook failed to innovate its business model in response to digital disruption, clinging to its traditional approach, which led to its bankruptcy in 2019.

Answer 29

The restructuring helped entrench the company's core business model, instead of prompting a more holistic change that could have addressed growing digital competition.

Answer 30

Thomas Cook's reliance on booking capacity in advance left it vulnerable when bookings did not meet expectations, forcing the company to offer margin-eroding discounts.

Answer 31

Thomas Cook declared bankruptcy in 2019, stranding half a million holidaymakers worldwide due to its inability to adapt to changing market conditions.

Answer 32

Realized business models refer to actual activities embedded in procedures, contracts, relationships, and tacit routines.

Answer 33

There is a reinforcing relationship between realized and cognitive business models, where the structure of the business model is imprinted in firms through both structural and cognitive paths.

Answer 34

In new ventures, important characteristics of business models are shaped during the sensitive period of early founding and can persist despite subsequent environmental changes.

Answer 35

The founders' mindset is crucial because it influences the characteristics of the business model that will persist over time, even when external factors change.

Answer 36

Business models are difficult to change due to path dependencies, dominant logics, cognitive limitations, and resistance to change.

Answer 37

Polaroid's dominant logic of making money from consumables rather than hardware created cognitive inertia, which discouraged innovation in the digital imaging market.

Answer 38

Polaroid executives discouraged R&D efforts inconsistent with the traditional business model, preventing the company from developing capabilities to enter the digital imaging market.

Answer 39

Managers directly involved with digital imaging developed a more adaptive understanding of the competitive landscape, but the broader company stuck to the traditional business model.

Answer 40

Polaroid could have adopted a low-cost/high-quantity hardware production model to better compete in the digital imaging market.

Answer 41

Cognition refers to the set of processes through which human beings engage in intellectual activities such as thinking, reasoning, and remembering, which enable behavior.

Answer 42

'Knowledge structure' refers to the structural relationships among the various components of the knowledge stored and processed in our brains.

Answer 43

Cognition influences business model design by shaping the knowledge and thought processes that enable business model change and innovation.

Answer 44

Business models can be viewed as cognitive structures, and cognition serves as an antecedent to business model design and implementation, particularly in promoting change and innovation.

Answer 45

Cognition is the set of processes through which human beings engage in intellectual activities like thinking, reasoning, and remembering, which precede and enable human behavior.

Answer 46

'Knowledge structure' refers to the structural relationships among the components of knowledge stored and processed in the brain.

Answer 47

Business models are considered cognitive structures, with cognition serving as an antecedent that influences business model design and implementation, particularly in fostering change and innovation.

Answer 48

Business models can be characterized by design themes such as novelty, lock-in, complementarities, and efficiency.

Answer 49

A mindset that “recognizes the interrelatedness of things” and is increasingly relevant in the Big Data era.

Answer 50

industry-spanning search and complex system thinking.

Answer 51

Industry-spanning search occurs when managers actively search outside their industry for inspiration to develop novel business models.

Answer 52

The opposite is industry-focused search, where managers copy successful elements from within their own industry to improve efficiency, without increasing novelty.

Answer 53

By facilitating better information processing and a holistic understanding of where novelty lies in the system, complex system thinking helps in creating innovative business models.

Answer 54

The opposite is internal efficiency thinking, which focuses on cost control and operational efficiency, often leading to incremental rather than radical innovation.

Answer 55

Power, defined as unilateral control over resources, enables key decision-makers to implement business model innovations, especially when combined with industry-spanning search and complex system thinking.

Answer 56

When decision-making is decentralized and involves many team members, radical proposals are often filtered out in favor of consensus, reducing the degree of business model innovation.

Answer 57

The two generative cognitive processes are analogical reasoning and conceptual combination.

Answer 58

1) Identification of a source model, 2) Comparison with the target model, 3) Integration of elements from the source model, 4) Modification of elements to fit the target model.

Answer 59

Analogical reasoning involves choosing a source model from one domain and using it to create novelty in another domain through comparison at the system level.

Answer 60

Tesla used Apple Computers as an analogy to position its electric motors relative to internal combustion engines in the auto industry. Aravind Eye Hospital used McDonald's as an analogy for standardizing cataract surgeries.

Answer 61

The subprocesses in analogical reasoning are stretching (applying an analogy to a new context), bending (modifying firm activities to better fit the analogy), and positioning (using stretching and bending to develop a competitive position).

Answer 62

Conceptual combination involves comparing one or more source models with a target model, focusing on differences to generate new ideas for modifying or creating an entirely new business model.

Answer 63

Howard Schultz combined the concepts of specialty coffee retailer, café, office, and gallery to create the core of Starbucks' business model.

Answer 64

Unlike analogical reasoning, conceptual combination relies more on comparisons of specific features of source models while keeping the whole in mind.

Answer 65

The important feature was 'displaying a unique ambiance,' created by combining elements from various models, such as offering coffee accessories, aestheticizing the coffee experience, and providing a comfortable work environment.

Answer 66

Applying an analogy to a new context, even in cases when there are significant differences with the old context or source model (hence the analogy must be “stretched”’).

Answer 67

Bending: Changing firm activities to better fit the analogy invoked through stretching. This creates better correspondence between the target and source domains. The bending process focuses on changing the context of the analogy rather than the analogy itself.

Answer 68

Utilizing stretching and bending as a source of differen- tiation and to develop a competitive position in the market.

Answer 69

Firms' perceptions of business model issues as threats can lead to rigidity and prevent business model innovation, while framing them as opportunities can motivate change and promote innovation.

Answer 70

Framing issues as threats leads to rigidity, restricted information processing, and reduced flexibility, as power and influence become more concentrated at higher levels of the corporate hierarchy.

Answer 71

Framing issues as opportunities is associated with positive outcomes and expectations of gain, which can overcome inertia and promote business model innovation.

Answer 72

The two types of inertia are resource rigidity (failure to change resource investment patterns) and routine rigidity (failure to change organizational processes that use resources).

Answer 73

Opportunity framing was necessary but insufficient to trigger an adaptive response to digital media; it did not overcome resource rigidity on its own.

Answer 74

Threat framing motivated a forceful response that increased firms' resource commitment to experimenting with new business models, but it led to rigid, top-down efforts to replicate content online.

Answer 75

Routine rigidity occurred when newspaper firms replicated content online without developing new sources of revenue, reflecting a narrow scope in their response.

Answer 76

Physical separation of digital initiatives from the parent company helped decouple the threat perception in the parent organization from the opportunity perception in the digital venture, enabling innovation.

Answer 77

At the corporate level, both threat and opportunity framing coexist and are cognitively integrated by members of the top management team, enabling business model change and innovation.

Answer 78

The two categories are managerial leadership actions to foster employees' business model mindset and actions to foster one's own business model mindset.

Answer 79

Employees, especially in R&D, often focus on product and technology-related issues, making the shift to a business model mindset less intuitive.

Answer 80

Management can facilitate the shift by clearly communicating the importance of business models, sending awareness-enhancing messages, and providing specific training.

Answer 81

Volkmar Denner, CEO of Bosch, emphasized that product innovations alone won't ensure the company's success, advocating for a focus on new types of business models.

Answer 82

The three long-term strategic actions are employee selection, memorable mentoring, and role modeling.

