Business Models - Coursework Example

Business Model Name Institutional Affiliation Business Models Business Model, according to Gambardella and McGahan (2010), is a way to understand organisations as systems that have common components of capturing value, delivering value as well as creating the value. In the context of a system that is activity-based, the business model helps stakeholders mainly managers to understand businesses and organisations in the following prisms commonly known as the basic building blocks of business model. The value or that the business and the organisation creates. Who it serves. The factors that set it apart from the rest of the businesses with regards to uniqueness to give it a competitive mileage. The resources that the organisations dearly depend upon. The crucial relationships that mean much to the business venture and the organisations wholly. The channels through which the organisation delivers value. How the organisation amasses wealth that helps in determining its sustainability. The main things that the organisations spend money (its revenue) on. It is, therefore, easy to derive from the building blocks that a business model is, basically, a means by which cooperate managers studies the operations, purpose and the goals of their business that help them generate profits. Additionally, it encompasses all those organisational activities that help the organisation in fulfilling its purpose, including policies of the organisations and all its processes. Business Model Innovation, on the other hand, helps the corporate managers to look beyond just changing their products and services as the only growth criteria by proposing a continuous self-re-evaluation of the business. It proposes product innovation, creation of new business channels alongside additional revenue generation streams (Gambardella & McGahan, 2010). Business models have proven their worth in helping business stakeholders understand their businesses comprehensively. Their customer segment is creating insights about to whom the business creates value, how these people react to the value created and segregate the customers with regards to how they are important to the organisation. Value proportions detail to the business the value it offers to the customers and how it solves the customer issues to glue them from turning attention to the competitors. Additionally, it helps the business to identify the customer needs it is satisfying amicably and how its products perform in the market in comparison to those produced by its competitors. Very significant to the existence of the business is the applicable channel through which the business reaches its customer segment. Business model significantly helps different business to uniquely define those important channels through which the business reaches out to the needs of their dear customers. They identify all the applicable channels and choose those that work best at integrating the customers’ routines. Businesses establish and maintain healthy customer relationships, maintain the already existing ones and determine how costly such relationship are to maintain. Business Model Innovation helps businesses re-invent their ideas workflows and their methodologies of service delivery. Businesses are striving to outplay their peers through taking to the market innovating products and services that catch the attentions of the target customers. Business Model Innovation helps the companies to re-evaluate and reinvent themselves continually. They re-evaluate the value they create and the customers with which they collaborate, the purpose of the organisation, how it captures the value to the expectations of the target customers. In re-evaluating themselves, the product produces and the services offered, the business and the organisations are striving to achieve revenue growth, profit margins, and improved market share. Zott and Amit (2009) posit that, apart from just helping businesses to change the customer value propositions, business models innovation helps the organisations change the way the way they do business. It suggests the creation and subsequent adoption of systems of doing business and interacting with the customers, which encompass new improved business channels, improved product value and incorporating technology to improve service delivery. Gambardella and McGahan (2010) assert that, today, most business innovations are coaxed to give substantial considerations to environmental conservations by adopting productions exercises that lead to the effect. Businesses are often faced with the static and dynamic problem. It is thus often important for businesses to optimally structure their models so as to counter these problems. Static challenges are often the consequence of irregular actions that are taken dishonest individuals within the organisation. Static challenges often affect companies that are economies that are relatively stable. To counter static problems, it is important that companies model up their systems in an elaborately structured manner. Decisions making should be decentralised, and elaborate oversight over such actions should be placed to ensure all senior stakeholders are involved in important decisions within the organisation, thus limiting the possibility of resource mismanagement (Baden-Fuller & Haefliger, 2013). The independence of the auditing department should be ensured, thus improving oversight over all operations. Other factors such as earthquakes and deaths and fire also fall under static problems. Since static changes do not change over time, business should anticipate their actualization and thus put in place elaborate mitigation measures say installation of fire extinguishers to counter fire. Dynamic problems, on the other hand, are the consequence of changes in the economy. Such changes include technological alterations, alterations in the tastes of consumers, price level changes and income changes. Thus, it is important that organisations structure themselves in the manner that they respond to environmental changes both the internal and external environmental