Explain how business models put strategy into action.
What will be an ideal response?
Strategy is a set of goal-directed actions a firm takes to gain and sustain superior performance relative to competitors or the industry average. The translation of strategy into action takes place in the firm's business model, which details the firm's competitive tactics and initiatives. Simply put, the firm's business model explains how the firm intends to make money. The business model stipulates how the firm conducts its business with its buyers, suppliers, and partners. How companies do business can sometimes be more important to gaining and sustaining competitive advantage than what they do. This also implies that business model innovation might be more important achieving superior performance than product or process innovation. To come up with an effective business model, the firm's managers first transform their strategy of how to compete into a blueprint of actions and initiatives that support the overarching goals. In a second step, managers implement this blueprint through structures, processes, culture, and procedures. If the company fails to translate a strategy into a profitable business model, the firm will run into trouble.
You might also like to view...
The term "LIFO" relates to the merchandise in inventory at the end of the accounting period, not to the merchandise sold during the period
a. True b. False Indicate whether the statement is true or false
Answer the following statements true (T) or false (F)
1. Contribution margin is the difference between net sales revenue and variable costs. 2. Contribution margin is the amount that contributes to covering variable costs. 3. Steadigen Company sells two generators—Model A and Model B—for $454 per unit and $396 per unit, respectively. The variable cost of Model A is $408 per unit and of Model B is $314 per unit. If Steadigen Company's sales incentives reward sales of the goods with the highest contribution margin per unit, the sales force will be motivated to push sales of Model A more aggressively than Model B. 4. Resolute Company sells two generators—Model A and Model B—for $456 per unit and $394 per unit, respectively. The variable cost of Model A is $406 per unit and of Model B is $304 per unit. The company will generate lower revenues but a higher net income if it sells more of Model B than Model A. 5. If the sales price of Product X is $24.00 per unit and unit fixed cost is $7.50, its contribution margin per unit is $16.50.
Answer the following statements true (T) or false (F)
1. Return on investment measures the profitability of an investment center but not the efficiency in using its assets. 2. The return on investment formula focuses on the amount of operating income earned before considering other revenue and expense items, such as interest expense. 3. The return on investment of a company is a measure of profitability and efficiency. 4. The return on investment of a company can be improved by either increasing average total assets or decreasing operating income.
Even in a perpetual inventory system that updates the inventory account as and when transactions occur, the business must count its inventory at least once in a year
Indicate whether the statement is true or false