Answer 83

The founder of a European healthcare startup organized regular meetings encouraging employees to share examples from other industries, which helped the team think creatively about business model challenges.

Answer 84

Memorable mentoring can have a lasting influence on employees’ thinking, as it shapes their approach to problem-solving and encourages them to embrace a business model mindset.

Answer 85

Role modeling occurs when leaders display behaviors that inspire employees, such as showing interest in business model issues and being open to new ideas, even without direct interaction or teaching.

Answer 86

Role modeling allows employees to learn by observing the behaviors and thinking of their leaders, enabling them to assimilate business model-oriented practices and adopt similar approaches.

Answer 87

Mentoring is a purposeful interaction to teach something specific, while role modeling is more passive, where employees learn through observation of the leader’s actions and behaviors.

Answer 88

Exploring future business model concepts. Anticipat- ing ideally allows a manager to implement business model innovations far enough in advance that the firm can maintain its competitive posi- tion. At the same time, managers should not be overreliant on formal strategic foresight tools, which can invite complacency about an inher- ently unknown future. This is a fine line between thinking enough about future possibilities, and not becoming mentally “stuck” in static (imagined) scenarios.

Answer 89

Gaining perspective about the current business model through nurturing an “outside-in” perspective. When engaged in the everyday business of a firm, it can be easy to lose sight of the bigger picture; however, it is important to keep a distance in order to have a holistic view of the business model. This can be achieved by stepping away from this for a certain amount of time, for example through participating in a strategy workshop. Another way to achieve distancing is by leveraging the view of a firm outsider (external hires or outside advisors, for example), or of existing employees who have been working at the “periphery” of the firm and therefore have a broader perspective.

Answer 90

Restating business models in conceptual terms. Once a manager has been able to step back and achieve distancing, it is easier to think about the business model in abstract and generalizable terms. This can be helpful in identifying and applying elements of an existing business model to a new domain, or vice versa. However, it is also a balance, because being too abstract (and oversimplifying) can lead one to ignore important elements tied to the underlying context of an existing business model.

Answer 91

Generating new perspectives and new business model alternatives. new Once possibilities be considered. distancing or Firms flexibility, “strategic that and abstracting frames” have strong for the have been business achieved, model can communication processes, consistency in approaching change, and multiple diverse perspectives can more easily consider and reframe their business model. In firms that lack this flexibility, however, it often takes a crisis before alternatives are considered.

Answer 92

Consciously considering the targets of attention that are closely related to the business model level of analysis, such as the dominant industry logic, or distant business methods.

Answer 93

Realized business models are difficult to change due to inertial forces and corresponding cognitive representations that managers often accept without critically considering alternatives.

Answer 94

Not questioning an existing business model can endanger a firm's survival, as seen in the case of Polaroid, which failed to innovate its business model in the face of digital disruption.

Answer 95

A business model mindset is a state of mind, attitude, or inclination that helps someone consider the firm’s entire activity system as a solution for business problems or opportunities.

Answer 96

A business model mindset helps managers think proactively and holistically about how to do business, preparing them for changes in their industry or business environment.

Answer 97

Two common mindset traps are: 1) Focusing on the wrong level of analysis, such as product or technology innovation rather than the business model, and 2) Following the dominant business model template in the industry without considering redesign.

Answer 98

Thinking holistically about business models is not easy because it is not something managers are used to doing, but it can be taught, learned, and developed.

Answer 99

The first trap is focusing on product, technology, or process innovation rather than the broader business model, which involves the entire activity system.

Answer 100

The second trap is adhering to the dominant business model template in the industry without recognizing that the business model can and should be redesigned.

Answer 101

first peer-to-peer online lender, was born in the UK

Answer 102

when the firm changes its activity system so that the new system is novel for the firm and possibly also in the product-market spaces in which it competes. - in book

Answer 103

the introduction of a business model that is novel (in terms of its content and/or structure and/or governance and/or value logic) to the product-market space in which the firm competes.

Answer 104

simply new to their firm; it does not necessarily have to be new to the world or even to their industry.

Answer 105

First, is the activity system novel in any of its key dimensions (What, How, Who, Why)? And second, for whom is it novel?

Answer 106

power tool manufacturer based in lichtenstein

Answer 107

(i) modified activities or exchanges; modifying an activity by making it faster, cheaper, or higher quality is not a business model innovation. (ii) product or service innovations; modification of an exchange mechanism among activities, such as an upgrade in a firm’s communication system, which allows for bet- ter coordination among activities. (iii) corporate venturing.

Answer 108

business-building initiatives taken in those [established] firms.

Answer 109

the selection of activities to be performed. eg.Bancolombia, Offering micro- finance, or “financial services to households and micro-enterprises that are excluded from traditional commercial banking services,”’” required adopt- ing activities beyond those of a traditional retail bank.

Answer 110

describes how the activities are linked, in other words the sequencing of activities and the exchange mechanisms among the linked activities. - eg. pokemon go

Answer 111

Franchising, for example, Because of their smaller size, these franchises (7-eleven) did not face the same regulations as larger stores.” Suzuki was an early adopter of what was then a novel type of activity system governance (new to Japan, but not to the rest of the world) specifically in the area of convenience store retailing.

Answer 112

for eg. the switch from transaction-based to subscription-based pricing

Answer 113

seek to numerically capture the innovativeness of a business model. This is not straightforward, because business model innovation 1s essentially a qualitative phenomenon. First, analysts write answers to questions in text format. They then apply a scale (e.g., "strongly agree") based on their understanding of the firm's business model. These responses are coded into standardized scores (e.g., 1 for "strongly agree"). Finally, the individual scores are aggregated into an overall score using specific weights, creating a quantitative measure of the business model's innovation.

Answer 114

Qualitative measures of business model innovation are often an early step before quantitative ones but require in-depth understanding and time-consuming data collection from sources like interviews, observations, firm documents, and archival data. The data is analyzed to assess innovation across key dimensions: content (new activities), governance (new participants), structure (new links), and value logic (new revenue models). Firms innovating in all areas show broad innovation scope, with those surpassing industry peers demonstrating higher novelty.

Answer 115

First, it complements other forms of innovation. Second, it does not usually require large upfront investment (e.g., into developing techno- logical expertise and capabilities) aka Low Capital Expenditure . Third, it can serve as an effective barrier to an imitation. Finally, business model innovation can be a disruptive force in industry.

Answer 116

masinės gamybos ekonominiai privalumai

Answer 117

The founder had envisioned providing heavily subsidized electric cars, with users paying a variable monthly fee to have their electric car batteries quickly swapped out at a network of automated stations — eliminating the need to wait for a battery to charge. Better Place failed due to several key issues. Firstly, the company underestimated the costs of building its electric car fleet and charging network. Secondly, customers didn’t embrace the offering, and the company needed rapid, widespread adoption to sustain its revenue model. Before shutting down, Better Place had sold under 1,500 cars. Additionally, it struggled to convince important partners about the legitimacy of its business model. Renault, the sole car supplier, exited the partnership when Better Place failed to deliver high-volume sales. This, along with the difficulty in persuading other car manufacturers to join, contributed to the company's bankruptcy.

Answer 118

TRUE. Although business method patents exist in the U.S. (but not in Europe), they are difficult to enforce. With the exception of natural monopolies such as social networks (in so, 2019, Facebook had a market share of 67%), most markets addressed by business model innovators present low barriers to entry.