changes. The ideal business model in countering dynamic problems is not only sensitive to the changes to take note of them whenever they occur, but also being flexible enough to adjust favourably in response to the changes that occur quickly. A company should have upgradable technological systems to allow seamless improvement or upgrade of their systems whenever necessary. Partnerships between often improve the workability of business models and in so doing allow efficient acquisition of resources and risk reduction. Partnerships create a business model where economies of scale are fully optimised. In most instances, companies are rarely in a position to execute the activities required of them on their own. Entering into partnership contracts with companies with the ability to address these needs at effective costs improves the effectiveness of the partners thus increasing their market- share. Partnerships often create a business model that effectively reduces competition, particularly in environments that are uncertain. Competing firms can choose to form a strategic partnership in one area and still continue to compete in another. Blue ray technology that is jointly developed by all leading electronic manufacturers is a good example of such partnerships. The partners, however, are extremely competitive in selling their Blu-ray products. Partnerships may be targeted towards the extension of an organisation's capabilities by depending on another organisation in the performance of given tasks or furnishing given resources. A business model can be structured such that a company outsources license acquisition, knowledge acquisition or customer access. For instance, an insurance company can benefit from the high competitive nature of a particular brokerage firm in the selling of its policies instead of making an effort to come up with its sales department (Dunford, Palmer & Benveniste, 2010). Amit and Zott represents a business model as a textual and ad hoc graphical representation of a business that holistically gives the operational layout of the business. According to them, the model depicts the content of the business, the structure, and all the designed transactional operations that govern the how the particular business creates value for the business as well as utilising the same value. They add that collaborative ties of businesses are defined by the business model to act as an analysing tool that helps evaluate the sustainability of the business operations. The text alludes to the innovations through asserting that such components of the business models help make the business span beyond its boundaries to compete favourably with the competitors for desired niches of the market. A favourable example of Amit and Zott’s context is the Xerox Corporation. It was facing a problem with its machine that relied on an old technology to produce wet papers instead of dry ones that could not be sold immediately after productions. Apart from interfering with the normal operations of the corporations, it became unbearably expensive coaxing the corporation to define its business model. The corporations used certain structural recommendations of the adopted model to invent technological procedures that help produce dry copies. Additionally, the corporation adopted a new sales criterion the reduced the prices of the bought copies above a certain number. Zott and Amit (2009) note that it worked to turn around its business trend for the better; from spending unnecessarily to making profits. The most useful article is “Business model design: An activity system perspective” Christopher Zott and Raphael Amit. The article is considerably elaborate in defining business models. It details that a model is a business model is made up of activities that are interdependent and transcend both boundaries’ and the focal point of the firm. The article equally embraces the use of vivid descriptive case studies that are instrumental in illustrating different business modelling concepts. The article explains that the core goal of a business model is to optimise the exploitation of business opportunities available so as to create value for all involved parties through the fulfilment of customer needs. The paper has allowed the development of an activity system viewpoint in business modelling. By detailing and enabling the fostering steps towards the enhancement of empirical comprehension of both present and past business models, the article is instrumental as it allows cumulative predictive theory development in the designing of models thus future advancement in business modelling. In future endeavours of modelling a business model, the article encourages the inculcation of governance, content, and structure as elements of design. In general, the article emphasises that there is a need for incorporation of good governance, putting in place suitable structures and the institution of activity contents into modelling. The designed models should be characterised by high levels of efficiency, complementarities, lock -in and novelty. According to Markides and Sosa (2013) and Zott and Amit (2009), the establishment of an elaborate system in the business modelling process allows for detailed analysis of the whole process at each stage of its overall result, thus allowing for its refinement and improvement over time. References Baden-Fuller-C & Haefliger, S. (2013). Business models as technological innovation. Long Range Planning, 46: 419-426. Dunford, R., Palmer, I. and Benveniste, J. (2010). Business model replication for early and rapid internationalisation. Long Range Planning, 43: 655-674. Gambardella, A. and McGahan, A.M. (2010). Business model innovation: General purpose technologies and their implications for industry structure. Long Range Planning, 43: 262-271. Markides, C. and Sosa, L. (2013). Pioneering and first mover advantages: The importance of business models. Long Range Planning, 46: 325-334. Zott, C., & Amit, R. (2009). The business model as the engine of network-based strategies. In P. R. Kleindorfer & Y. J Wind (Eds.), The network challenge, 259-275. Read More