The Concept of Business Model Sample for Students-Myassignment

Question: Write an Essay on Business Model. Answer: The business model concept is designed to aid in the exploitation of a business potential of an innovation (Seppanen, 2009). Seppanen in his paper goes on to explain that the business model covers those resources an organization possess, and assist in the effort of an organization to build a larger capability in innovation. According to Johnson (2008) a business model entails four interconnecting components which when put together, deliver and create value. The most essential component is the customer value proposition, and the other components are key processes, profit formula and resources (Johnson, 2008).The business model is mandatory because of the features in market economies where we have costs of transactions, choice of customers, and heterogeneity amid competition, consumers and producers. The business model concept is attaining grip in various disciplines yet it is still disapproved for being vague, fuzzy and missing consensus on its features and meaning (Fielt, 2013). The business concept helps in the study of the way a company drives economy rate from a technology that has been advanced (Rasmussen, 2007). Zott and Amit revolved to analyze the rate chain, strategize in network theory, innovate Schumpeterian, resource based of the firm and transact the economy rate in order to deliver the foundation of an assimilated model of rate formation in the company (Christoph Amit, 2001). The business model is described as a way in which you identify a business and a way it makes profit. This reflects running of the business hypothesis which entails customers needs, and in what way they need it. It can also be referred to as business performance that cause a larger efficiency by using information technology. The process of conceptualization is the phase which creates the focus of the study. The main activities during the conceptualization stage of the modelling process should include familiarizing with the problem area, defining time horizon of the problem and defining the main questions to be addressed (Randers, 1980). Furthermore, one requires to understand the social structure, problem and process to aid in business model conceptualization In addition, when intellectualizing a fresh knowledge, it is important to put your intelligence towards precise measurements then hunt solutions to assured queries to aid develop idea from primary thought through various steps of innovation (Balasubramanian, n.d.). Another important aspect is to communicate to the deliberate aims of your business. Conceptualizing your hint by a perfect vision of target market, economical placing plus tying it to the main skills of the business are serious reasons in the achievement of an innovation. In aspect of business model, innovators used to reason thoroughly and intellectualize their knowledge by applying the use of business alignment, competitive advantage, execution, customers and business value. Business models can be engaged by organizations in resolving static difficulties through making use of their seizing, sensing, and renovating abilities (Anjorin Ravi, 2012). For instance, through making sure their objectives and goals are well conversant by the known probabilities at a marketplace presented by the existing plus upcoming technologies which also affect their value intention to customers in addition to the nature of their output and inputs. Likewise, utilization of significant resources, network, and significant associates could be coupled by greater levels of absorptive, adaptive, and innovative abilities of a company. In the unsettled domain of electronic commerce, companies can only thrive by constantly revising their models (Reuver, Bouwman, Maclnnes, 2009). When resolving dynamic complications, dynamic business models can be used to perfect the connection between firm performance and technology development, the technology sway on business model innovation, and the technology organization improvement (Baden-Fuller Haefliger, 2013). In various markets, specifically those swayed by advanced technology, it gets difficult on how to improve and correct technology because of the ever-changing demands of customers. The business model may require alteration to correct technology features that make customer value. Likewise, components of the model may vary so as to allow technology advancement that fulfill desires of customers. When a business initiative is known, its moreover implicitly before explicitly hires an exact corporate ideal that describes the structural design before strategy of the rate formation, supply and supply mechanisms it pays. The principle of corporate model is in describing the technique by which the initiative provides rate to consumers, attracts consumers to compensate for value, then transform payments towards profits (Teece, 2010). A significant part of business model design involves thinking on how one can capture value from innovation. Any product advancement is required to be joined with a business model development that states its capturing value and market approaches. Evidently technological innovation cannot guarantee economic or business achievement. Intellectuals have accepted that innovation of technology without a strategy of commercialization is as likely to lead to the distraction of firms. A good model implementation and design, joined with careful strategic analysis, are crucial for innovation to thrive or else companies will stumble. Business models can be used as units of analysis to understand how firms partner. In strategic management the study unit is the industry wherein a business is competing, the business unit, and the organization which is most business units legal entity. Researchers try to assess why some companies have extra incomes than other similar companies on the foundation of these units. Exponents claim that the structure of the industry is important for greater profits. Companies can make a choice on what position they want to possess in an industry, in which industry they would like to