Answer 119

(i) the more attractive the business model innovation is in terms of its market potential; (ii) the more legitimate the innovation is in the eyes of customers, regulators, and other ecosystem players; and (iii) the more loosely coupled the underlying activity system is.

Answer 120

the holder of an office or post. - valdantieji

Answer 121

atsakyti tuo pačiu

Answer 122

once a company adopts a certain model, it becomes harder to change over time. This is especially true if the business model involves a tightly connected system of activities, which are more difficult to modify compared to a loosely connected system.

Answer 123

First, it complements other types of innovation. Second, a novel business model (for example, a digitally-powered business model) can be cost-effective. Third, business model innovation can serve as an effective barrier to imitation. Finally, business model innovation can create a new market or allow a company to uncover new opportunities in existing ones. In some cases, it can lead to industry-wide disruption.

Answer 124

The greatest risk is that the business will fail. Second key risk is the lack of protection from imitation by incumbents. Companies introducing business model innovations also need high legitimacy, which may be harder for new ventures to achieve. The robustness and stability of the business model is furthermore partially dependent on the sustained alignment of incentives among all stakeholders. As the complexity of a business model increases, so does the risk to its viability. Another risk to a new business model is the possibility that path dependencies become entrenched.

Answer 125

What perceived customer needs can be satisfied through the new model design? What novel activities are needed to satisfy these perceived needs? How could the required activities be linked to each other in novel ways? Who should perform each of the activities that are part of the business model (e.g., the focal firm or a partner), and what novel governance arrangements could enable this structure? How can value be created in novel ways through the business model for each of the participants? What novel revenue model fits with the firm’s business model to appropriate part of the total value it helps create?

Answer 126

when you innovate, look at the forest, not the trees — and get the overall design of your activity system right before optimizing the details.

Answer 127

Anticipating Distancing Abstracting Reframing

Answer 128

Employee selection Memorable mentoring Role modelling

Answer 129

Analogical reasoning and conceptual combination

Answer 130

- Novelty - Lock-ins - Complementarities - Efficiency

Answer 131

“What customer need will the new business model address?”

Answer 132

peer-to-peer

Answer 133

design drivers include internal factors, or constraints (which we refer to as Deployable resources), the focal firm’s External environment, Stakeholders’ activities, Incumbents’ templates, Goals to create and capture value, and the perceived Needs of customers).

Answer 134

“thought of as an integrated and disciplined innovation process that builds creative insight from deep knowl-edge.”’ Typical domains for the application of design include architecture, fashion, engineering, software, and medicine.

Answer 135

the conceptualization of a boundary-spanning activity sys- tem that includes the mechanisms that connect these interdependent activ- ities and the identification of the parties that carry out each of the activities within the system.

Answer 136

centered on identifying a set of interdependent physical components and features that characterize the firm’s offerings to its clients.

Answer 137

process of grouping activities, roles, or positions in the organization to effectively (and possibly in new ways) coordinate the interdependencies that exist.

Answer 138

the particular (and possibly novel) configuration of activities enabled by business model stakeholders and the resources they deploy.

Answer 139

“wicked.”

Answer 140

Deployable resources, which are also known as internal constraints, concern availability of human and capital resources and capabilities that can be deployed to enable activities. External constraints refer to the conditions imposed on the business model designer by the focal firm’s external environment, including its competitive market and its technological ecosystem. It also includes the macroeconomic (e.g., interest rates), legal, socio-political, regulatory, and cultural environment in which the business model will be embedded; these are therefore also often referred to as “environmental constraints.” Must be valuable, rare, difficult to imitate and hard to substitute -VRIN

Answer 141

internal constraints for the business model designer.

Answer 142

external environ- ment.

Answer 143

provide support or a firm basis for

Answer 144

Big data analytics Mobile channels Social media Cloud computing AI Machine learning Blockchain Internet of things Autonomous cars 5G

Answer 145

Big data analytics “examines large amounts of data to uncover hidden patterns, correlations and other insights.”

Answer 146

“the delivery of computing ser- vices — including servers, storage, databases, networking, software, ana- lytics, and intelligence — over the internet (‘the cloud’) to offer faster innovation, flexible resources, and economies of scale.”

Answer 147

is just a thing-labeler, taking your description of something and telling you what label it should get.”?” It enables auto- mated customer service chatbots, or “virtuous cycles,”

Answer 148

BITCOIN, Blockchains are a more secure method for record keeping, which is centralized rather than distributed.”

Answer 149

: Broadly, the Internet of Things refers to “ev- erything connected to the internet but it is increasingly being used to define objects that ‘talk’ to each other.””

Answer 150

This concept refers both to collab- oration with partners during the design process, and to collaboration as a defining characteristic of the resulting business model design. calls for shifting the focus beyond the focal firm’s boundaries. It alerts business model designers to the advantages of proactively incorporating and leveraging resources and capabilities that exist within the focal firm’s ecosystem.

Answer 151

Which activities should be included? This step considers whether activities complement each other and reinforce a specific goal. For example, should a peer-to-peer lending platform include a credit risk assessment of borrowers? Who should perform these activities? Once activities are chosen, it must be decided whether the company or its partners, vendors, or other stakeholders should handle them. For instance, should the platform manage credit risk assessments, or leave it to the lenders? Different stakeholders (like banks, credit data firms, or payment processors) can perform different activities, creating various ways to design the business model.

Answer 152

value engineering:

Answer 153

designers routinely draw on existing templates.* aka the established business models)

Answer 154

foster efficiency at the expense of novelty. people tend to follow the dominant, efficient design)

Answer 155

the “goal” design driver is often closely linked with customer (or, more generally, stakeholder) needs. Main goal of the firm is to FULFILL NEEDS of its CUSTOMERS But equally important to FULFILL NEEDS of OTHER STAKEHOLDERS – both internal and external !!! * Thus, BM design should ensure value creation forall AND value appropriation for the firm By adopting a total value perspective, business model designers integrate the resource, i.e., supply and demand sides of the business model. By taking into account the interests of others, they also increase the opportunity cost of breaking away from the focal firm’s business model and enhance the commitment of business model stakeholders.

Answer 156

“state of active awareness characterized by the continual creation and refinement of categories, an openness to new in- formation, and a willingness to view contexts from multiple perspectives.”°

Answer 157

tvirtas, stiprus

Answer 158

“a generalized perception or assumption that the actions of an entity are desir- able, proper, or appropriate within some socially constructed systems of norms, beliefs, and definitions.”°

Answer 159

are both legitimate and do not lend themselves easily to imitation.

Answer 160

One way is by generating incompatibilities with incumbents’ existing business models. Two, business model designers need to make legitimate structural elements visible, while keeping novel elements that may lack legitimacy less visible.

Answer 161

how activities are linked both within the firm and across its boundaries, 1.e., with its external partners (How). Business model structure is generally more difficult to identify for competitors than business model content (What) or governance (Who).

Answer 162

Strong relationships with legitimate, and perhaps prominent, partners indicate that the focal firm has earned a positive evaluation from experienced and influential actors, signaling legitimacy to other participants.°

Answer 163

win over partners, especially in the case of new firms.

Answer 164

resources and capabilities a firm has for various activities.

