Discuss about the Business Model Concept for Ethics and Sustainability.
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The business model concept highlights a framework or guideline that shows how a business entity operates on a daily basis. The primary purpose is to present a precise overview of firm's principal activities and operations, financial details and how the activities interact to propel the business to the right so that it can accomplish its goals and objectives. The well-formulated business model will help an organization to be able to create value and distribute it optimally to the satisfaction of all involved stakeholders. The business model system when well utilized will result to innovative and creative ways of conducting business operations.
From the findings gathered, business model should have e-business archetype. This will enable the organization to tap the online market which is growing rapidly. This archetype will also improve the sources of generating revenue which is one of the goals of many organizations. The business model should also be structured around the activities of the organization and that is the reason the model should have activity system that highlights the activities of the company. Cost and revenue architecture should also be given a lot of attention when making decisions concerning business model as it highlights avenues for generating revenue and minimizing cost.
The business model can be used to solve static and dynamic problems facing many organizations. Due to inevitable change, the business context keeps on changing. This means that the model should be designed to accommodate future changes that face the organization. The change is due to technological development, competition, and rise in data volumes. Toyota company has been used to demonstrate how change is inevitable in organizations, the impact of change and what needs to be done when making decisions concerning business models in future.
Essay on business model concept.
The business model concept usually tries to explain how business organizes its activities so that it can operate efficiently to attain the set goals of the firm. The business model is a representation in the form of pictures or graphs to show important business activities and how they relate to each other, financial structures of the business and even key operations that bring competitive advantage (Fielt, 2013). The business model should be well analyzed before being developed because they a very important in showing how a company can create value and distribute it to the shareholders, manage change, competition and generate revenue. This essay is written to demonstrate how business model conceptualization can be used to promote innovation, value creation, combat change and solve dynamic and static problems.
Understanding business models can help in creating value to many firms and even how to appropriate the value to the right parties. The business model system helps n identifying opportunities that a company can exploit. Using these opportunities enables the business to have new channels of creating value for the shareholders as the company can generate more revenue (Botha, Kourie, & Snyman, 2014). The business model also helps in identifying the market segment to be targeted. This enables the firm to appropriate the created value to the right customers and this helps to create more customer satisfaction and customer loyalty. The business model system also helps in identifying the right partner to engage in business activities with. Choosing the right partners with the needed capabilities will help the firm to generate more revenues from partnerships.
The business model system will help in improving innovation process. By understanding the business model developed, managers and stakeholders involved in the decision-making process will be able to identify processes that can assist in producing unique products and services. The unique products will help to position the business in a higher position than its competitors (Chesbrough, 2010). Innovation will also help in coming up with innovative ways of producing the products and services. This will assist in reducing the cost of production. This in turn results to manufacturing cheap quality goods and services that will attract more customers and this helps in attracting more customers for the firm.
The business model should have e-business archetype. E-Commerce enables a company to conduct its business electronically through the use of computers, mobile phones, and other internet-enabled electronic devices. A firm sells its products without having to physically meet the buyers (Zott & Amit, 2010). In the recent past, e-business has led to increased market for many firms. Increasing use of internet services and even increased number of internet service providers can be credited for the birth of e-business. Reduction in costs of computing have also facilitated the growth of e-business. Reduction in online transaction fraud cases also has encouraged many people to turn to e-business and hence business models should ensure that put more focus in this type of archetype.
The business model should be designed and developed as a system of activities of the firm. The effective business model system can only be attained if it only includes the activities that the business engages in. This enables the company to focus its resources on the right core activities that can translate to more value and revenue for the firm. The business model should have activity system content (Achtenhagen, Melin, & Naldi, 2013). This helps in highlighting the activities that the firm engages in and helps the business to avoid deviating to less profitable activities. The model system should have activity system structure which shows how the activities interrelate to each other to bring the best efficiency. The activity system governance should not be left out as this helps to show the individuals responsible for performing the activities of the company.
The business model should also have well-defined cost/revenue architecture. For effective business model, it should have well-defined guidelines that show how the firm generates income and even new ways of generating revenue. This architecture part of the business model should be able to identify the most profitable activities that the business can engage in (Carroll & Buchholtz, 2014). This architecture should also be able to analyse cost-benefit of the operations of the business so that the business can stop engaging in operations that are associated with higher costs and fewer revenues. Through business model system the firm can identify strategies that can be employed to bring in more revenue to the company.
Conceptualizing business model system has been backed as a way that can help to solve static and dynamic problems. Some of the problems solved to ensure the development of sustainable business include increased tax rate, reduced investments, low capital supply and low customer satisfaction. Business models help in analyzing dynamic problems in a way that can be understood by decision makers in many firms (Al-Debei & Avison, 2010). This enables the business to figure out what needs to be done to effectively address the sustainability challenges facing many companies. The business model system should also be developed with the consideration that challenges facing a firm keeps on changing and hence it should be flexible enough to accommodate future solutions without having to create a new design of the business model each time the challenges change.
The business model should also be based on the business context of the firm. Business context can be defined as the system, goals, objectives, employees, structures, strategies and technologies of business. Business contexts should be well coordinated to enable the business function efficiently (Storbacka et al., 2012). The notion that change in business is inevitable is true. As the business grows, change is expected because the strategies, goals, customers, and technology employed by the firm change to suit changing customers' preferences and perceptions. Technological advances are the main reason why the change in business is inevitable.
To help prove that change is inevitable in business, Toyota Company will be used. Toyota firm initially used to manufacture and assemble manual vehicles. The phenomenon of technology integration, the necessity of reconfiguring the value chain and the rise of big data forced Toyota to change the way of carrying out activities. Due to technological advancements and rise of big data, automation of services was embraced by the firm. This enabled the business to start manufacturing and assembling automatic vehicles to compete efficiently and maintain its market share (Polites, Roberts & Thatcher, 2012). The rise of big data also forced it to automate its services to fully analyze the data and offer the needed value to its customers.
The change had a great impact on the business model of Toyota. By automating the services, Toyota was able to fully analyze the data and be able to offer what the customers needed. This, therefore, led to improved value creation. The enhanced value enabled them to create customer loyalty and satisfaction. The change also resulted in production of automatic vehicles. This allowed them to start producing unique vehicles. This made Toyota be able to maintain its business position at a higher position (Intergovernmental Panel on Climate Change, 2014). When making a business model decision, managers should consider that change is inevitable and hence the model should be able to accommodate future changes that will affect the business. The model developed should enable the company compete effectively. Contingencies for dealing with future changes should also be incorporated in the business model by the decision makers.
In conclusion, for future business model research, business model developers should put into considerations that change in business is inevitable. This developed model should ensure that it can deal with future changes and provide optimal solutions without having to redesign the business model as this move will be very costly leading to wastage of valuable resources. The developed model should also be able to solve static and dynamic issues affecting business operations, help in value creation and also to distribute the created value to the right stakeholders.
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