Deck 6: Specifying a Business Model

Question 1

Business models summarize how strategic decisions are expected to make a profit.

Answer 1

True

Question 2

A subscription model can be advantageous as the company can offer its customers an 'upgraded' service for a price.

Answer 2

True

Question 3

The Internet has undercut the viability of some older broker models, while creating a landscape where other brokers have emerged.

Answer 3

True

Question 4

In stage two of the industry life cycle, small, entrepreneurial firms dominate.

Question 5

A significant number of businesses that attempt to expand through franchising fail.

Question 6

Open innovation is the process of centralizing innovation in one unit of the organization, often the R&D department.

Question 7

As a strategist, it is important to pay attention to your organization's value chain and how it interacts with the value chains of other firms.

Question 8

Economies of scale are cost savings enjoyed through more efficient production of larger volumes of a product or service.

Question 9

The game console market is not very competitive.

Question 10

The bulk of many markets revolve around a small number of products, but the total market is much larger.

Question 11

Experience curves graph the relationship between cost and units produced over time.

Question 12

Product standards are the set of attributes that customers expect in a given market.

Question 13

Value chains identify the primary and supporting activities used by an organization to create value for customers.

Question 14

Standardization occurs when every product or service is produced to specified requirements.

Question 15

Sony, Nintendo and Microsoft pursue different strategies in the gaming market.

Question 16

A business plan is a formal document that overviews company activities and often includes detailed financial analysis.

Question 17

Increases in market share will always ensure profitability.

Question 18

Once a product standard is set, competitors have a clearer idea of what to produce as more is known about customer demands and how efficiency can be gained in meeting those expectations.

Question 19

Microsoft typically chooses to be a second mover in new industries.

Question 20

As profit increases, more players tend to be attracted to the market.

Question 21

Which of the following is not a primary activity in Porter's value chain?

A) Inbound logistics
B) Operations
C) Outbound logistics
D) Human resource management
E) Marketing & sales

Question 22

Which of the following is not a supporting activity in Porter's value chain?

A) Firm infrastructure
B) Sales
C) Technology Development
D) Procurement

Question 23

Which of the following is not true about Canon?

A) Developed an extensive repair network
B) Second mover in the office copier market
C) Offered customers the possibility to diagnose and replace defective modules themselves
D) Gradual focus on more sophisticated products

Question 24

Which of the following is true about stage one of an industry life cycle?

A) Sales figures are high.
B) Potential users are sophisticated.
C) New entrants may be numerous
D) Large firms dominate.

Question 25

Which of the following is not true about stage four of the industry life cycle?

A) Only large firms compete.
B) A service and experience orientation dominates.
C) Highly profitable niches are available in otherwise competitive markets.
D) Knowledgeable users are very demanding about their requirements.

Question 26

________ theories help the strategist identify critical aspects of a problematic situation, rather than offer solutions to problems.

A) Human capital
B) Social capital
C) Frame
D) Life

Question 27

Economies of ________ are cost savings enjoyed through more efficient production of larger volumes of a product or service.

A) Scope
B) Scale
C) Systems
D) Sales

Question 28

The practice of grouping a set of products or services together as a package is known as:

A) Selling
B) Customizing
C) Bundling
D) Standardizing

Question 29

_____ innovation is the practice of drawing innovative ideas from multiple sources.

A) Closed
B) Open
C) External
D) Internal

Question 30

Which company pioneered the razor and blades model?

A) Bic
B) Gillette
C) Sword
D) Netflix

Question 31

Which of the following is not currently a dominant player in the game console market?

A) Atari
B) Microsoft
C) Nintendo
D) Sony

Question 32

A _______ model describes when a customer pays a periodic fee for access to a specified good, service or experience.

A) Razor and blades
B) Subscription
C) Broker
D) Advertising

Question 33

Which of the following is not true about Netflix?

A) Is the only company video rental company that pursues a subscription model
B) Has patented its 'dynamic queuing' system of communication and delivery
C) Business model requires close attention to inventory and logistics
D) Continues to innovate

Question 34

Which of the following is not an example of a modified razor and blades model?

A) Consoles and games
B) Cell phone and airtime contract
C) TV dish and contract
D) Ebay

Question 35

Which two models does Google combine?

A) Advertising and razor and blades
B) Subscription and advertising
C) Subscription and broker
D) Broker and advertising

Question 36

Which of the following was the first mover in the internet browser industry?

A) Microsoft
B) Mozilla
C) Netscape
D) Safari

Question 37

Stage ____ of the industry life cycle is characterized by a mixture of small and large firms, highly profitable niches in otherwise competitive markets, and knowledgeable users who are very demanding about their requirements.

A) one
B) two
C) three
D) four

Question 38

What percentage of all franchising in the United States does McDonald's retail sales constitute?

A) 1%
B) 10%
C) 50%
D) 99%

Question 39

Which of the following is not true about the Virgin Rail Group?

A) Uses a hub and spoke system
B) Provides more customer services such as meal carts
C) Uses a point-to-point system
D) Is an industry with ever increasing passenger traffic

Question 40

Which of the following is true about franchising?

A) In the US, approximately 1 in every 2 retail businesses is a franchise.
B) Franchising is on the decline in the US, Europe and South America.
C) Franchising is moving into services such as residential cleaning and wholesale distribution.
D) There are 1,000 franchising companies around the world.

Question 41

Name and describe two common business models. Provide one example of each.

Question 42

What are some of the advantages of the subscription model?

Question 43

What are the four stages of the life cycle model? Choose one stage and describe how that stage of the life cycle be used as a source of business model ideas.

Question 44

For the franchisee (the person starting/running a franchise), what are some advantages and disadvantages of franchising?

Question 45

What is the experience curve? Provide an example.

Question 46

What are the four supporting activities in the value chain? Provide an example of each.

Question 47

How can the life cycle be used as a source of business model ideas?

Question 48

How can value chain analysis contribute to business model improvement?