BB320 Integrated Strategy Capstone Environment

Introduction 

The number of papers regarding strategic business model or even its interaction is unlimited. The aim of this literature review is to develop and enhance the understanding of the strategic business model. Over the last fifty years, the strategic business model’s literature has evolved and the use of the term strategic business model has grown rapidly in the present scientific community since e-commerce and internet were adopted. A business model can be defined as a business’ abstraction that identifies how the specific business profitably makes money. It defines how the inputs to a firm are transformed into outputs which are value-adding. Strategic management’s bottom-line is on how organizations are currently making money and how they should change to effectively continue making money. As such, a strategic business model can be defined as a policies’ systematic list that is to guide processes, inputs, values, and outputs of an organization’s business complete operations. Traditionally, several strategy texts made use of a variety of strategy analysis methods to formulate strategy alternatives. However, these strategies do not provide a strategic business model for how firms should operate in the future.

The review is based on analyzing previous work on the strategic business model by researchers. A detailed search strategy for this research is as shown:

Database & Time Limits	Language	Search Date	Search terms	Number of hits	Number discarded (unrelated title)	Number reviewed (title and abstract)	Number reviewed (full text)
Google Scholar	English	24/08/2018	Strategic Business model	673	661	12	2
Medline	English	24/08/2018	Business Model	11	11	0	0

The flow chart for the selection of the literature to be included in the review is as below:

Literature included in this review is obtained from conducting a deep analysis on the selected topic and selecting the relevant materials that relate to the topic of study. A summary of the literature included in the review is as shown:

Reference	Title	Study Aims & Objectives	Research Design	Sample	Data collection methods	Findings relevant to the review.
Aithal, P. S., & Acharya, R. K. (2016). Strategic Management Models & Indian Epics.	Strategic Management Models & Indian Epics	The research identifies modern business models that are used by companies correlated their base in the Indian epics.	Systematic review	Indian Epics such as the Ramayana and Mahabharata	Analyzing different bibliographies	In a global business, use of PESTLE model can be incorporated with White ocean mixed strategy as an optimum model.
Ward, D. (2005). An overview of strategy development models and the Ward-Rivani model. Economics Working Papers, June, 1-24.	An Overview of Strategy Development Models and the Ward-Rivani Model	The study aims at providing an overview and compares different strategic business models.	Systematic review	Italian companies	Analyzing several studies	Most of the Italian firms use SWOT, PESTLE, and the BCG matrix models to solve specific problems.

The literature review will be discussed under themes such as competitive advantage, and globalization. Competitive advantage puts a firm at superior competitive advantage thus leads to high market share. Having high competitive advantage facilitates an organization to globalize its operations.

Literature Review

 The primary goal of any company is to achieve revenue as well as create value. An organization’s business model captures the means and the ways used to achieve the specified goals. A business strategy defines the approach that is used by a business to compete with other organizations successfully within a particular market (Abdelkafi & Täuscher, 2016). A business strategy is thus used in outperforming competitors. As stated by Porter, a company can only outperform its rivals if it establishes a difference that it is possible to preserve. The research questions for this review are:

1. Which are the strategic business models that are used in developing business strategies?
2. Does the use of strategic business model enhance competitive advantage?

The above questions led to the formulation of the reviews hypothesis.

Ho: Strategic business model do not enhance an organization’s competitive advantage

Competitive Advantage

Aithal & Acharya (2016) carried out research to investigate the application of strategic business models in the Indian epics. They determined that it is essential for an organization to have a corporate strategy which helps a company relate to its environment in a manner that assures continued success and outperforms its rivals. For this to happen, they identified several factors that enhance a company’s competitive advantage (Baden & Mangematin, 2013). These factors are stability, efficiency, growth, and profitability. The growth of an organization depends on having resources that support growth, as well as identifying the markets that facilitate growth by improving the firm’s competition. According to the two researchers, a market leader gains cost benefits over its competitors since the other companies will have a market share that is smaller, thus reduced chances for economies of scale (Drouven & Grossmann, 2016). There are several models that are adopted by firms in outperforming their competitors. They include Red Ocean strategy, Green Ocean strategy, Purple Ocean strategy, Black Ocean strategy, and White Ocean strategy.

 The authors used the Indian Epic to relate to the above models whereby organizations try to outdo their competitors with the intention of grabbing a higher market share of the current demand. When using the above strategies, Aithal & Acharya (2016) noted that there was the need for an organization to use strategic business models such as carrying out a PESTLE analysis (Horkoff, et al, 2014). For instance, when using the White ocean strategy in their study, they identified that firms first carry out an environmental analysis such as the political, economic, social, or technological trends that are relevant to the market. Based on a firm’s PESTLE analysis, the researchers identified that an organization’s global strategy is co-related to the White ocean mixed strategy, thus facilitating firms to be competitive in global business (Joyce & Paquin, 2016). The two concluded that the Indian epics adapted a new strategic model called the White ocean mixed strategy thus becoming globally competitive. This review thus answers the study question as to whether strategic business models helps in enhancing the competitive advantage of an organization.

