The Concept of Business Models When Applied Online - Coursework Example

ONLINE BUSINESS MODEL STUDENT’S NAME: INSTITUTION: INSTRUCTOR’S NAME: DATE: Introduction A business model is a unique tool that contains what the organization wishes to perceive. It is designed in every organization because it will help in directing the company in the right way on achieving their objectives. It provides a clear view on how the business will look like in reality, therefore, placing the company in a position to plan and budget for their operations. It contains important aspects that guide the company, for example, the goals perceived, the strategies on how to achieve the goals, the technological plan, the process and structures of implementing the ideas. All these aspects contained in a business model are important because it helps the company to find ways of ensuring the goals are attained by providing satisfactory services to their customers and thus winning their trust and loyalty which will enable the company to be in the phase with the competing markets. Business model, therefore, acts as a tool used to predict the future of business. The concept of business models when applied online With the advancement in technology, there has been a rise in competition and companies have gone to the step of engaging in electronic commerce where they provide goods and services through internet (Alt, 2010. pg 7). This has shown a great step in innovations and; therefore, more companies are established online. The purpose of engaging in commercial activities through the use of the internet comes with the need to connect with customers and clients globally. In any companies that wish to extend their commerce online, they always have to plan and set strategies that will enable them to connect with people and thus winning more customers and being part of the competition. When planning for expanding on services and goods provision online, it is, therefore, important to have a business model. This will be used as a tool for projecting how the business will look like. Since the model will help the company to set strategies that will fit the available resources in the company and thus enabling the company to have a clue on the projected profits. The model is used according to the objectives of the company; therefore, we can conclude that the objectives are determinant of what model to design. For example, if the objective of the company is to create awareness of the company services and goods they provide, it is important to consider an advertising model (Holden, 2010). Different from the business plan, business model is just a tool that projects the future of the company; the business plan is used to actualize the contents of the model. Business plan contains aspects like marketing plan which describes how the business will market their products and services, financial plan which describes how the business will allocate the available finance to achieve their goals and the control measures of finance, the management plan which describes how the organization will integrate all the managerial aspects to accomplish the mission, technical plan is used to describe the systems that will be used in the operation of the business and lastly the economic plan which describes how the business will look like in the macro-environment (Teece, 2010.pg 180). The model, on the other hand, will describe the objectives or the goals of an organization that could be regarded as the mission of that company. It will also contain the strategies on how to implement the ideas that build objectives into a profit generating activity. It also contains the process or procedure for implementing those strategies. It also contains the technological plan, and this will involve the use of advanced technology like internet in implementing the ideas of the company. When all these aspects of the model are put together, the companies will begin to design a business plan because they already have a clear view on the projections of the intended activities. Therefore, a business plan and model are tools that have resulted in the success of organizations. When the model is applied on current online business, it there implies that the company will use the available resources to design a model that will suit their intended goals. This involves the organization finding the appropriate business to customers marketing and business to business marketing. These two aspects will help the company in developing an appropriate model. Internet marketing is a crucial process that the model helps to simplify the work of the company; it has to deal with influencing and attracting more people to visit the company’s website or make people spend their time on their adverts. Importance of a clear business model for an internet company A clear business model is important for an internet company since it will help the company to identify their projected weaknesses and be able to correct them. It also enables the company to identify opportunities by conducting research on internet commerce, and this helps in planning for the implementation process.Wiliam (2006) explains the importance below; It describes the perceived value of services and products that the company will offer to the customers. A clear business model will enable clear articulation of the customer satisfaction strategies. The company will design a model that will provide satisfactory results. This will be achieved through projecting the level of customer influence using past performance and, therefore, able to create a unique strategy that will lead to achieving the objective. Online business requires that creativity should be involved so as to come up with a unique way of ensuring the success of the company, and this will involve dedication of the subordinates by forming a teamwork that adds value to the company. Identifying target market segment depends on the company model because a unique model will take the company through the process of identifying the target segment. This is because when designing that model, the company will focus on the aspects such as a goal, if the goal is to attract more customers; it means that the target segment should be identified by conducting an opportunity analysis through the internet. The model helps to develop a strategy on how to identify the target market segment and, therefore; it is required that the model should be clear. A clear model is important because it defines the projected cost of production and the profits. When there is a clear projection of the cost of production, the company will plan their operations in a manner that minimize the available resources in order to maximize profits. They will apply the principle of optimization so that they can be able to reap enough profits. With the competitive nature of online commercial activities, the company needs a clear model that will define how the operations will be integrated to produce the best results in terms of profits. The structure of the value chain is identified in a clear model because it will explain the structure that best suits the perceived operations of the company. The value chain is the process that an organization will use to ensure quality services and products. This structure will involve aspects like the appropriate channel of distribution, the appropriate channel used in creating awareness (Currie, 2004.pg 28). When a company has a clear value chain, it will enable them to attract more customers and gain a competitive advantage on the internet. Since online commerce involves connecting with people globally, therefore, the image of the company should be maintained by providing a good structure of the value chain. The company will also find ways of adding value to their products and services for example; provision of twenty four hour services is a way of adding value to the services offered. Using a model is an opportunity for the company to protect their position in the market. Online marketing is created by a series of network whereby one business connects with another business as long as they serve the same line of production. When an organization predicts its position, it can make decisions on how to retain the position or improved the position depending on the benefits it accrues from being in that particular position. Designing a clear model provides a clear picture of the company position and, therefore, designing a business plan will be easy. After projecting the position of the company, the model can be used in setting a competitive strategy which will enable the company to have a competitive advantage over the other internet markets. This will be done by researching on the best competitive strategy which can be through the use of low cost, competitive strategy whereby the company