ISOM 351 UNIT 1 QUESTIONS AND CORRECT
ANSWERS || 100% PASS
/.What does alignment mean? - Answer-✅- Strategy, business model, and execution
must be connected and consistent
- Decisions about one must be made with consideration of each of the others (aka
interconnectedness, consistency)
/.What does the BMC do? - Answer-✅Helps align strategy & execution; helps align
internal capabilities to market expectations
/.4 elements of strategy - Answer-✅Decisions, tradeoffs, activities, resources
/.What are the goals of strategy? - Answer-✅- Competitive advantage
- Create, capture, and deliver value
/.4 questions that a business model answers - Answer-✅Who is the customer? What
does the customer value? How do we make money in this business? What is the
underlying economic logic that explains how we can deliver value to customers at an
appropriate cost?
/.Business model vs strategy - Answer-✅Business model describes how your business
runs, while strategy explains how you will do better than your rivals
/.Right side of the BMC - Answer-✅Who are our customers (segments), what problem
do they want solved (value proposition), how do they want to interact with us
(relationships), and how do they want to get access to our service or product
(channels)?
/.Left side of the BMC - Answer-✅key partners, key activities, key resources, value
propositions
- "the operating model," how the firm executes strategy
/.Bottom of the BMC - Answer-✅Economic logic = cost structure, revenue streams
/.Willingness to pay - Answer-✅Belongs to the customer; the maximum amount of
money a customer would spend in order to solve their problem; aka benefits
, /.Price - Answer-✅the amount of a money a customer actually spends to buy the
product/service
/.Total cost - Answer-✅the total cost incurred by the company in order to make the
service or product available to the customer
/.Input cost - Answer-✅the cost incurred by the company in order to acquire all basic
materials and equipment needed to deliver the service or product
/.WTP - TC = ? - Answer-✅value created
/.Price - TC = ? - Answer-✅value captured by the firm
/.WTP - Price = ? - Answer-✅consumer surplus: the amount of value, created by the
business and the customer, that the customer gets to keep
/.TC - IC = ? - Answer-✅value delivered (transformation costs): the cost incurred to
deliver a product or service; value is delivered through the operating model
/.What is the role of price? - Answer-✅to divide value created into the portion captured
by the firm and the portion captured by the customer
/.If price > WTP... - Answer-✅maybe TC > WTP --> bankrupt, monopoly, or subsidized
prices, "ought to" price
/.If price = WTP... - Answer-✅consumer surplus is 0; there is no basis of choice for a
customer aside from price; very low consumer loyalty; pure commodity; transaction
market
/.If WTP > price... - Answer-✅consumer surplus is greater than 0; creates consumer
loyalty, relationship
/.What is the operating model? - Answer-✅- Reflects how an organization delivers value
to its customers
- The basis for day-to-day execution
- The blueprint that results from the decisions an organization makes to navigate
tradeoffs concerning key activities, key resources, and key partnerships
/.What are key activities? - Answer-✅the critical processes, or work steps, needed to
deliver value to the customer
/.What are key resources? - Answer-✅the critical tangible and intangible assets that are
internal to the organization needed to deliver value to the customer
ANSWERS || 100% PASS
/.What does alignment mean? - Answer-✅- Strategy, business model, and execution
must be connected and consistent
- Decisions about one must be made with consideration of each of the others (aka
interconnectedness, consistency)
/.What does the BMC do? - Answer-✅Helps align strategy & execution; helps align
internal capabilities to market expectations
/.4 elements of strategy - Answer-✅Decisions, tradeoffs, activities, resources
/.What are the goals of strategy? - Answer-✅- Competitive advantage
- Create, capture, and deliver value
/.4 questions that a business model answers - Answer-✅Who is the customer? What
does the customer value? How do we make money in this business? What is the
underlying economic logic that explains how we can deliver value to customers at an
appropriate cost?
/.Business model vs strategy - Answer-✅Business model describes how your business
runs, while strategy explains how you will do better than your rivals
/.Right side of the BMC - Answer-✅Who are our customers (segments), what problem
do they want solved (value proposition), how do they want to interact with us
(relationships), and how do they want to get access to our service or product
(channels)?
/.Left side of the BMC - Answer-✅key partners, key activities, key resources, value
propositions
- "the operating model," how the firm executes strategy
/.Bottom of the BMC - Answer-✅Economic logic = cost structure, revenue streams
/.Willingness to pay - Answer-✅Belongs to the customer; the maximum amount of
money a customer would spend in order to solve their problem; aka benefits
, /.Price - Answer-✅the amount of a money a customer actually spends to buy the
product/service
/.Total cost - Answer-✅the total cost incurred by the company in order to make the
service or product available to the customer
/.Input cost - Answer-✅the cost incurred by the company in order to acquire all basic
materials and equipment needed to deliver the service or product
/.WTP - TC = ? - Answer-✅value created
/.Price - TC = ? - Answer-✅value captured by the firm
/.WTP - Price = ? - Answer-✅consumer surplus: the amount of value, created by the
business and the customer, that the customer gets to keep
/.TC - IC = ? - Answer-✅value delivered (transformation costs): the cost incurred to
deliver a product or service; value is delivered through the operating model
/.What is the role of price? - Answer-✅to divide value created into the portion captured
by the firm and the portion captured by the customer
/.If price > WTP... - Answer-✅maybe TC > WTP --> bankrupt, monopoly, or subsidized
prices, "ought to" price
/.If price = WTP... - Answer-✅consumer surplus is 0; there is no basis of choice for a
customer aside from price; very low consumer loyalty; pure commodity; transaction
market
/.If WTP > price... - Answer-✅consumer surplus is greater than 0; creates consumer
loyalty, relationship
/.What is the operating model? - Answer-✅- Reflects how an organization delivers value
to its customers
- The basis for day-to-day execution
- The blueprint that results from the decisions an organization makes to navigate
tradeoffs concerning key activities, key resources, and key partnerships
/.What are key activities? - Answer-✅the critical processes, or work steps, needed to
deliver value to the customer
/.What are key resources? - Answer-✅the critical tangible and intangible assets that are
internal to the organization needed to deliver value to the customer
