Module 5 Business Models

Question 1

Assessing profitability of a business model

Answer 1

• Costs of acquiring customers (CAC)
• Lifetime value customers (LTV)
• LTV must exceed CAC for a profitable business

Question 2

Types of business models

Answer 2

• Pipes vs platforms
• Bicks, clicks and flips
• Disintermediation (cutting out the middleman)
• Razor and blades
• Franchising and licensing

Question 3

Scalable business model

Answer 3

Multiply revenue with minimal incremental cost

Question 4

Repeatable business model

Answer 4

Success in one area of a business can be repeated across other areas

Question 5

Strategic alignement

Answer 5

Aligning organisation structure and resources to the mission statement, strategy and
business environment.

Question 6

Robustness

Answer 6

Continue delivering effective performance even when conditions change.

Question 7

Pipes vs. Platforms

Answer 7

• Pipe - pushes goods or services towards potential customers
• Platform - provides a platform for users to interact and create value

Question 8

Bricks and clicks

Answer 8

• Specific pipe business model
• Both physical and virtual channels

Question 9

Disintermediation

Answer 9

• cutting out the middleman

Question 10

Razor and Blades

Answer 10

• Product A is cheap or free (high CAC)
• Product B high profit margin (Increasing LTV)

Question 11

Franchising and Licensing

Answer 11

• Low-risk geographic growth established business
• Scalable
• Repreatable

Question 12

Critical Success Factors

Answer 12

• Functional advantages
• Financial advantages
• Other intangible factors (exclusivity)

Question 13

Key lessons when developing a business model

Answer 13

• CSF are defined in relation to customers
• Performance needs to be understood in relative terms
• CSF change over time as customer values change

Question 14

Benefits of market testing

Answer 14

• Better understanding of customers
• Better manage the risks and costs
• Refine the product
• Evidence to support buisness model