strives for low cost leadership in the market, or the use of differentiation strategy where the company will differentiate their products and services to suit all the segments and lastly, the company can operate under focus competitive strategy whereby they will deal with satisfying the demand for a specific product only. A good competitive strategy will enable the company to maintain its position in the online market and to benefit globally. Advantages of a model of an internet company A model helps the company to forecast on the future outcome of its operations. This occurs when a company uses the model to predict its position and also to have a clear view on how the business will appear in the reality. This enables the organization to plan appropriately. It also helps the company to identify the right business or activity they want to engage in. Designing a model involves considering the available resources and the projected company goals, and this helps in choosing an internet business that will fit the available resources. A model is appropriate because it will help the company to identify the deviations that are likely to occur in the process of implementation (Fusco, 2010). Identifying weaknesses and mistakes is a way of accomplishing the mission because the organization will find the appropriate means of correcting those deviations and thus preventing the occurrence of a failure due to mistakes that were not detected. A successful internet business results from the appropriate business plan, the business plan also depends on the business model. If a model is not appropriate, the business plan will also be inappropriate; therefore, the model is advantageous because it sets the phase for the accomplishment of other activities that are in line with the mission. An example of a business model An advertising model An advertising model is a tool used to create awareness on the existing product and services in the market through the use of the internet. It aims at passing a message from the producer to the consumer by informing them about the products and also using ways of attracting customers. It tries to capture the attention of people using the internet and avail information to them. When designing an advertising model, it is important to identify the business to business markets and the business to consumer markets. The advertising model that I chose is on the sale of designer attires through online. The model that will be designed will focus on creating awareness on the existence of designer attires, and the market segment focuses on the youth attires. The name of the company will be ‘youth designer attire.' The model will be developed that will consider the use of the site that most youths will be found, and that is where the advertisement will be carried out. Facebook is a social site where advertising basing on business to consumer will be appropriate, and LinkedIn is a business site where there is interaction of business to business advertising. Youth designer attire will develop a model that will use facebook as a place to advertise its products. It will create a Facebook where users will be invited to like the page and be able to view the types of products and services we offer. The company intends to design attires that are unique and suits the youths, they will focus on innovating different designs of outfits ranging from clothes, shoes and jewelries. The designer company will post the photos of these attires on the facebook page, and people will like and view them. Once they like, they will influence their friends to also like the page and the trend will continue until the site will be globally known. The purpose of designing an advertising model with the use of facebook is because many facebook viewers are youths, and this is an appropriate market segment for the company’s products. Many of the youths also like trendy attires, and when they login into their facebook accounts, and they view the images of designer outfits that are trendy, they will tend to be attracted and this will create a connection of more youths. According to the model, the page is designed by providing a business address and contacts, this is important because as people view, they will also like to purchase; therefore, the contacts ad address will enable their access to the products. The business to business marketing strategy has been used to choose the use of face book because it is a social site where people interact, therefore, interaction between the customers and the business through the use of created page will enable the designer company to analyze the level of demand together with identifying the needs of the youth and, therefore,working towards satisfying those needs. LinkedIn is a business to business marketing strategy where the youth designer outfit will use to advertise its products to working class youths and do not have time to login to facebook. LinkedIn is used for linking professionals, and it is always used for business purpose. Therefore,the company will develop a name that it will use to connect to professionals and other business units. In this case, the products and services of the company will be advertised through interaction of the business people. According to Palmer (2010), an internet advertising model will be created with the use of the foul marketing mix elements whereby each element has its role in creating awareness. The first element is a product, and you find that the product is a designer outfit, and it targets only the youth. The product helps the designing of the model by developing goals which will be to earn profit. The next element is the place, and this describes the appropriate place for marketing the products. For the designer business, facebook and LinkedIn were the appropriate places where customers are located since online business requires a site where many customers are connected globally. Pricing is another element whereby the model focuses on the pricing mechanism that the companies will use. In the case of youth designer, pricing will be determined by the demand from customers and the existing market price of the products; therefore, the method of pricing will be as per the outfit that the customer desires. Promotion is the last element, and it focuses on the best medium of advertising, online business requires a means of advertising that will create awareness. Since the company is focusing on the advertising model, the choice of a site with many target customers is appropriate and also creating a page and a website will enhance more connections. The Promotion also involves developing a strategy that will attract more customers by providing after sales services. For designer company, after sales services provided will involve product delivery. So also if the outfits do not meet the requirements of the customer, the company will cater for correcting where necessary. Conclusion Online business is a place where the buyers meet the sellers and; therefore, the exchange of goods and services can take place and hence becoming an electronic commerce. This requires the use of the internet, and also electronic gadgets like computers and smart phones. Developing a model for an internet company will enable them to carry out their online commerce smoothly. Online business creates a marketplace that allows for the exchange of goods and services globally; it also provides room for bargaining of products whereby the buyer and the seller can negotiate for prices. This is an advantage because they do not have to travel in order to communicate together. It also enables a transaction to take place, and this will accomplish the mission of any internet company since it focuses on conducting successful transactions and thus making a profit. Therefore, after establishing an internet company, it is important to consider the future of the business which involves obtaining licenses for the business to business marketing and also the subscriptions for the business to consumer marketing. The company can also expand its activities and consider other sources of revenues by the use of the same site, and this will earn more profits to the company. For example, with the youth designer outfit business, it may consider developing other ideas, for example, organizing of events that are related to the line of the current business. Reference Alt, R. (2010). introduction to special sections-business models. taylor and francis online , 3-9. Currie, W. (2004). Value Creation from E-Business models. butterworth-heinemann. Fusco, M. (2010). An analysis of the competing business models of online journalism. Michael fusco. Holden, G. (2010). Starting an online business for dummies. John Wiley & sons. Mahadevan, C. (2000). 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