Globalization

Ward (2005) provides an overview of some of the selected strategic business models that are applied when developing a business strategy that is customer centered. The author has facilitated the comparison of some strategic models as well as expressed how to realize new models. The author also in his research proposes the Ward-Rivani model, a new model that can be used to complement and provide a useful platform for future work on strategy (Osterwalder & Pigneur, 2013). The author notices that organizations that tend to globalize their operations are required to conduct an external and internal analysis within a given business, industry, or market. As a result, there are several models that have been developed to aid in the process of internal and external analysis. The intended outcome of using the models is to improve an organization’s position in the market globally as well as maintain and improve its competitive position (Zott & Amit, 2013). He notes that perhaps Michael Porter’s five force model is the most famous models. The model is a standard comparison for most of the new models that analyze a firm’s external environment (Saebi & Foss, 2015). To better understand the various strategic business models and how they assist a firm to globalize its operations, Ward compares all the 8 models that are used to analyze the internal and external environment of an organization. To do this, Ward took Italy as his reference nation since he was familiar with the country’s economic and business world.

First, Porter’s five forces model helps a firm to simultaneously understand its competitors in the industry which it was operating and at the same time be able to implement a competitive strategy (Storbacka, Windahl, Nenonen & Salonen, 2013). The five forces as identified by Michael Porter are the threat of new entrants, the threat of substitutes, the bargaining power of the supplier, the bargaining power of the consumer, and competition among established firms. The author notes that the model’s elements have been criticized since they are not contemplatable hence meriting another force (Veit, et al, 2014). Ward contacted most of the Italian firms which were international regarding their customer base or multinational’s local branches.

Ward found out that most of the managers were not aware of the strategic business models while in most incidents, they did not recognize their evaluation of Porter’s forces. His study indicated that strategies such as the SWOT, BCG, Parts of the 7S model were common in many of the firm’s culture and use. This is because most of the external consultancy agencies have made use of these models in carrying out the company’s analysis. The other models that Ward has discussed in his study are the Ansoff Matrix. This model is particularly used by organizations that aim at globalizing their growth and are correlated with two of Porter’s forces which are rivalry and entrants (Wilson & Post, 2013). The matrix is made of four quadrants which are market penetration and development, as well as product development and diversification. The other models that Ward discusses are the BCG Growth-share matrix, 7S McKinsey model, and GE-McKinsey matrix.

According to Ward (2005), most of the companies are not aware of these strategic business models, particularly Porter’s five forces model (Wirtz, Pistoia, Ullrich & Göttel, 2016). This paper’s analyses indicate that a lot needs to be done in providing firms not only with the models necessary for globalizing their operations but also help the managers appreciate the industry’s environment complexity. This paper thus illustrates some of the models that can be used by firms when conducting an analysis of the environment as they prepare to globalize their operations.

Conclusion

The aim of this literature review was to develop and enhance the understanding of the strategic business model. To understand the models better, the review focused on two primary themes which are the organization’s competitive advantage and globalization resulting from the use of strategic business models. It is evident that for any organization to remain competitive in the market which it is operating, it should regularly conduct an internal and external analysis to better understand its rivals. Additionally, firms that intend to globalize their operation should also use models such as Porter’s five forces, BCG matrix, PESTLE analysis or even SWOT analysis in conducting their analysis as Ward (2005) suggests. The literature review has created an understanding of the different strategic business models that can be used by an organization. Additionally, it has efficiently answered the two questions developed for this review. Further, the literature review has proven the null hypothesis to be wrong. This is because it has clearly shown that strategic business models help in to improve a firm’s competitive advantage.

References

Abdelkafi, N., & Täuscher, K. (2016). Business models for sustainability from a system dynamics perspective. Organization & Environment, 29(1), 74-96.

Baden-Fuller, C., & Mangematin, V. (2013). Business models: A challenging agenda. Strategic Organization, 11(4), 418-427.

Drouven, M. G., & Grossmann, I. E. (2016). Multi?period planning, design, and strategic models for long?term, quality?sensitive shale gas development. AIChE Journal, 62(7), 2296-2323.

Horkoff, J., Barone, D., Jiang, L., Yu, E., Amyot, D., Borgida, A., & Mylopoulos, J. (2014). Strategic business modeling: representation and reasoning. Software & Systems Modeling, 13(3), 1015-1041.

Joyce, A., & Paquin, R. L. (2016). The triple layered business model canvas: A tool to design more sustainable business models. Journal of Cleaner Production, 135, 1474-1486.

Osterwalder, A., & Pigneur, Y. (2013). Designing business models and similar strategic objects: the contribution of IS. Journal of the Association for information systems, 14(5), 237.

Saebi, T., & Foss, N. J. (2015). Business models for open innovation: Matching heterogeneous open innovation strategies with business model dimensions. European Management Journal, 33(3), 201-213.

Storbacka, K., Windahl, C., Nenonen, S., & Salonen, A. (2013). Solution business models: Transformation along four continua. Industrial Marketing Management, 42(5), 705-716.

Veit, D., Clemons, E., Benlian, A., Buxmann, P., Hess, T., Kundisch, D., ... & Spann, M. (2014). Business models. Business & Information Systems Engineering, 6(1), 45-53.

Wilson, F., & Post, J. E. (2013). Business models for people, planet (& profits): exploring the phenomena of social business, a market-based approach to social value creation. Small Business Economics, 40(3), 715-737.

Wirtz, B. W., Pistoia, A., Ullrich, S., & Göttel, V. (2016). Business models: Origin, development and future research perspectives. Long range planning, 49(1), 36-54.

Zott, C., & Amit, R. (2013). The business model: A theoretically anchored robust construct for strategic analysis. Strategic Organization, 11(4), 403-411.