Answer 165

mindfulness ir robusteness

Answer 166

ideate ir iterate, BMIJmplement veliau atsiranda

Answer 167

discovery-driven planning and effectuation (main dr. Saras D. Sarasvathy She wanted to answer the question: How do “Entrepreneurs think”?) - scholars kalba daug in practice - lean startup

Answer 168

“process tool kit”

Answer 169

tackles the inherent uncertainty around designing an innovative new business model by proposing a framework for identifying and testing crucial assumptions.

Answer 170

framing, benchmarking, specification of deliverables, testing of assumptions, managing to milestones, and parsimony.

Answer 171

asks the entrepreneurial managers to define long-term success by asking a series of questions. framing in DDP corresponds to the “goal” design driver in the business model design process.

Answer 172

Benchmarking (step two) asks the entrepreneurial manager to peg the key revenue and cost metrics (e.g., from the reverse income statement) against the market, and against the firms with the most comparable business models. It entails the identification of what we called “templates” and benchmarking against them.

Answer 173

3rd. it involves being clear and specific about the operational requirements of the various activities What dimension. At this stage, key assumptions are made that should be carefully documented in a Key Assumptions Checklist.

Answer 174

These steps, which refer conceptual to the careful use of steps resources and a reluctance to make large upfront expenditures, are most powerful when they are combined with each other. Key assumptions about the business model (identified in step three) should be tested (step four) early on in the business development process at milestones (or checkpoints, step five) that have been preselected or even created because they allow for maximum learning at the lowest possible cost (step six).

Answer 175

What, How, Who, and Why dimensions

Answer 176

Key activities can be performed at a reasonable cost (What?) We can get sufficient and reliable real-time information at low cost from our customers about their (changing) preferences, and we can feed this information into our production system so that new products can be designed rapidly (How?) We will be able to partner with the government to certify our services (Who?) Customers will accept a subscription-based model for ordering basic items (Why?) The business model ensures that new product designs that correspond to new customer needs are available in less than ten business days (system-level property)

Answer 177

overall it resembles the ways in which preschool-aged children discover new things about the world by engaging in play.' Rather than competing with their peers when playing, young children take an active interest in others around them and often mimic what they are doing. They also test different toys before choosing a favorite. refines the discovery-driven planning method for developing a business model by suggesting more than one alternative for largely initially commitment-free staged experimentation first, and then by leaving the business model deliberately under-specified once a particular option has been chosen.

Answer 178

need to be aware that such commitment may entail significant opportunity costs, by putting the venture on a distinct path and thereby possibly foreclosing other business model options down the road

Answer 179

Leveraging resources at hand, Keeping in mind affordable loss (Find ‘first customer’ with minimum expenditure of resources. So my market research would actually be hands-on actual selling”), Building partnerships, Leveraging unexpected contingencies (“Turn surprises into profits” vs. “avoid surprises as much as possible”), Controlling the near future

Answer 180

The first premise is that managers know what they do not know (and hence what they need to test). The second premise is that they already have a pretty good idea of the market opportunity (a.k.a. customer needs) and possible solutions (specifically, business models) to address it.

Answer 181

acompanying

Answer 182

Encourages active involvement of partners in order to leverage their complementary resources and capabilities. Effectuation could be characterized as a “low risk, low return” search strategy.

Answer 183

a future event or circumstance which is possible but cannot be predicted with certainty

Answer 184

besiformuojantis

Answer 185

First, it is largely driven by coincidence and trial-and-error. For example, “whoever first buys ... becomes by definition the first target customer.” Second, action implies commitment, and so the Paradox of Entrepreneurship mentioned earlier can apply.

Answer 186

is anchored on the observation that entrepreneurs’ subjective perception of a business model opportunity may be very different from a validated one. encourages entrepreneurs to explicitly formulate a series of empirically testable hypotheses about the opportunity, then test these hypotheses by conducting deliberate experiments in a lean, or non-wasteful, fashion. AKA hypothesis-driven entrepreneurship. Test out business opportunities in a “lean” way * Lean = fast + frugal Minimum Viable Product – Version of a productwith just enough features to be usable by early customers who can then provide feedback forfuture product development Minimum Viable BM - Involves testing out the “What, How, Who, Why framework” in the “leanest” way

Answer 187

shorten product development and rapidly discover a viable business model. The notion of “lean” refers to the method’s focus on avoiding unnecessary resources and waste, and points to the roots of the concept in the lean manufacturing movement, with its emphasis on streamlined production systems. Although it is primarily aimed at startup firms, the lean startup method has also been suggested for use in established firms to build new business models and even entire new businesses. Based on the test outcomes, a decision needs to be made about whether to persevere (i.e., continue with the same business model), pivot (i.e., change the model), or perish (i.e., abandon the business model). If the choice is to continue, the next set of business model hypotheses needs to be tested. In case of a pivot, the process will start again from the beginning. Thus, lean startup is an empirical, structured, and orderly search process for a viable business model.

Answer 188

minimum viable business model

Answer 189

minimum viable product

Answer 190

it does not waste resources unnecessarily; speeds up development time; and proceeds in a rational, systematic manner that can be easily understood and communicated to others. there is a high likelihood that a viable business model will actually developed due to the close interaction and consultation with customers and other business model stakeholders. **Two associated benefits are: Reduced market risk: Customer and stakeholder feedback Reduced capital expenditure (CapEx) and initial funding needs: Emphasis on cheap experimentation - reduces the need for large amounts of project funding. It encourages delaying CapEx to bring the business model to life, until these costs cannot be avoided any further.

Answer 191

capital expenditure - money invested by a company to acquire or upgrade fixed, physical or nonconsumable assets

Answer 192

Cost of experimentation: the fixed cost of experimentation is often greater than zero, especially in the later stages of business model development. Disclosure of strategically important information: Performing market-based tests and getting feedback implies disclosing information about the business model that may be strategically relevant. This could foster imitation by rivals. Cost of damaged reputation: Not all experiments that are conducted are viewed positively. Customers who are used to receiving near-perfect services may be negatively surprised. Noisy signals: The testing of hypotheses may yield noisy signals instead of clear and unequivocal learning insights. Cost of organizational change: If the outcome suggests a new model that requires changing an existing one ir viska kas su tuo ateina - this may be costly — both financially and in terms of the motivation, time, and attention.

Answer 193

Loyalty, personalization, community (reviews)

Answer 194

D-E-S-I-G-N; Mindfulness; Robustness

Answer 195

makes a customer dependent on a vendor for products, unable to use another vendor without substantial switching costs Lock-in can be manifested as switching costs, or as network externalities that derive from the structure, content, and/or governance of the activity system.

Answer 196

incorporates both online and offline channels, usually combining a website and a physical store

Answer 197

The first is the product; just the technique. Relatively expensive in local terms, but for that we offer the possibility of paying in installments. To exclude the risk that the end customer does not pay, we offer our second pillar: Pay-As-You-Go. With our third pillar—financing—we offer the cheapest capital in Africa they can get. As a fourth pillar, we offer distribution parties technical and service-oriented support. For this purpose, we have local employees in our offices at the various parties. They are our eyes and ears and offer technical support and after-sales services, which they also use to increase local knowledge of solar products."

Answer 198

First of all for our users: they generate energy, but not just for themselves and their family. They also sell energy to their fellow villagers and thus become an ‘entrepreneur’. These ‘Local Energy Suppliers’ can provide energy to around 12 to 20 households. For these end-users the energy costs of a LED lamp are lower than that of a kerosene lamp. Additionally, there is a profit margin for our distribution partner, which is often a local party with access to rural areas in India. Finally, there’s a profit margin on the supplied service for Rural Spark as well. This enables us to scale up the network and to continue to add new functionalities.

