Lean Business Model:
Lean Business Model is a strategic approach to business where the thrust is on eliminating wastes from the processes and products of the business without compromising on the satisfaction of customer needs.
The three key principles of lean business model
Answer to Problem 1DQ
The three key principles of lean business model are identification and addition of value, creating the value stream and eliminate waste.
Explanation of Solution
Lean business model is a business strategy where the focus is on meeting the needs of the customers while reducing the waste to the most minimum level. The model focuses on reducing the waste by continually improving the processes, improving the quality and reducing the inventory levels to minimize waste and damage. The three main principles of the model are:
- Identification and addition of value − Here, the business strives to identify which process creates the value for the customers. What is the customer expectation in terms of price, delivery, features etc. must be understood to analyze what is the value in the product/service provided by the company
- Creating the Value Stream − Once the value has been identified, the next key thing is to create or align the processes to achieve the value from the product. This alignment must be in each stage starting from raw material to final material delivery to the consumers. A flow diagram or map of the entire value chain is the objective here.
- Eliminating Waste − This is the last and the most important principle, which strives on reducing waste at each level of production process by continually improving the processes and quality.
All these together helps the company achieves quality products which are valuable to the consumers with minimum level of waste in the environment.
Want to see more full solutions like this?
Chapter C Solutions
Managerial Accounting
- What does it mean to obtain a competitive advantage? What role does the cost management system play in helping to achieve this goal?arrow_forwardIn which areas of an organizations value chain can important business sustainability risks or opportunities arise? I. Research Development II. Customer Service III. Manufacturing IV. Warehousing Distribution a. I only b. II only c. III only d. II and IV e. I, II, III, and IVarrow_forwardWhat does the term hedging mean? Why do companies elect to follow this strategy?arrow_forward
- Should a firm have a firm grasp of the concepts of differential cost, opportunity cost and sunk cost to be effective in making business decisions? If so why or why notarrow_forwardthe Hierarchy of the information- based business decision makers.Which level has the best chance of success and why?arrow_forwardThe strategy that the company could take to maintain the competitive advantages are Cost Leadership, Differentiation and Focus please provide a brief explanation of all three.arrow_forward
- How does the Triple Bottom Line (TBL) reflect the holistic performance of a company?arrow_forwardWhat are the three principles that enable management accountants offer the greatest value to managers?arrow_forwardExplain the contemporary business environment and how it has influenced costmanagement.arrow_forward
- Which three principles assist management accountants in delivering the most value to managers?arrow_forwardWhat is meant by a product’s contribution margin ratio? How is this ratio useful in planning business operations? Often the most direct route to a business decision is an incremental analysis. What is meant by an incremental analysis?arrow_forwardWhat should be the most important goal of a company? Why?arrow_forward
- Intermediate Financial Management (MindTap Course...FinanceISBN:9781337395083Author:Eugene F. Brigham, Phillip R. DavesPublisher:Cengage LearningEBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENTBusiness Its Legal Ethical & Global EnvironmentAccountingISBN:9781305224414Author:JENNINGSPublisher:Cengage
- Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning