Final Take Home Exam PDF

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IBP_26100_13205632

Question 1 - Imagine that you are heading off to sleep the night before you launch your new business and you’re thinking about your business model. What are the weakest two components of your business model? That is, what are the two components that you would be most likely to be up worrying about the night before launch?

With reference to your Business Model Canvas and/or Value Proposition Canvas:

a. Describe the weakest two components and how they work (6 marks; 3 marks per component)

Two business model components; The inconsistent nature of the revenue stream is the first business model canvas problem that would be considered one of two of the weakest components of the business model. The second of the weakest problems for the business model is the instability of the cost structure.

Our business model canvas component of acquiring revenue predominantly consists of engaging sponsors and customer

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acquisitions for payments and donations, in exchange for the business services of providing friendship and leadership programs.

While this business model is capable of generating revenue, it is uncertain and inconsistent, making revenue risky and thereby business planning unpredictable. The revenue is uncertain and inconsistent because participation of students, the business model’s customer and source of revenue, is not obligatory to participate in, reducing the certainty of the revenue. Secondly, the revenue is uncertain as there is a freely available alternative, the university social setting, for customers to use instead. Thereby, there is significant risk in revenue due to customer acquisition uncertainty.

The second of the weakest problems for the business model is the variability in the pricing structure due to the different available activities provided through the friendship program, such as opting for sponsorships and participation in different activities catered to dynamic student preferences. This is a problem, because inconsistent price structure correlates to

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inconsistent revenue, which limits the business model from planning for future costs and operations, thereby restricting profitability and growth, the most significant problems for the business.

b. Drawing on evidence you collected through the semester and/or relevant concepts/theory, justify why you believe these two components to be the weakest (6 marks; 3 marks per component)

Drawing on facts, our product is not a real or tangible object that has a physical effect on the customer. Our target market is university students who are struggling to build friendships during their first year of university when it can be overwhelming. Our product is a programme to which our university administrator will be assigned to provide students with bonding opportunities and to build more relationships with their fellow students.

As stated in the previous answers, the weakest two components of our groups will have to be the revenue stream and the price

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structure, because there is no set stream and cost structure that our participating students can adopt. These are the two weakest as the revenue stream will consistently be uncertain as a result of the intangible nature of the business model described.

Contrasting this to other proposed business models throughout the semester, such as selling food baskets with set price points for products and consistent, predictable units sold, it is evident that a business model that sells tangible goods has set price points with reduced uncertainty in revue as opposed to our service based, intangible friendship program, leading to uncertain revenue, and an inability to plan for business operations. This creates uncertainty in the profitability, the largest consideration in business success.

c. Reflecting on what you have learnt over the semester and your process of business model development, explain at least one step you could take to strengthen each of these components if you had your time again? (8 marks; 4 marks per component)

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Reflecting from this semester, our business model development was not easy, our group struggled to create a product which would be tangible, however seeing our topic, friendships cannot be built on materialistic items rather, memories and experiences to be cherished forever.

One step that my group and I should have taken to strengthen our revenue stream and cost structure would be to introduce a fixed fee that students would have to pay to join or participate in university friendship programs and resources to enable this. This strengthens the price structure and revenue by ensuring a minimum fixed income is available per customer, regardless of variety in services and participation. Although this may disincentivise students and therefore customers and revenue, the demand for friendship and the examined, extensive barriers present in the university environment, may overcome this disincentive at the correct fixed price point, that can be achieved through extensive market research.

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Question 2 - Reflect on your group discussions over the semester:

a. Identified the two most divergent views held by team members on the design of one component of your business model (2 marks)

The two most divergent views held by team members on the design aspect of our business model will have to be between deciding to create an app for our business and actively making our revenue from advertising or building service and receiving sponsors.

Our business model canvas portion of the acquisition of an app will primarily consist of ads as our source of revenue whilst the acquisition of our service program would produce revenue through customer acquisitions for purchases and donations, in exchange for business services including friendship and leadership programmes.

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b. Explain what you believe motivated these different views and how this tension was resolved and/or managed (4 marks)

The motivation for these differences of opinion would be the personal experience of our team members at the university. Some group members have found friendships that have been effective through mobile apps and social media, whereas others have confirmed that having physical social interactions is a more productive way to make friends.

Ultimately, this conflict was resolved because our assignment criteria and tutor feedback were that applications would not be approved as a method of business rather than providing either a physical product and/or a service would be more sufficient in this regard.

c. Drawing on evidence you collected through the semester and/or relevant concepts/theory, who was correct in your view? (4 marks)

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Drawing on evidence, providing a service for first year university students was the correct and more effective business strategy. In comparison to other proposed business models throughout the semester, such as the selling of food baskets with fixed price points for items and stable, predictable units sold, it is clear that the business model that sells tangible goods has set price points with reduced uncertainty in the review as compared to our service-based, intangible friendship programme, which leads to face to face student interaction and relationships.

Conclusively, having interviewed many university students, it became apparent that students needed a free and appropriate environment to make friends while also enjoying the experience of a university lifestyle and community. Our team agreed to create a service "Assign A Mate" program, a program of leadership and friendships for first university business students. We aim to make it easier for students, along with developing new relationships in the university community.

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