A business model creates a picture of how an organization operates to provide quality services and value to customers. Therefore, the business model assists the company to beat their competitors in the markets. Consequently, the model enhances the value of the company to rapid profits and revenue growth. Therefore, research shows that it comprises of two elements such as a profit model and business system (Amit, R., & Zott, C, 2001) .The business model does not only work as a system of works but rather as behavioral indicators of customers and suppliers. A successful business model integrates the profitability level of a company and its operations. As a result, it can realize the strategic objectives of the company.
When an individual conceptualizes a business model as a system, he/she focuses on delivery and production of the company. Therefore, the system has several interdependent activities to go beyond the boundaries and focal industry (Chesbrough, 2006). As a result, the business model conceptualized as a system allows the company to collaborate with strategic partners. Additionally, it creates value especially for its customers. Hence, the business model should deliver its goods and services to their target customers. The business model intellectualized as a system focuses on the delivery approach only rather than giving attention to the operations. The system focuses on creating a good relationship with the consumers for satisfaction. The strategic intentions of the system is to persuade customers to purchase goods and services. In addition, the customer care service is part of the delivery system that attracts more consumers to buy goods and services from a company. The activity systems comprise of governance, structure, and content. The entrepreneurs and managers design and shape the organizational activities into a system.
The business model as a system solves static and dynamic problems in the company. Therefore, it is important to indicate the areas that have static and dynamic growth in the organization. For instance, the business model focuses on delivering value to customers and remain competitive in the future (Itami, H., & Nishino, K, 2010). As a system, it allows the strategic plan to fit in all operating activities. As a result, the models describe the functions of the company. The system in the company varies depending with the business ecosystem. The business model as a system allows people to communicate at all levels. For instance, the communication moves from the senior to the junior level as a result, static activities change positively. The system also has complex adaptive approaches that evolve the static operations due to the business environment.The business elements such as firms, suppliers, and employees carry out the duties and tasks that enhance transformation in static activities. The business models as a system create networks through joint ventures, strategic alliances, and collaborations. Additionally, it creates a business community with similar goals. Consequently, the business model as a system allows the company to outsource supplies therefore keep the operations dynamic. The business activities are in motion because of the continuous supply of information and technology. The business system educates the employees and employers about their duties and assignments. Therefore, the system controls the entire work flow as well as delivery of goods and services to the customers. The business model links between the inputs and outputs in order to create value for customers.
The business models help companies learn from each other. The firms can exchange knowledge and information about innovation and technology. Therefore, the firms can partner to develop similar products jointly. On the other hand, business model enables companies to produce goods and services independently (Magretta, 2002). Global companies achieve self-sufficiency due to collaboration and partnership among themselves. The business model highlights the production costs and management as a result, businesses partner with other firms to reduce costs and increase their assets. The business model maintains the integrated business activities among the firms. Additionally, it triggers communication among the staff from different firms in order to share their business experiences. Besides, it creates cross functional and mixed teams outside and within the firms. For instance, in Taiwanese and South Korean firms in telecom fields focus on sharing their creativity view perspectives. Therefore, the business models create value chains and flexible team work within the firms. As a result, the firms are in a position to partner outside and inside the firm.
According to Zott and Amitt, the business models create the value in electronic businesses. The models concentrate on the importance of outsourcing complimentary services for the businesses. Additionally, the authors suggest that the model comprise of efficiency, complementarities, novelty, and lock –in variables. The four factors determine the value creation in e-business. The scholars emphasize that firms should provide customers with unique products and services to satisfy them. Therefore, the uniqueness of these products and services is achieved by companies through devising new methods to address new consumers’ needs. Furthermore, model modifies the goods and services to satisfy the existing customers’ requirements. The model focuses on the modification costs that consumers bear to replace the competitors’ goods. The firm and business partners fulfill the customers need (McGrath, 2010) .Moreover, customers benefit from savings, financial costs, and efforts of the company. The value creation model proposes that the fours factors influences the company’s financial performance. For instance, the business model offers personalized solutions to the customers. Additionally, they reward customers with loyalty programs and vouchers. The strategic partners influence the comprehensive offers of goods and services. The consumers participate in products customization therefore the model has synergy effects.
The ‘Killing Two Birds with one Stone’ article is relevant because it explains a business model as a system as well as a profit model. It explains that a model enables a firm to deliver and produce the company’s products and services. Furthermore, it focuses on the behaviors and operations of suppliers and customers. Therefore, it provides a competitive advantage and mitigates business risks (Porter, 2011). The profit model generates revenues for the business in a short term period. The model’s intention is to reduce costs and increase profits. Therefore, the article emphasizes on the business system and profit model that accelerate the growth of the company. Additionally, the model provides continuous future learning and strategic product differentiation.
The significance of finding regarding to the future of business models reflects that technology accelerates the new business models. Additionally, innovation influences the value creation models because consumers will make their payments electronically. The increased use of cloud computing predict the future behaviors of business models. The business models shall improvise ways of interacting with virtual customers in future (Iyer, B., & Davenport, T. H. , 2008). There shall be low manufacturing costs because the firms shall customize depending with the customers’ tastes and preferences. There shall be qualitative change of business model due to the sensors and mobile technologies. As a result, the improved technology shall sharpen the future business models.
In conclusion, the producers will engage in data driven innovation to sell their goods and services in the market place. The value chain coordinators will assemble modified solutions for their consumers. The current business models will demand for continuous innovation to match future demand and supply (Porter, 2011). On the other hand, some goods and services will require traditional approaches of business models in order to create value for consumers. The future business models will assist the company to collaborate with the strategic partners, customers, and competitors. The findings reflect that the business models design overall business networks and operations.
According to Zott and Amitt, value chain activities are particular tasks that industries carry out to deliver product and services. Partnering is where firms come together to work together with the aim of reducing costs while networking is interacting with other companies to develop contracts. Static or cross sectional is where a company engages in operations that do not change the profitability of the company whereas dynamic and longitudinal activities result to increased revenue and production levels. Innovation process is creating and implementing new ideas to improve delivery method.
Figure 1. A business model for creating value
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