Business Model Design: The Overall Working Procedure of an Organization

Definition of business model Design

A business model can be termed as the conceptual structure assisting the viability of a business including the purpose, goals and the ongoing plans for achieving them. In a simpler form, it can be described as the way an organization fulfills its purpose. As per the management expert Peter Drucker, a business model answers the questions like – who is the customer, what is the customer value and how does one deliver values at an appropriate cost?

A business model is almost similar to a business plan in its content and makeup. A business span specifies all the elements necessary to demonstrate the feasibility of a prospective business, while a business model demonstrates the elements that take an existing business to work successfully.

The importance of documentation in a business model includes maintenance of a focus on the corporate goals, reviewing the operational practices and ensuring that two are harmonious. A representation of the business model of a company can be incorporated into the public relation material and is essential to share with the partners and the customers. A vision statement is an important part of a business model. Traditionally, the financial goals are the main focus of such models but the business sustainability and the corporate culture have turned to be integral to the business plans in recent years.

Examples of Business model designs

There can be several models of business models. The companies building out of business models that might be helpful to communicate the fundamentals in a succinct format that can be shared and adjusted easily.

 Bricks and Clicks business model

This is a business model where a company involves both offline businesses, like stores and shops plus online presences. Some of the retailers add extra flips like a catalog, telephone ordering, and mobile phone apps or telephone sale support. The retail reinvention is an ongoing process that is not very simple. This model has been used by traditional retailers, having extensive logistics and supply chains as well as a large marketing budget. It can also be said that the adoption of the click and the brick model where a customer can return items to one of the stores can reduce the associated costs like shipping for the returned items.

The collective business model

The business system, organization or the association is typically composed of a large number of businesses, professionals and tradesperson or in the related field of endeavor, that pools resources and shares information and provide other benefit or their members. An example can be cited such as a science park or a high tech campus provides shared resources to the firms like lab facilities and clean rooms, in addition to the creation of an innovative community among the firms and the employees.

 Explain to Value configurations  

In order to understand the values that information technology gives to the organization, it is necessary to understand the manner in which a particular organization conducts business and how the information system influences the performances of the several components activities of an organization. Since a long time, Porter’s (1985) value chain was the only value configuration that was known to the managers.

The value chain is the best-known value configuration, where values are mainly created by the efficient production of the goods and services on the basis of a variety of resources. The primary activities in the value chain involve inbound logistics, marketing sales, and services.

 Two alternative value configurations have been identified by Stabell and Fjeldstad. A values shop schedules the activities and applies resources in a way that is dimensioned and is suitable to the needs of the client; a value chain, on the other hand, performs fixed sets of activities that enable it to produce a standard product in large numbers. For example, value shops are professional service organizations that are found in the law, medicines, architecture, and engineering. A value network connects the customers or the clients who wish to be interdependent. The examples of value networks are telephone companies, portal services or logistic services, retail banks and the insurance companies.

Explain to the Revenue model  

A revenue model is a framework for the generation of revenues. It identifies the revenue sources that need to be pursued. It states and explains the revenue making strategy of the organization. It also involves the product or the service of value, the revenue generation technique, the sources of the revenue and the target consumers of the offered products. Revenue can be generated from a large number of sources like mark up, commission, arbitrage, bids, and rent. A revenue model involves every aspect of the revenue generation strategy of the business.

How can I design a business model? 

Five steps need to be followed for the development of a successful business model. The first step involves estimating the size of the solution in the target segment. The second step confirms that the product or the service solves the problems. It is necessary to take regular feedback on how to make a better fit. The third step would be to test the channel and the support strategy. The fourth steps involve consultation with the investors and the industry experts. A small advisory board with experience in the same domains can provide with unbiased feedback if needed. Finally, it is necessary to plan and execute a local or pilot rollout. Focussing on the collection of references from customers is another necessary step for the development of a model. Finally, it is necessary that one gets positive e feedback, credibility, and visibility as a final validation for the business models. 

What are some pros and cons of using Design Patterns to describe the business model

Some of the pros and the cons of using Design Patterns to describe the business models are as follows:-

Pros:

• It is easy to predictable changes in the business needs
• It is easy to unit tests and validates the individual components
• Can provide organizational structure when the business requirement becomes very difficult.

Cons:

• It can be difficult for beginners’ engineers.

They are often used improperly without a realistic understanding of how the software works.

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