Business Model Concept And Innovation For Theoretical Construction

Value Drivers and Value Proposition Define Business Model

Discuss about the Business Model Concept and Innovation for Theoretical Construction.

The business model is a theoretical construction supporting the goals, purpose, and viability to achieve individual goals. Purposes are part of the model that specifies how the organization performs its operation. Value drivers and value proposition define business model (Fields, 2016) .Business value drivers entails the brand and market plan, outstanding customers loyalty and knowledge, innovative product and product development, effectiveness and consistent in the product delivery. Therefore, value proposition determines the direction of the company; this is because the high the level of the value proposition the high the number of the potential customers. Hence, the business changes value propositions to achieve rapid growth and high-profit margin. “While there are many different definitions of business models, there is an emerging consensus that the concept provides a holistic description of how firms create and appropriate value through interaction with its surrounding environment” (Zott & Amit, 2010) .Therefore, business model determines how the business generate revenue opportunities by selling its products; because of either minimal marketing strategy or lower cost of the supply of the raw materials.

Of utmost importance is that the company’s core principles are strategies, customers, organizational structures, business process, and operational policies  (Rainey, 2010). Therefore, the business model of an organization, is how the company makes, provides and realize value as result of the environment where it is operating; social, economic or cultural environment

Due to the changing in the consumption behavior and technology, the current business model should always not be static; not change as the firm runs its operation (Rainey, 2010). Business model should be dynamic due to the changes to the competitors venturing in the market segment with better business model. The way business creates and captures value propositions undergoing a very rapid change. When managers in the organization compete with a different model, the outcomes of the operation will differ. Competitive advantage can arise as a good modeling goes through cycles.

It is important for the managers to make the right choices for the right model. New and old companies can market their business activities through technology advance to create the right model. The strategic objectives are important in the conceptualizing the idea which should be different from another competitor (Rainey, 2010). Development and sustainability of the concept is a result of core competencies of the organization and competitive positioning. Thus, conceptualization of the business idea to achieve the success of the innovation is by proper core competencies, targeting market and competitive positioning. For the examples, advancement of the technology makes company to change the business model. The business will fail if it does not match its technology with business modeling. Small business is not affected by the technology, and therefore the business modeling is not crucial to its operation.

Importance of Core Principles in Business Model

Static and dynamic business model differ in the business operation. Static business model is with small companies who intend not changes they process in the long run. Big enterprise should employ the dynamic business model to go with current technology as also to be competitive level with the close competitor  (Zott & Amit, 2010). The designing business model requires innovator and manager to have precise knowledge about the intelligent system, market research, and modern innovation. Business should organize its value chains and value capture to deliver the product required by the consumers.

New to technology	Third study Design and innovation	Fourth study Business in value creation
Familiar to technology	First study Antecedents and consequences Business  concept perception	Second study Innovation and clarity in business model
	Old business model	New business model

Hybrid framework of business model (Baden-Fuller & Morgan, 2010)

The first quadrant conceptualizes antecedences and its consequences (Teece, 2010). There is a proper understanding of the concept and focuses precisely on academic journals.

The second quadrant involves clarity and openness to the technology and external environment. Therefore, establishment is based on the existing technology. For instances the automobile industries.

The third quadrant: focuses on the novelty and efficiency  (Zott & Amit, 2010).for example automated electronics like electric drives or testing equipment

Fourth quadrants: identifies element of change and represents new technology; depicts the structure, content, and governance.