Answer 199

Existing products/solutions too expensive or complicated for some people Opportunity to exploit newly available/tested technology Shifting basis of competition & fending off low- end disruptors

Answer 200

* Design is a mindset/discipline/method * Design = Process + Human-centric + Creative problem-solving

Answer 201

a comprehensive marketplace platform for trading cars, motorcycles, caravans, and utility vehicles online

Answer 202

DDP, Effectuation & Lean Start up

Answer 203

ENVIRONMENTAL and SOCIAL value as well

Answer 204

“explains the relationship among the performance of the product, the fulfillment of the customers’ needs and the total cost to the customer over the customer relationship life cycle.” it reflects the net benefits that customers receive from a focal firm’s attempts to address their needs.

Answer 205

“behind any winning strategy must stand a superior value proposition — a clear, simple statement of the benefits, both tangible and intangible, that the company will provide, along with the approximate price it will charge each customer segment for those benefits.” - Scholars who suggest that the realized value proposition to customers (which they refer to as value created for customers) equals the customer’s willingness to pay, minus the price paid for the product or service.’

Answer 206

“Services are outputs produced to order and which cannot be traded separately from their production. Services are not separate entities over which ownership rights can be established. They cannot be traded separately from their production.”

Answer 207

hypothesis formulated by a focal firm about how much value it creates for a stakeholder by way of providing tangible as well as intangible benefits that fulfill the stakeholder’s needs, net of any costs that the stakeholder incurs and/or perceives.

Answer 208

subjective. For example, a busy top executive will place a different value on rapid order delivery than a retired employee. They are based on subjective assumptions that the firm’s managers make about the subjective utility functions’ of the focal various stakeholders.

Answer 209

added together

Answer 210

The first way is to increase the willingness-to-buy of customers of the firm (i.e., a classic differentiation approach). The second way is to lower the opportunity cost of suppliers The third way is to lower willingness-to-pay of customers for competing firms’ products (such by creating switching costs). Finally, the fourth way is to increase the opportunity costs to suppliers of working with other firms (such as through creating switching costs for suppliers).'°

Answer 211

adoption of new activities (content), new ways of linking the activities (structure), new ways of governing the activities (governance), and/or new ways to monetize the activity system by the focal firm (value logic).

Answer 212

Novelty (The novelty value driver can be captured by the focal firm through first-mover advantage, for example, and defended through switching costs.) lock-In (it can appear as switching costs or network externalities) Complementarities (when bundling activities within a business model enhances the overall value (compared to adding up the value of each item separately) Efficiency (captures how the design of the activity system reduces transaction costs; this is especially clear with digital business models that benefit from high efficiency at a relatively low cost.)

Answer 213

consumer awareness of a product or brand, typically as opposed to market share.l

Answer 214

First, loyalty programs. Second, firms can develop a dominant proprietary design standard for business processes, products, and services (e.g., Amazon’s patented shopping cart). Third, firms can establish a trusting relationship with customers, such as by offering them transaction safety and reliability guaranteed by independent and highly credible third parties.

Answer 215

1. nuosavybės 2. patentuotas

Answer 216

the value created for customers increases with the size of the customer base. Consider, for example, messaging application WhatsApp. Each WhatsApp user benefits from a larger number of WhatsApp users.

Answer 217

are present whenever bundling activities within a sys- tem provides more value than running activities separately.?!

Answer 218

a type of business model that incorporates both online and offline channels, usually combining a website and a physical store.

Answer 219

refers to the ways in which firms aim at achieving greater efficiency through the design of their activity systems.

Answer 220

reducing transaction costs.

Answer 221

reduction of the costs of coordinating and executing activities.

Answer 222

First, by codetermining the overall total value created, which is the upper limit to the focal firm’s value appropriation. Second, the business model also influences the focal firm’s bargaining power vis-a-vis other business model stakeholders. The greater the total value that is created by the business model, the greater the focal firm’s potential bargaining power, and the greater the amount of value that the focal firm may be able to appropriate.

Answer 223

atžvilgiu

Answer 224

1. sukaupti 2. įgyti

Answer 225

the locus of innovation. on average, an increase in business model novelty will not decrease the focal entrepreneurial firm’s ex-post bargaining power relative to other business model stakeholders.

Answer 226

the value proposition of a product. While the value proposition of a service may not be as easy to distinguish from that of the associated business model, together, the two make up the total value proposition to the customer, in the same way that the value proposition of a product complements the value proposition of a business model.

Answer 227

Activity System Level

Answer 228

aiskiai istarti

Answer 229

Storytelling: Explaining at a high level how the business model works. Dimension Elaboration: Describing each element of the business model in detail. Activity Mapping: Creating a visual chart showing the firm's key activities and how they are connected.

Answer 230

value chain, encompassing all activities involved in creating and delivering value

Answer 231

“stories that explain how enterprises work”, with clear characters (Who), motivations (Why), and a plot (What, How).

Answer 232

Condition 1: Incentive Compatibility All stakeholders must find the value proposition compelling enough to “play along.” Condition 2: Profitability The story must end with value creation and appropriation for the focal firm. To evaluate whether a business model is plausible and viable. Helps articulate how value is created and captured.

Answer 233

environmental PEST scanning, and resource and capability scanning.

Answer 234

Boxes represent key activities (What) – each described with a verb (e.g., "deliver," "process," "design"). Arrows between boxes illustrate the links and sequencing (How) – showing how activities are interconnected. Colors indicate Who performs each activity: e.g., green = focal firm, yellow = customers, red shades = different suppliers.

Answer 235

DESIGN DRIVERS

Answer 236

(i) Be centered on stakeholders, especially customers, not the focal firm. (ii) Reflect human-centered thinking, considering customer goals, needs, desires, and motivations. (iii) Address a meaningful and important issue for the customer. (iv) Be ambitious yet feasible, i.e., solvable in a way that makes economic sense.

Answer 237

kuklus, taupus

Answer 238

Political: Government policies, trade regulations, taxes, tariffs, and political stability. Economic: Macroeconomic indicators such as interest rates, inflation, exchange rates, and recession risks. Social: Demographics, cultural values, workplace and lifestyle trends (e.g., preferences of millennials, Gen X, Gen Z). Technological: The role, maturity, and adoption level of technologies relevant to the business model ecosystem.

Answer 239

by Michael Porter, the Five Forces Analysis examines: Power of Customers: Can buyers drive prices down or demand more value? Power of Suppliers: Can suppliers influence costs or availability of inputs? Barriers to Entry: How easy is it for new competitors to enter the industry? Threat of Substitutes: Are there alternative products/services that could replace yours? Competitive Rivalry: How intense is the competition among existing players?

Answer 240

The focal firm itself (internally controlled or owned). External partners or stakeholders.

Answer 241

Step 1: Inventory current internal capabilities and resources. Step 2: Identify and assess external capabilities accessible via partnerships, alliances, or external environment and internal capacity.

Answer 242

external environment and internal capacity.

Answer 243

highlights the key assump- tions of a low-cost business model experiment. The TAM is a tool used to document and track which assumptions will be tested and when. It consists of a table with: Rows: Represent the critical assumptions behind the business model. Columns: Represent milestones or key events, such as customer visits or experiments, where assumptions will be tested. Matrix Structure: Checkmarks in the cells indicate which assumptions will be tested at each milestone. Additional rows capture important details about each test: Type of test (e.g., survey, prototype testing, focus group). Expected costs for the test. Parties involved and how they will participate. Individuals responsible for executing the test. Test timing and deadlines. Expected outcomes of the test. Realized outcomes after testing. Key learnings from the test.

Answer 244

Business Model Canvas

Answer 245

“generate ideas spontaneously,” “avoid discussing their merits,” “do not criticize, do not mention negatives,” “resist becoming committed to one idea,” and “record all ideas.”!

Answer 246

Fostering a business model mindset within the organization. Creating a sense of urgency and a common understanding about the importance of business model change. Building an organizational memory of business model design solutions. To the extent that business model stakeholders are involved in the brain- storming: getting them on board and encouraging them to endorse the new model. Enhancing the skill set of participants involved in brainstorming, in particular for analyzing and designing new business models.

Answer 247

the focus should be on testing the most critical assumptions behind the model, known as key assumptions.

Answer 248

Alex Osterwalder and Yves Pigneur to help translate a business model idea into a full-fledged business plan. The BMC is a poster-sized graphic that visually organizes key elements of a business model.

Answer 249

Key Activities (KA): Core tasks the business performs to create value. Key Resources (KR): Assets required to deliver value. Key Partners (KP): Strategic relationships and external entities that help achieve business goals. Value Propositions (VP): The products and services that create value for customers. Customer Relationships (CR): How the business interacts with customers to maintain relationships. Channels (CH): Ways through which the company delivers its products and services. Customer Segments (CS): Different groups of people or organizations the business serves. Cost Structure (C$): The costs associated with operating the business model. Revenue Streams (R$): The sources of income generated by the business.

Answer 250

Company Description (KA) Products and Services (VP) Marketing Plan (CR, CH, CS) Operational Plan (KR, KP) Management and Organization (KR) Strategy (KA, KR, KP, CS) Financial Plan (C$, R$)

Answer 251

Environmental analysis (market, competitor analysis) Risk analysis Implementation roadmap Detailed financial spreadsheets and their assumptions These elements can be added in a subsequent step if needed.

Answer 252

Value Proposition (VP): The value offered to customers. Cost Structure (C$): The costs involved in delivering the value. Revenue Streams (R$): The income generated from the value created.

Answer 253

Channels (CH): How the value is delivered to customers. Customer Relationships (CR): How the company interacts with its customers.

Answer 254

Business Model: Defining the What, How, Who, and Why. Canvas: Filling out key elements (KA, KR, KP, VP, CR, CH, CS, R$, C$). Business Plan: Developing a full business plan based on the Canvas.

Answer 255

Not directly - no

Answer 256

First, Haier fundamentally transformed its business model while keeping its existing scope largely intact (i.e., manufacturing household appliances). Second, Haier innovated its business model in tandem with its internal organizational structure and manage- ment system, which created enormous complexity (from many interrelated moving parts) and challenges in creating fit among the various systems: business model-business and corporate strategy-organization.

Answer 257

Haier’s Transformation Challenges: Conflicting Activities: Haier faced internal conflicts between its old business model focused on standardization (e.g., forecasting demand through product development) and the new focus on mass customization (e.g., market-specific research and prospecting). Incentive Misalignment: The old incentive system, based on wholesale numbers, was inconsistent with the new customer-centric model, which incentivized salespeople based on retail numbers and customer satisfaction. Organizational Structure Issues: The integration of new business model elements, like e-commerce, into the old organizational structure hindered the e-commerce unit’s ability to gain necessary resources and support. The e-commerce division’s progress was stunted by its repeated restructuring within the company. Employee Behavioral Constraints: Haier faced behavioral inertia, as employees accustomed to the old system of standardization were reluctant to adopt the new practices. When confronted with challenges in the new system, they often reverted to old, familiar methods. Suning.com’s Successful Transition: Dual Business Model: Suning.com successfully combined offline retail with online e-commerce, creating a dual business model. It leveraged its established position in traditional retail while expanding into the online-to-offline (O2O) model. Growth: Suning’s online business grew by 64.45% in 2018, contributing to a dominant market position with total annual revenues of $86 billion in 2019. Strategy: Suning.com demonstrates how an “old economy” retailer can use its existing strengths to successfully compete in the “new economy” of e-commerce.

Answer 258

The chief barriers to business model change in established firms are often rooted in resistance to change and organizational inertia. Internal fit refers to how well the new business model aligns with the existing structures, cultures, and routines within the firm. Resistance to change is a significant challenge because employees and management are often comfortable with the old system and processes. Organizational inertia can prevent the adoption of new practices, with employees being reluctant to break away from established routines even when new activities are required.

Answer 259

Internal Organization Fit, External Ecosystem Fit, Strategic Fit

Answer 260

Lack of Familiarity: Employees may not understand the new business model or perceive it as illegitimate. Cannibalization of Existing Business: The new model may pose a threat to the firm’s core business, potentially undermining existing revenue streams. Career Threats and Envy: Employees may feel that the new model threatens their career progression or spark envy among peers. Doubts About Efficiency: There may be uncertainty about whether the new business model will be more efficient or profitable. Uncertainty About Scalability: There could be concerns about whether the new model will scale effectively or generate future profitability.

Answer 261

In many cases, an established firm will not replace its old business model immediately but will operate dual business models for a period of time. For example, a car manufacturer like BMW may also run a car-sharing business (e.g., Share Now) alongside its traditional operations.

Answer 262

Path Dependencies: Past investments in assets, capabilities, routines, relationships, and contracts create strong path dependencies, making it difficult to redeploy or unwind these investments. Managers tend to favor decisions that align with the established business model, often allocating resources to what has been proven profitable in the past, which disproportionately favors the old model. Organizational Culture: An organizational culture that does not encourage experimentation with new business models, and is even characterized by a fear of failure, contributes to inertia. The culture may resist change, and employees may fear the risks associated with failing in new ventures. Dominant Logic: The dominant logic of the existing business model imposes cognitive constraints on managers, limiting their ability to think beyond the established ways.

Answer 263

The forces that constrain the mindset and behavior of managers, causing them to continue past practices and resist adopting new ways, particularly when it comes to implementing business model innovation (BMI). It involves passive resistance to change, which can be driven by several factors.

Answer 264

One of the key recommendations to counter organizational inertia is to continuously experiment with new business models. Experimentation helps overcome the barriers to business model implementation by reducing market uncertainty and fostering an entrepreneurial mindset within the organization. Probing: Visiting innovation hotspots or establishing development centers in cities known for innovation. Local experiments and in-market tests: Conducting small-scale, localized trials to gather real-world data. Corporate venturing: Investing in or collaborating with startups to explore new business models.

Answer 265

Redundancies: The two models might end up duplicating efforts or resources. Underexploited synergies: There may be opportunities for collaboration between the old and new models that are not fully utilized. Cultural Differences: Separate units can develop distinct organizational cultures, which may lead to conflicts. Governance and Incentive Issues: The two models might require different governance structures and incentive systems, leading to confusion or inefficiency. Unresolved Decisions: It can be difficult to determine when, if ever, to integrate the old and new models, and the transition process can be fraught with challenges.

Answer 266

where past investments create a bias toward continuing with the old model, making it hard to embrace innovation.

