MISA Exam__2_MIS111 - 10/21/2007 It is a description of how...

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10/21/2007 1 ± It is a description of how a business will operate in the real world and it specifies its position in the value chain ± A business model will be used to evaluate how well a business will perform before being exposed to the real world using different assumptions ± Value proposition ± how a product or service fulfills the needs of a customer personalization, customization, reduction of search costs, discount) ± Revenue model ± how the firm will earn revenue and make a profit sales, transaction fees, subscriptions
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10/21/2007 2 ± Business Models ± Financial Model Financial Models ± Production Models ± Sales Models ± Process Models ± Workflow Models ± Organizational Models ± IS Models (Data, Systems, etc.) Every aspect of business can be modeled in different ways. ± Cause and effect Relationships ± Price affects sales ± Feedback Loops ± Unit cost affects price ± Price affects sales ± Sales affects viable unit costs ± Time delayed Responses ± Marketing and advertising ± Subsequent product sales ± Non linear Responses ± Initial marketing–rapid market share growth ± Expanded marketing – saturation and diminishing returns
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10/21/2007 3 ± Fishbone Process Analysis ± Identified by problem specifics ± Who, what, when, where, how ± Steps to analysis ± Select major categories (personnel) ± Identify key issues (scheduling) ± Organize issues by category and root of problem Spreadsheet based models showing expenses, revenues, cash balances, and other financial metrics over time Revenue model Cash Flow model Cash Flow (for a company which has no capital expenditures and depreciation) Year 1 Year 2 Year 3 Year 4 Year 5 Company Earnings 1,000 $ 1,020 $ 1,040 $ 1,061 $ 1,082 $ Statutory Tax Rate 35% 35% 35% 35% 35% Less Taxes (EBITA * Tax Rate) (350) $ (357) $ (364) $ (371) $ (379) $ Free Cash Flow (FCF) 650 $ 663 $ 676 $ 690 $ 704 $ EBITA Earnings before Interest, Taxes, and Amortization
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10/21/2007 4 ± Spreadsheet models showing expected production and sales over time and resource requirement sales over time and resource requirements ± Answer Questions like: ± What’s the most cost effective way to meet unplanned demand? ± What part of the product’s cost is related to the workforce in production? ± How long would it take to payback (ROI) an investment in a new machine that would increase production capacity by 20%? ± Examples: ± HR Staffing Model a payroll forecasting model deals with assumptions like how long is a store open, how many employees work on the same shift, how much is an employee making ± Production Model deals with operating assumptions like how many shifts per day, how many holidays per year ± Usually the necessary steps to complete a task or action and uses a Flowchart Format Basic Flowchart Symbols Begin & End Process Start Stop Decision Connection A or B?
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10/21/2007 5 ± When a business model does not have the expected outcome it is important to identify the problem ± After identifying the problem you need to understand what causes it and what is the effect on your business ±
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This test prep was uploaded on 04/02/2008 for the course MIS 111 taught by Professor Neumann during the Fall '08 term at University of Arizona- Tucson.

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MISA Exam__2_MIS111 - 10/21/2007 It is a description of how...

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