Ebis307 It and Entrepreneurship

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Chapter 6 1. What are the four primary components of a firm’s business model? Briefly describe the importance of each component. Core Strategy – Business model is describes how a firm competes relative to its competitors. Business mission A firm’s mission, or mission statement, describes why it exists and what its business model is supposed to accomplish. Product/ market scope A company’s product/market scope defines the products and markets on which it will concentrate. Basis for different It is important that a new venture differentiate itself from its competitors in some way that is important to its customers. Strategy Resources – The resources a firm has affect its business model substantially, thus they can implement a strategy. For a new venture, its strategic resources may initially be limited to the competencies of its founders. Core competencies A core competency is a resource or capability that serves as a source of a firm’s competitive advantage. Strategic assets Strategic assets are anything rare and valuable that a firm owns. They include plant and equipment, location, brands, patents, customer data, a highly qualified staff, and distinctive partnerships. Partnership Network A firm s network of partnerships is the model. New ventures, in particular, typically do not have the resources to perform all the tasks required to make their businesses work, so they rely on partners to perform key roles. Suppliers A supplier (or a vendor) is a company that provides parts or services to another company. Partners Along with its suppliers, firms partner with other companies to make their business models work. Customer Interface – The way a firm interacts with its customer hinges on how it chooses to compete. Target customer A firm’s target market is the limited group of individuals or businesses that it goes after or tries
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