Managers should make sure that the business model of the partnering business is achievable. On working on the firm model, partnering is one of the options one can consider (Zhang, 2009). The business model innovation beings with the consumers as an initial stage; how consumer perceives the changes to design such as new pricing, delivery, and new features. One needs to consider the market sizing, resources, functionality and time to market. In partnering design process, the partner should check if the partnering has innovation that you need to deliver to your potential customer (George & Bock, 2012). The partnership consists of four processes; understand, design, evaluates and compare. Understanding means that your potential partner business model defines how the business operates. In design, partner weighs on the potential partnership when comparing the two models. Comparing is where partner look for the value that s (he) does not have and check if they can groove together (Piperopoulos, 2012). Evaluation, as to take place to test the impact of the other partner business model at this stage partners, should make a clear hypothesis to make sure every partner understand every aspect of it. Running a partnership requires operation cost, and therefore one should estimate business model if the transfer activity will have a substantial effect on resources, or if your partner can compensate .After calculation of the cost, innovation now is achievable, and two businesses can operate interdependently. Partnership opportunity can break if the one of the partners does not have appropriate value creation and value appropriation.

Need for Dynamic Business Model

Design contents are where the firm examines competition of the action and sequence and look for someone to perform those activities. Zott and Amit 2009 consider the content design and themes design in business design model as crucial  (Zott & Amit, 2010). In value creation, the theme’s design is the most dominant value of the system. Design themes consist of the modeling and company’s description like the channel of distribution, value appropriation, cost structuring, targeting segment and customer’s relationship. Zott and Amit views model in business as cost leadership and differentiation which comprises the market choices.

For the new introduction of the product to the market, the business model is vital for, however, if the managers adopt the individual model to change it to the new one due to technology will be at big task due to the internal and external environment (Chesbrough, 2010). Conceptualization of the business is series of the dependent dealings establishing the business.  Leaders integrate these events to form a business activity system. The revenue design compliments the model plan and product design correlates to the price strategies. Value appropriation depends on how the competitor puts pressure on the others firms

Activity system enables businesses in the holistic system rather than on product activity (Berglund & Sandström, 2013). Business conceptualization and business model innovation assists new theoretical development .The operation systems could be vital in developing the business model design which is predictive .researchers and scholars are unable to piece together between individual actions, model performance, and team activities.

Conclusion

The research focuses on the intra-firm factors since the consensus is that there is no clear definition and understanding of the business model innovation. There is a restriction of the firms to work since there is no bureaucracy control over others. Companies tend to fear the business model innovation due to competition over resources with large companies. The firm will fear to pursue such initiative due to the uncertainties of changes in the business model innovation. There is importance of establishing social norms and institutions; which basis on trust and business ethics. Secondly, knowledge sharing is vital to overcome the challenges of BMI across an independent organization. The success of the BMI does not depend on the hierarchical position one have in the firm. Therefore, businesses should look on how to incentive the parties participating. The research on the BMI is yet to be done thoroughly, thus theory development need to conclude the challenges and solution on business model innovation.

References

Baden-Fuller, C., & Morgan, M. (2010). Business models as models. Long range planning, 43(2),.

Berglund, H., & Sandström, C. (2013). Business model innovation from an open systems perspective: structural challenges and managerial solutions. International Journal of Product Development, 18(3-4), 274-285.

Chesbrough, H. (2010). Business model innovation: opportunities and barriers. In Long range planning (pp. 43(2), 354-363.).

Fields, Z. (2016). Incorporating business models and strategies into social entrepreneurship. Hershey, PA: Business Science Reference.

George, G., & Bock, A. (2012). Models of opportunity: How entrepreneurs design firms to achieve the unexpected. Cambridge University Press.

Piperopoulos, P. (2012). Entrepreneurship, innovation and business clusters. Farnham: Gower.

Rainey, D. (2010). Sustainable business development: inventing the future through strategy, innovation, and leadership. Cambridge: Rainey, D. L. (2010). Sustainable business development: inventing Cambridge University Press.

Teece, D. (2010). Business models, business strategy and innovation. In Long range planning (pp. 43(2), 172-194.).

Zhang, X. (2009). Values, expectations, ad hoc rules, and culture emergence in international cross-cultural management contexts. New York: Nova Science .

Zott, C., & Amit, R. (2010). Business model design: an activity system perspective. In Long range planning (pp. 43(2), 216-226).