The business model is a business identity or blueprint for a business. "A business model describes the rational of how an organization creates, delivers, and captures value" (Osterwalder & Pigneur, 2010, p. 14). A business model is the force behind any business growth and development. All business arrangements and procedures are a linked to that particular model. According to Fielt (2013), a business model answers the following questions: Who is your client, what does the client esteem, and how would you convey an incentive at a suitable cost? The advantages of a business model include key points such as, maintaining emphasis on corporate objectives, inspecting operational practices and insuring consistency. An organization's plan of action can be used as advertising (PR) material and is essential to clients and associates. A statement of purpose or mission statement might be incorporated into a plan of action (Fielt, 2013).
Business Model in Depth Osterwalder & Pigneur (2010) states that there are nine essential building blocks that display the development of how an organization
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The types of relationships a company has with its clients help strengthen customer relationships. The target market of people a company aims to reach are customer segments. Value propositions can be defined as the quality of products or services that a company has in order to reach a specific target market. Key resources are resources that a given company can use to offer and create quality products for their consumers. Revenue streams are monies a company renders from its customers. Key activities are steps required by a company to operate successfully. Key partnerships are one of the driving forces to making the business model work. Lastly, the cost structure describes the costs incurred to operate a business model (Osterwalder & Pigneur,
4 company’s skills and objectives, the customers they were trying to attract, the competitors they
Selecting a business strategy that details valuable resources and distinctive competencies, strategizing all resources and capabilities and ensuring they are all employed and exploited, and building and regenerating valuable resources and distinctive competencies is key. The analysis of resources, capabilities and core competencies describes the external environment which is subject to change quickly. Based off this information a firm has to be prepared and know its internal resources and capabilities and offer a more secure strategy. Furthermore, resources and capabilities are the primary source of profitability. Resources entail intangible, tangible, and human resources. Capabilities describe environment and strategic environment. Core competencies include knowledge and technical capability. In this section we will attempt to describe in detail the three segments which are resources, capabilities, and core competencies.
There are two types of contracts that can be negotiated with the key partner, the first one is an exclusive agreement where the two organizations cannot work with anyone else or a more lenient contract where each entity keeps their individuality and are able to form additional partnerships with other companies (Anastasia, 2015). The contract between the two entities should be well-defined with clear expectations and a win-win situation for both parties because this partnerships is a vital tool in the making or breaking of a business and it is important to maintain healthy and positive working relationships with your key partners and have the ability to see when the need for that partnership has changed because a business lifecycle can change over the years (Anastasia, 2015). Key activities is what the specific business must accomplish to make their business model work, these activities can range from producing a product or providing a service to the targeted customers ("Business Model: Key activities," n.d.). Every company has their own unique key activities based on the organizations Business Model Canvas that must be completed to meet the business plan (Anastasia, 2015).
There are four key resources that can be broken down into categories; human, financial, physical and intellectual (Martin, 2015). Effective key activities are vital pieces of the puzzle that help the business deliver its value propositions ("20 Minute Business Plan: Business Model Canvas Made Easy," n.d.). These activities need to be carried out so the product or service that was promised can be delivered ("20 Minute Business Plan: Business Model Canvas Made Easy," n.d.). These particular activities coincide with the revenue stream building block, which is a procedure a company follows to get their chosen customer segments to purchase the service or product. A revenue stream can be generated seven ways; an asset sale, a usage fee, a subscription fee, lending/leasing/renting, licensing, a brokerage fee, and finally advertising (Martin,
When the buzzword of business model was very active and reactive during the internet boom, many individuals did not understand the concept of the proper business model for the proper business (Magretta, 2002). When not utilizing the right type of model for the organization, the model will be misused and distorted (Magretta, 2002). Understanding the traditional organization and learning organization, will allow an organization to determine which time of organization they desire the most.
But let me tell you, these are not the only business alibaba group depended, where they make money. Alibaba has many other businesses to make money from like, Alibaba Pay (it’s an online payment system which is somewhere similar to PayPal service), Aliwangwang (instant chat service), Alibaba group also invest in film business and mutual funds, Juhuasuan (similar to Groupon service for flash sales).
A business is always set up with an aim of profit maximization. Before a business is set up, the entrepreneur always has to analyze the market. The target group, the advertising medium, level of competition among others. The business has to know its strength and the weaknesses and the strength of the competitors. This factor therefore enables choosing of the right product or service to invest in.
Organization is a group of people working together to achieve a common goal. Management, Marketing, Human Resource Management, Finance and Statistics are the pillars of every business. Each pillar is specialized in playing an important role in running the day-to-day activities of the organization. Detailed analysis of the above mentioned pillars will be gone through in the rest of this assignment.
The term business model has been applied to situations where is a strategic management and entrepreneurial tool, it relate to the firms about how is going to make profit, and how to deal with internal player and external players by use appropriate model (Papazouglou and Ribbers, 2006, p. 662). It helps manager to growth the business and enhances a great profit by choosing different business models.
Defining the revenue model of the business and also judging how to price the products and technologies that are manufactured by the business are the most crucial part in development of products and tools. Finally the business model is includes by pricing the products and technologies and the revenue model which effects the marketing decisions by means of the customer service decisions.(2) The revenue model is used for middle and lengthy period estimates of a company’s revenue process and procedures and also by what means a business is going to get income, profits and produce more returns on what a business has invested.(3) The effect of revenue model and set a price judgments are difficult and have a basic effect in what way the business is going to operate. Every business is going to have their own innovative revenue model.
To ensure that the Product or Service developed by the Company will ensure Satisfaction among the customers, the company needs to understand and implement the needs of its customers while developing products or services, allowing them to have a loyal customer database. Any company can only be successful in a business environment if they have loyal customer base that will continue to purchase from a particular brand as compared to purchasing products or services from competitors as long as it satisfies their requirements and
The business model of an organization is its means of earning revenues and recovering costs. It is the mode of value creation, value delivery and value capture followed by the organization. Its essence is the value proposition to consumers that allows the company to make money from its business.
One of the major ways of sustainably doing business is through the designing of an efficient business model. A business model explains the justification of how a firm delivers, creates and captures value (Muehlhausen 2013). A business model enhances sustainability in terms of creating a successful and profitable business entity in the long-run. It enables entities to withstand various business environments thereby surviving over a long time. The relevance of a business model is reinforced by having a wide scope since it applies to various diverse settings including NGO’s, Public sector administration, schools, as well as individuals. One of the most current contributions to the turf of the business model conceptualization is the business model canvas. This concept was proposed by Osterwalder in 2010. A business model canvas refers to a lean startup and strategic management template for developing new or documenting an existing business model (Osterwalder 2013). In this context, it involves the use of a visual chart that contains elements that describe the firm’s infrastructure, value proposition, finances and customers. It helps organizations in aligning their activities by demonstrating potential trade-offs. This paper will utilize the business model canvas to describe eBay’s internet business model.
Having a strategic business plans provides all employees with direction within their role and allows for employees to be motivated as they know where they are
According to Michal Lewis Business model is an art which is used for planning that how one can make money and what is the aim behind it (Ovans, January 23, 2015). However, the authors (Zott C & L, 2011) also found the developing basic topics among researchers