Discuss About The Connected Products Transforming Competition.
The essay highlights the importance of business innovation and the manner in which a business model can be implemented. The essay focuses on the Commonwealth Bank of Australia one of the wealthiest and most popular banks in the country. Commonwealth Bank of Australia was set up in 1911 and the bank was made into a public company in 1991. It has 1100 branches in New Zealand and Australia (Commbank.com.au, 2018). The existing business model that is faced by the company is analysed in the essay. Moreover, the importance of gaining profits along with maintaining the opportunities and threats are analysed in this particular essay.
The business model can help an organisation to make strategic decisions that are beneficial for a company. According to Chesbrough (2010), effective decisions on the operations of an organisation need to be maintained so that the strategic decision can be effectively imposed. Companies operating in different sectors need to remain aware of the internal and external factors that help in the dominance of the market. In the case of the Commonwealth Bank of Australia, the company can lay the foundation for the assessment and the review of the revenue that is generated. The application of the business model can help the bank to continue with its operations and ensure that competitors such as ANZ do not get an advantage with the people.
In this regard, the term disruption can be used to understand the business model. According to de Jong and van Dijk (2015), disruption refers to the dissemination of business models mainly due to the changes in the external and internal pressure in organisations. The effects of globalisation on organisations lead managers to take such decisions that may help in the development of the business market. Commonwealth Bank of Australia, have adopted the globalisation and the rapid development of technology so that the company can maintain its reputation in the market of Australia. As stated by Bock et al. (2012) most of the changes in business organisations are mainly due to the involvement of technology.
Most organisations try to develop new and positive ideas so that it can maintain operations in the competitive market. Therefore, Commonwealth Bank of Australia also aims to develop innovative business practices so that the disruption changes can be maintained in the organisation. In this regard, Gobble (2014) stated that with the implementation of functionalities owing to the problems that arise in business, it is necessary that Commonwealth Bank of Australia need to be innovative and provide lucrative offer based on the return on an investment made by the customers. In this case, it can be said that the application of the business models is mainly to maintain the flexibility in an organisation (Amit & Zott, 2012). The application of the disruption method can be made by Commonwealth Bank to understand the internal and external factors of the business environment.
The analysis of the smart connected products that are used by Commonwealth Bank can help the company to have great influence on the existing business. De Reuver, Bouwman and Haaker (2013) is of the opinion that smart connected products are considered as the physical products that organisations need to consider Organisations adopting this particular approach can maintain a positive note for its progress. This is considered as important technological software that is developed in the modern world. In the case of Commonwealth Bank, this can be useful for the development and improvement of the company. According to Euchner (2016), the bank can use the smart connected products for developing sensory software that can help in the development of the products of the bank.
Commonwealth Bank can ensure that the smart connected products help in streamlining the operations that are used in the computer system. These systems are used by various banks so that the personal information of the people can be protected. The smart connected products help in the development and the improvement of the existing business model of Commonwealth Bank. Hence, this can be considered as excellent opportunities for expanding the bank in the overseas market. The banking operations that exist are mainly based on the customers and the type of service provided by the bank (Kindström, Kowalkowski & Sandberg, 2013). The banks can understand the profitability that can be obtained in terms of providing services to the people. This can help the shareholders as the investment made by the shareholders can help in the improvement of the bank.
Thus, these opportunities provided by the application of smart connected products are productive for the development of organisations. Johnson, Christensen and Kagermann (2008) are of the opinion that it is necessary for companies to take control of the opportunities and ensure that these opportunities help in the mitigation of the threats. Therefore, the threats of the application of the smart connected products can be analysed. One of the major threats that Commonwealth Bank may face is the fact that the services of the bank may change. As observed by Leih, Linden and Teece (2014) Commonwealth Bank is known for the services it provides and for the goodwill, it maintains with the customers. The application of the smart connected products may provide the company with the disadvantage of changing the quality and level of service.
At the same time, technical flaws may also be created that provides the company with an edge over its competitors. Flaws in technology can hamper the progress in Commonwealth Bank mainly due to the competition it has with ANZ. The flaws may occur due to the lack of testing of the system (Massa & Tucci, 2013). This may lead to problems as in the modern world, the application of technologies is necessary for the success of a business. Another threat that Commonwealth Bank may face is the fact that the employees may respond to it in a negative manner. The negative mentality of the employees may be mainly due to the rapid changes that take place in the company. This may lead to the loss of employees due to lack of understanding of the new technique, performance and productivity may drop (Osterwalder & Pigneur, 2010).
In this regard, it can be said that Commonwealth Bank can use the business model canvas proposed by Osterwalder and Pigneur (2010) for implementing it in the company. The application of the business model canvas can help in the bank to understand the operations and the strategies that are developed for completing the operations are adopted. The business model canvas provides a pictorial representation of the operations that are required to be taken by an organisation (Refer to appendix for figure). The business model canvas consists of nine blocks that help in the analysis of the business models so that the managers of Commonwealth Bank can get an idea about the businesses that are conducted by the rivals.
Schaltegger, Lüdeke-Freund and Hansen (2012) are of the opinion that the business model can bring about a positive influence in an organisation. In a reputed bank like the Commonwealth Bank, the application of the business model can help in involving the customers and gain their feedback. This can help in the improvement of the bank and based on it the integrity of the bank can be maintained. Porter and Heppelmann (2015) also stated that the value of service could be provided as well as asked for from the customers. The customers get the values with the high quality of services provided by the bankers. Therefore, the level of satisfaction of the customers can be improved that can help Commonwealth Bank develop its business in a more dominating manner.
At the same time, it can be said that the Commonwealth Bank of Australia, can help in the development of the business model that is operated by the bank. According to Porter and Heppelmann (2014), the high revenue obtained by the bank can lead to the reduction in the operational cost of the banks. Commonwealth Bank has the best employees that help in the development of the banks and ensure that the satisfaction of the customers is attained. Unlike other companies, the satisfaction of the customers is attained with the type of service that is provided by the Commonwealth Bank. Schneider and Spieth (2013) state that the potential of the Commonwealth Bank is such that it can provide all type of banking services that are regularly required for the customers and at the same time provide more unique services for its development.
Conclusion
After the analysis of the essay, it can be said that Commonwealth Bank needs to ensure that the business management model that the bank currently adopts be changed. It needs to be innovative so that it can outcompete its competitor like ANZ. The reputation of the bank across Australia and New Zealand help it to remain a competing force in the banking industry all around the world. The smart product can help the company to be more flexible and provide the highest level of service to the customers of the country. This can encourage stability in the future growth of the organisation.
References
Amit, R., & Zott, C. (2012). Creating value through business model innovation. MIT Sloan Management Review, 53(3), 41.
Bock, A. J., Opsahl, T., George, G., & Gann, D. M. (2012). The effects of culture and structure on strategic flexibility during business model innovation. Journal of Management Studies, 49(2), 279-305.
Chesbrough, H. (2010). Business Model Innovation: Opportunities and Barriers. Long Range Planning, 43(2–3), 354-363.
Commbank.com.au.(2018). Commbank.com.au. Retrieved 23 April 2018, from https://www.commbank.com.au/
de Jong, M., & van Dijk, M. (2015). Disrupting beliefs: A new approach to business-model innovation. McKinsey Quarterly.
De Reuver, M., Bouwman, H., & Haaker, T. (2013). Business model roadmapping: A practical approach to come from an existing to a desired business model. International Journal of Innovation Management, 17(01), 1340006.
Euchner, J. (2016). