Fall 2021- 2022 FWS310

FWS310 Exam (30%)

Section 1: MCQs and True/False (14 x .5 = 7 marks)
Each question is worth 0.5 marks, total 6 marks.

1. What are the key components of the ‘golden circle’: (0.5 mark)

a.When, how, what

b.Why, who, what
c. What, how, why
d.If, when, how

2. The use of minimum viable product is an important aspect of the lean start-up methodology.
Which of the following are advantages of creating a MVP?

a. No need to develop a whole product and you can test user feedback
b. Customers are not really buying your product or service, so no way to check if they need it
or not
c. Customer can lose interest before you build your whole product
d. Customers are not loyal and can switch to another product or service

Section 2: Short Answer (2 questions x 4 marks each = 8 marks)

Question 1: When you created your business model canvas, what were your main points that
you included about your proposed business? Explain in brief.

1. defining the company's mission: How can we determine whether or not a model is effective
without a clear goal?
This can be anything you want it to be, like:
 generating passive money at home
 To stop the destruction of Indonesian rainforests
 to strengthen the financial standing of our parent company
 to give young people at risk of homelessness steady employment
 To enhance the employment search
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2. the value propositions and the customers: These might be Psychographics like their
political views, altruism, biases or preferences. Keeping in mind that our customers are the
people who make decisions and pay for our products/services (not to be confused with the
End User or the Beneficiary). In the Value Propositions box, we describe what the customer
is really looking for.
 We want to understand how our products/services make their lives better, to the point that
customers will happily pay us for this Value Proposition. Josh – We have two customers:
Young professionals who want to buy cool, environmentally friendly gifts for themselves and
their friends, and mothers with young children who like the idea of environmental
responsibility in their daily decisions. Kylie and Dan – Two customers: Couples and families
who love learning more about Indigenous culture, and the feeling they get from having a
weekend away from hollow distractions.
3. Customer Relationships and Channels: With a clear picture of who we're serving and how
we'll delight them, we get to design three things. The Channels box is our chance to explain
how we first encounter our customers, as well as how we deliver our Value Proposition.
Your business might find customers through Google Ads or Facebook, then serve customers
through face-to-face workshops or drop-shipped packages.
4. Key Partners, Key Resources, and Key Activities: Key Resources are the people, places,
machines, patents and intangible assets that enable our business to exist. Key Activities are
the processes and tasks that must be completed in order for our customers to be served.
Key Partners are those who supply raw materials or finished goods, send customers your
way, or act as a sponsor/enabler. Essential activities are the brand, website, sales channels
and the founder.
5. Cost Structure and Streams of Income: Bottom line of the canvas represents the bottom
line of your business. Cost Structures are the 7-8 biggest expenses – how much we spend,
how frequently we spend it, and whether it changes as sales go up and down. Revenue
Streams are the prices each type of customer typically pays, as well as how frequently they
come back. It also gives us a chance to think about our pricing strategy – clever pricing can
massively increase the profitability of your new business.Josh – The main costs within the
business are the purchase of brushes (recurring costs that will decrease as the orders get
larger), the cost of acquiring customers (ads and content creation) and the costs of fulfilling
orders (packaging, postage and staff time).Revenue comes through one main product; 4-
packs of brushes.
6. Linking The Boxes +Tidying Up: If we make claims about our happy customers, that should
shine through in our Revenue Streams. If we expect to keep personal relationships with
each customer, that will become a part of our Key Activities and Cost Structure. The canvas
highlights the potentially overlooked activities and resources that are crucial for success.
7. Telling The Story: Presenting a full canvas to a new person is not a good idea – there's too
much to take in. Instead, it's best to fill in each box as you explain the idea. This will take
about 6-8 minutes to explain the full concept, and remove a lot of misconceptions.
8. Assumptions Testing: Just because you wrote something clever on a canvas doesn't make it
a reality. Research should be conducted with real people, and they need to be people who
are in your customer segments. We start by assuming that all of the words on the page are
assumptions, and our next job is to verify them – starting with the most crucial. I find this is
made easier with a simple Test Card, which asks you to name the big assumptions, pick a
way of measuring the truth, and setting pass/fail
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Section 3: Case Study (15 marks)

Netflix is a great example of an online business pivot. Today viewers associated Netflix with
binge-watching consecutive seasons of the original Netflix series. The mainstream app Netflix
has become a staple in most homes these days.
 
Viewers easily forget that a few years back Netflix was the service that delivered DVDs to your
mailbox.  Netflix saw the writing on the wall for DVD viewing. Gradually the platform added a
streaming service. Today many consumers no longer own a DVD player but are accustomed
to streaming video on their phones, computers, and other devices.
 
While implementing this change the old DVD by mail service provided stability to the company.
Gradually this service became a much smaller portion of the company’s service. Netflix saw a
changing market and adapted.
 
What is more, Netflix saw the need for ever-changing and a wide variety of content. So they
pivoted to add a production company and provide a large portion of the content available.
Netflix is an outstanding example of Pivoting to take advantage of emerging markets and tech-
driven consumer demand.

Question 1. What was the main business strategy of Netflix initially?

The idea for Netflix was first incorporated in 1997 by Reed Hastings of the USA, and the movie renting
company was formally launched by him in 1999. A consumer would pay a predetermined sum to rent
and receive DVDs for a predetermined amount of time with the original DVD mailing service. In 2010,
Netflix launched its streaming services in Canada. Within a year, these services had also been launched
in 43 other nations. As in the past, postal delivery was common throughout North America. The
separation of the DVD mail services and the video streaming services was announced by Netflix in 2011.
Current customers reacted negatively to this, and Netflix's stock price dropped. The Netflix business
model evolved over time into on-demand internet streaming media that is now accessible to viewers in
North America, South America, some regions of Asia, Europe, and Oceania. They had more than 23
million subscribers and over 120.000 titles available for online streaming in 2012. With 125 million hours
of movies and TV episodes, over 83 million customers, and 190 countries, they now have more media
than one lifetime. The largest online Internet television service provider today, Netflix distributes movies
and other media in 270 languages in more than 190 countries thanks to its hosted and original content.
It made more than $4.37 billion in revenue in 2013. Its overall revenue increased from 1.36 billion
dollars ten years ago to approximately 15.79 billion dollars in 2018. In 2018, the business's net income
was 1.21 billion dollars, and there were 7,100 employees worldwide.
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Question 2. What was the new strategy of Netflix?

In the digital age, Netflix employs data-driven and customer-focused marketing techniques. You can
utilize these tools for online business promotion much like Netflix does because their performance
depends on ongoing analysis and optimization. Netflix’s Generic Competitive Strategy includes:

1. Cost management.

Cost leadership, which guarantees a competitive advantage in Michael E. Porter's model, is Netflix's
general strategy. With this standardized approach, Netflix is gaining more customers in the online
entertainment sector. With a focus on market penetration, Netflix's aggressive growth initiatives are in
line with this traditional strategy-specific approach. The strategy builds on the company's value and
business model.

2. Differentiation
3. Cost leadership is predominantly used by Netflix as a traditional strategy for competitive
advantage. The company incorporates diversity into all of its operations. For instance, Netflix
creates its own original content to maintain its competitive advantage. The generic
differentiation strategy aids in the business model's ability to draw in and keep customers..
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Question 3. What is the name given to the strategy shift in the case of Netflix?

disruptive innovation in the video streaming industry: Since it eliminated the need for video rental and
DVD mailing services, the creation of video as digital content and its delivery via the internet have
become radical innovations. Because of the demise of the market leaders and the rise of a late entrant
like Netflix, it has turned into a disruptive innovation.
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