Answer 267

Accelerators: Programs that speed up the development of new business models. Incubators: Organizations that nurture early-stage business ideas. Innovation labs: Dedicated spaces for exploring new technologies and business models. Cross-functional teams: Teams made up of members from different departments to foster creativity. Scouting missions and challenges: Initiatives like hackathons that encourage problem-solving and creativity.

Answer 268

temporary projects set up by firms to gather timely and relevant information on new developments, particularly related to business model innovations in areas crucial to the firm. The teams (referred to as scouts) typically seek input from startups, inventors, specialized consultancies, university researchers, and attend conferences and trade shows at the forefront of innovation. The purpose of scouting missions is to identify new opportunities and keep the firm informed about emerging trends and innovations that may impact its business model.

Answer 269

A think tank is a more permanent version of a scouting mission, focused on research and innovation. It can be an independent institution or a part of a corporation.

Answer 270

Challenges like hackathons can be particularly effective for changing company culture and shifting employees' mindsets toward innovation and entrepreneurship.

Answer 271

encompassing the whole of a thing, and not just the part

Answer 272

Demand-side risks: The risk that customers may not accept the product or service as expected. Supply-side risks: Risks related to the management team, product/service quality, technology, and partners/vendors. Competition risks: The risk that competitors may imitate the offering. Capital market risks: Risks related to funding, timing, and valuation at exit. Environmental risks: Risks arising from macroeconomic, regulatory, and political factors.

Answer 273

B2C (business-to-consumer) models to B2B (business-to-business) models. The tight control by these platforms over distribution channels for digital products has made it more difficult for individual entrepreneurs to directly reach consumers, leading to a rise in businesses targeting other businesses (e.g., through the platforms).

Answer 274

Demand-side risks: Radically new business models may increase demand-side risks, especially if customers are initially reluctant or skeptical. For example, e-commerce firms like Amazon faced early customer reluctance about online payments. Supply-side risks: Complex partnerships or significant investments in assets can create path dependencies, increasing supply-side risks. Competition risks: Innovative models may be easy to imitate, as seen with Disney Plus entering streaming services similar to Netflix. Strong competitors may engage in unfair practices that harm innovators, as Google did by favoring its own price comparison service over rivals. Capital market risks: Innovative models can increase funding risks as angel investors and venture capitalists may delay funding decisions on unproven business models. Environmental risks: Business model innovations may raise regulatory concerns, such as Didi Chuxing’s carpooling model being temporarily suspended due to public safety issues.

Answer 275

creating a new venture from scratch OR reshaping an existing organization, BUT Weaker Inertia in New Ventures: New ventures, by definition, have a shorter history and less organizational inertia, meaning less the resistance to change. Founders and employees in new ventures are accustomed to frequent changes (or "pivots") to adapt and ensure the firm’s survival, making them more agile and open. Leadership and Decision-Making: In new ventures, founders, as owners of the business, often have the decision-making power to drive business model innovation. This ability to make strategic decisions can help overcome the business model innovation leadership gaps that are often seen in larger, more bureaucratic organizations. Risks and Challenges in BMI for New Ventures: Strategic and external fit must be ensured to avoid dependency on external stakeholders, which could create unilateral risks. Like established firms, new ventures also face their own leadership and governance challenges, which need careful attention during business model innovation.

Answer 276

The sharks dilemma involves deciding when to partner with external entities that may have the potential to abuse their market power or misappropriate valuable resources, versus opting for less risky but potentially less advantageous partners. Need to have defensive mechanisms (e.g., legal protection, alternative partners) to counter this dilemma

Answer 277

vikrus, judrus

Answer 278

Dependent entrepreneurship highlights the challenges that entrepreneurs face when their success is tightly tied to the policies and market dynamics of dominant digital platforms.

Answer 279

Role confusion and unclear responsibilities, Conflicts among co-founders, Lack of mission-critical competencies, Poor communication, leading to inefficiencies.

Answer 280

In many new ventures, BOD members are deeply invested in the business and often possess significant industry knowledge, which allows them to add value. However, this can sometimes lead to governance issues: Too cozy relationships between directors and management, blurring the lines between helping the team create value and proper governance. Potential governance voids could emerge, where directors, due to shared financial interests with management, may overlook critical issues.

Answer 281

Thorough Analysis of Challenges Risk Management Approaches 1 Business planning: A vital tool for managing risks and organizing the venture in a structured way. 2 Building trust with external stakeholders: Establishing reliable relationships with key partners. 3 Lowering dependence on third parties: Reducing the risks that come from relying too heavily on external actors. 4 Strategic considerations in adopting a revenue model: Thoughtfully selecting a revenue model that aligns with the business goals. 5 Improving internal governance: Strengthening leadership and organizational structures to support innovation. Business Planning as a Risk Management Tool: 1 Business planning is a crucial way of managing risks in new ventures, as it can significantly increase the chances of survival. 2 Organizational Development: Many entrepreneurs fail to organize their ventures effectively, which harms their chances of success. A business plan helps organize the venture and define clear strategies. 3 Holistic Mindset: The process of business planning promotes a holistic mindset, allowing founders to recognize gaps, identify risks, and test assumptions. 4 Mitigating Uncertainty: Planning helps make the venture process more predictable and manageable, reducing the unpredictability of business model innovation. Fieldwork and Data Collection

Answer 282

1. bloginti 2. erzinti

Answer 283

The intrinsic dimension of actions refers to the functional tasks that help the venture progress (e.g., developing a business plan, explaining the model to investors). The symbolic dimension refers to how these actions communicate positive qualities such as trustworthiness and legitimacy to stakeholders.

Answer 284

(i) Personal Credibility: Demonstrating the entrepreneur's personal commitment, expertise, and integrity to gain trust from stakeholders. (ii) Professional Organization: Showcasing the organization's professionalism and efficiency through structured processes and well-established practices. (iii) Organizational Achievement: Highlighting past accomplishments and successes to reassure stakeholders about the company’s potential and reliability. (iv) Stakeholder Relationship Quality: Fostering positive relationships with stakeholders (such as investors, customers, and partners) to ensure long-term cooperation and trust.

Answer 285

Ventures often choose partners with high market power or the potential for misappropriation when they have limited alternatives or when they urgently need the resources and capabilities these partners offer. The critical question is: Why risk partnering with such entities? The answer lies in the venture's specific resource needs and the defense mechanisms they have in place to protect their own knowledge and resources.

Answer 286

Legal Protection: Patents or other forms of intellectual property protection can help guard against resource misappropriation and knowledge leakage. However, in many business model innovations, traditional patent protection may be less effective, making this defense weaker. Secrecy: Keeping critical business model components confidential, such as through trade secrets, is another defense. This reduces the risk of competitors gaining access to valuable intellectual property. Timing: Delaying the involvement of risky partners until later in the development process can help. This allows the venture to mitigate knowledge leakage by reaching a stage where it is less vulnerable to resource loss.

Answer 287

Alternative Providers (Plan B): Having alternative partners ready can reduce dependence on any one potentially risky partner. This provides a contingency plan if the relationship with the high-risk partner deteriorates. Strengthening Ownership Among Key Managers: Encouraging key team members (such as managers or co-founders) to have a financial stake in the venture can align their interests with the business. This reduces their incentive to disclose sensitive information and encourages a stronger commitment to the venture's success. Salaried Managers and Risk: Salaried managers, who are not personally invested in the venture, might be more inclined to adopt an opportunistic approach (e.g., disclosing business secrets or joining competing firms). Ensuring ownership stakes or equity compensation can mitigate this risk and strengthen their long-term commitment to the venture.

Answer 288

High awareness of resource constraints: Recognizing that resources, including time, are limited, and making the most of available resources to create a lasting impression. Willingness to work around constraints: Instead of being limited by the lack of resources, skillful managers find creative ways to convey the message. Tailoring the message: Adapting the communication to fit the audience's expectations and needs. Complementary delivery style: Using the most effective method to communicate, such as face-to-face meetings, which can be more personal and impactful compared to emails or written reports.

Answer 289

Paid Revenue Model: - Subscription Model: Payments are made on a recurring basis. Examples include Netflix, where customers pay a fixed amount per month for continued service. - Transaction-Based Model: Customers pay for each transaction or service rendered. It’s more variable in nature compared to subscriptions. --The paid revenue model is generally effective when product quality is high, consumer awareness is strong, and advertising costs are low. Advertising Revenue Model: - Under this model, users get access to a service for free, but revenue is generated by advertisers who pay to display ads to users. --It’s more effective when the ad rates are high, and user aversion to ads is low. However, it’s often linked to lower product quality, as the focus shifts to increasing ad revenues. Freemium Model: - A mix of free and paid versions of a product. The free version might have ads or limited features, while the premium version is paid and offers more benefits. - Examples: Spotify and Dropbox. --The freemium model is particularly useful for segmenting customers and giving them a chance to "try before they buy." However, self-cannibalization (where free users never convert to paid users) is a potential issue. ---------------------------------------------------- Understanding the target market: Are they willing to pay for quality, or is a free service with ads more attractive? Competitive landscape: What are competitors doing, and how can the chosen revenue model help differentiate the firm?

Answer 290

Boundary-Spanning Nature of Business Models: Many digital business models rely heavily on external stakeholders (suppliers, partners, and customers). These models require active participation from external parties in the firm's activity system. Increasingly Digital and Global Reach: Digital business models that are "born digital and global" have a broad market reach. Both opportunities and challenges, including the loss of human touch and the increased anonymity of interactions. It’s easy for governance issues to be overlooked due to the impersonal nature of digital transactions. Delayed Public Listing and Governance: Many high-valuation companies, such as Airbnb, choose to remain private for extended periods rather than go public through an IPO. This means they continue to raise funds through private equity sources. While this allows for greater flexibility in financing, it also creates challenges in ensuring that the governance structures and internal controls are evolving alongside the firm's growth and market influence.

Answer 291

Clear roles and responsibilities for internal stakeholders (e.g., executives, board members). Accountability mechanisms to ensure transparent decision-making processes. Board oversight to manage both short-term actions and long-term strategies. Ownership structures that balance the interests of investors, founders, and other stakeholders.

Answer 292

Inside directors usually include the founders, CEO, and possibly other top executives. Outside directors often include representatives from professional investors (e.g., venture capital firms), former co-founders, or independent directors with significant industry experience.

Answer 293

Institutional investors, who sit on the board, are fiduciaries for all shareholders. This can create a conflict of interest when decisions are made about timing or the mode of a liquidity event. Founders may want to delay a liquidity event to ensure the company’s long-term success, while investors might push for quicker returns.

Answer 294

Different institutional investors may have conflicting interests in a venture. This can cause significant issues for the company’s development.

Answer 295

Engaging in role-based interactions: Building relationships with investors who have board representation. Proposing single decision alternatives: Avoiding multiple proposals during board meetings. Holding separate brainstorming meetings: Discussing business model and strategic issues outside of board meetings. Forming political alliances: Using strategic framing and selective information sharing to close the strategy-making process.

Answer 296

Shared values and beliefs: The leadership team should work to develop a corporate culture based on shared values that guide decision-making. Functional teams to buffer negative effects: For example, counteracting the effects of narcissistic or hubristic leadership by fostering functional, collaborative teams. Empowering employees and encouraging bottom-up decision-making: This creates a flatter organizational structure and ensures that power is distributed more equally, which facilitates better monitoring and aligns objectives.

Answer 297

Dependence on Third-Party Partners. Governance and Leadership Issues. Also: Demand-Side Risks: Uncertainty about customer acceptance and market demand. Supply-Side Risks: Risks related to resources, partners, and the product or technology. Competition Risks: The threat of competitors imitating the business model. Capital Market Risks: Challenges with funding, including investor expectations. Environmental Risks: External risks from macroeconomic, regulatory, and political factors.

Answer 298

rapid expansion, questionable financial practices, and a failed IPO attempt, led to significant financial challenges. In November 2023, burdened by a massive debt load and declining demand for office spaces, WeWork filed for bankruptcy

Answer 299

Adam Neumann. He served as the CEO until 2019. Neumann was central to the company's rapid growth, but his leadership was also marked by controversial decisions, including aggressive expansion, questionable financial management, and a lavish lifestyle. These factors played a role in WeWork's struggles and eventual failed IPO attempt. After Neumann's departure in 2019, Sandeep Mathrani took over as CEO.

Answer 300

Changes to Amazon’s search algorithms or selling terms can cause their sales to evaporate overnight * Amazon strictly limits contact between sellers and customers, which makes their brand identity almost invisible to shoppers * Amazon has also been caught using its venture capital fund to invest in startups, only to steal those startups’ ideas and create rival products and services

Answer 301

Liability of Newness

Answer 302

arguing that organizations cannot be understood simply by focusing on the individuals involved but must be analyzed in the context of the broader social structures that shape them. Stinchcombe also discussed the ways in which organizations evolve and develop over time, emphasizing that organizations are influenced by the historical and social environments in which they operate.

Answer 303

Creating internal fit within an organization refers to aligning its structure, processes, resources, and culture to support the business strategy effectively. Can be active (e.g., protests) or passive (e.g., path dependence & lack of motivation or culture of experimenting) Solutions to Address Internal Fit Challenges: Strategic Alignment: Ensure that the organization’s structure and resources are aligned with its strategy. This may involve reshaping departments or redefining roles to support strategic goals. Cultural Change: Cultivate a culture that aligns with strategic goals, whether through leadership development or team-building initiatives. Improved Communication: Foster open and transparent communication across all levels of the organization. This includes setting up regular meetings, feedback loops, and collaboration tools. Clear Leadership and Direction: Ensure consistent and clear leadership, with leaders acting as role models for the culture and strategy. Leadership should communicate the vision and strategy regularly. Effective Resource Allocation: Regularly review the allocation of resources to ensure they are being used efficiently and are directed toward areas critical to achieving strategic goals. Process Optimization: Continuously assess and improve processes to ensure they are flexible enough to adapt to new demands but structured enough to maintain efficiency. Change Management: Implement strong change management practices, ensuring that employees understand the need for change and are equipped to adapt. Technology and Tools: Invest in modern tools and technologies that can support communication, decision-making, and collaboration across the organization. Talent Development: Focus on continuous development of talent through training, mentoring, and hiring strategies that ensure the right skills are in place to support the business model.

Answer 304

delivery agreement, whereby the seller assumes all responsibility for transporting the goods until they reach an agreed-upon destination

Q3: Business Models (pre-final) Flashcards

(336 cards)