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Some concepts in today’s business are as generally elaborated-and as infrequently systematically researched-as the theory of business models (Cyr, Dhaliwal and Persaud, 2002). Several individuals contribute to the efficiency of organizations like Dell, Amazon and eBay, for instance, to the methods they employed innovative technologies-not merely to enable their features more effective-but to overall generate innovative business models (Augeneder, 2014). However, despite of all the discussions regarding business models, there have been hardly any substantive empirical researches of them. For instance, people do not even know how general the various types of business models are working in the market and whether few business models have improved performance as compared to others.

Fundamentally, a business model is the level of how a business works. In detail, a business model elaborates how an organization competes in the market, utilizes its assets, establishes its associations, interacts with consumers, and generates and acquires value to maintain its business in the industry. They major component in a business model comprise of the following (Augeneder, 2014):

  • The value proposition of customers which determines how will the organization generate value.
  • The profit model which expresses how will the business make profit.
  • The major assets required to offer the consumer value proposition.
  • The organization’s major competencies like internal potentials or skills that facilitate the business to handle the operations in a manner that creates value.

There are numerous generic types of business model. However, eventually every organization’s business model is excusive since it is dependent on the resource base it managers and the potentials that the business possess (Evans, 2003). Stealing another organization’s business model is not likely to be effective. However, with time rivals will be capable to imitate the individual functions of an innovative business model. Alterations in the external business context may also decrease the effectiveness of a business model. Organizations thus require to constantly review and reform their individual business model (Chesbrough, 2013).

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