run, and how they can alter the structure of the industry so as to get a more favorable structure of industry, for example, through making hindrances for entrance of new comers. Zott and amits article states that, the business model of an organization is the structure of dependent undertakings that surpasses the principal organization and extents its limits (Zott Amit, 2010). The organization is allowed to concert with its associates for value generation. An activity system is defined as a group of dependent activities of an organization, including those carried out by the company, its consumers, and its associates. Zott and Amit put forward two considerations that designers of activity systems need to think through. The first one is the design element which is comprised of structure, content, and governance. The activity system structure defines how activities are connected and captures how they are important for the business model. The system content talks about activity selection. A good illustration of this is when the Ban Colombia had to implement activities that were aimed at offering microcredit to over 60% of Colombians who never had access to servi ces of banking. Hence the bank required to hire new staff, train its management, and improve their competences. This show how the business models are systems under the article because the bank was forced to come up with a product that favored the customers. This new product was intended to increase their customer base and as a result, the innovation led to a higher demand for staff at the bank so as to serve the added customers at the bank. This illustrates how the doing of one thing results to the necessity of anther within an organization. The zott and amit journal brings out this concept clearly compared to other journals. Lastly, under the design element, there is the system governance which denotes whoever carrying out the activities. Moreover, Zott and Amit insisted that it is the design themes which are structure of design elements and consists of novelty, lock-in, complementarities, and efficiency. Novelty involves adopting new activities and new techniques of relating them, and the various ways the activities could be governed. An example of novelty as an activity system is Apple which shifted from production of hardware only to music distribution as an activity. Music distribution was an innovation that apple had to implement so as to increase their revenues because of the increased competition in the phone and laptops in the market. Lock-in are activity systems which are designed to ensure third parties are kept attracted as contributors to business models. Complementarities occur whenever any system activities generate more value than independent running of activities. For example, the process of depositing in banking is a significant banking source that supplements the activity of lending by banks by provi ding cash deposits that are then used to issue loans. Finally, the efficiency design denotes how companies employ the activity system design they possess with an intention of realizing greater efficiency by reducing costs and transactions. This is achieved through the employing of lean production systems which ensure there is maximum output with less cost incurred for inputs. The zott and Amit article helps understand business models as systems the most, because of how they elaborate the creation of value through business model innovation. The article explains that an organization should bring together all its components and choose activities that are favorable to all of them.it helps understand the business models as systems as it mentions for example for a business, they should come up with a way of bringing together the customers and suppliers together. This can be done through cross functioning so that they can increase the revenues from the customers and also reduce costs of supplies. In conclusion, business models could be regarded to be outlines of the way organizations carry out business, how they provide value to interested parties, and the way they connect product and factor markets. The activity systems perspective according to Zott and Amit addresses all these important matters, and gives administrators a semantic and a theoretical tool to address and engage them in perceptive exchange of ideas and imaginative design. Additionally, a business model inspires the organization in complete and universal reasoning when planning its business model, rather than putting much concentration on isolated, individual selections. References Anjorin, J. A., Ravi, P. V. (2012). Business Models: Assessments of the dynamic aspects and non-dynamic aspects. Blekinge Institute of Technology. Baden-Fuller, C., Haefliger, S. (2013). Business Models and Technological innovation. Long Range Planning, 46, 419-426. Retrieved from https://www.elsevier.com/locate/lrp Balasubramanian, V. (n.d.). Innovation Management.se. Retrieved April 15, 2017 Christoph, Z., Amit, R. (2001). Value creation in e-business. Strategic Management Journal, 22(6), 493-520. Fielt, D. E. (2013). Conceptualising Business Models: Definitions, Frameworks and Classification. Journal of Business Models, 1(1), 85-105. Johnson, C. a. (2008). Conceptualisation Business Models:Definitions, Frameworks and Classifications. Journal of Business Models, 52-53. Randers, J. (1980). Guidelines for Model Conceptualization; Elements of the System Dynaamics Method. Pegasus Communications. Rasmussen, B. (2007). Business Models and the Theory of the Firm. Melbourne, AUSTRALIA. Retrieved June 2007 Reuver, M. d., Bouwman, H., Maclnnes, I. (2009, April). Business model dynamics: a case survey. Journal of Theoretical and Applied Electronic Commerce Research, 4(1), 1-11. Retrieved from https://www.jtaer.com Seppanen, M. (2009). Empirical classification of resources in a business model concept. Intangible Capital, 5(2), 102-124. Teece, D. J. (2010). Long Range Planning, 43, 172-194. Retrieved from https://www.elsevier.com/locate/lrp Zott, C., Amit, R. (2010). Business Model Design: An Activity System Perspective. Long Range Planning, 43, 216-226.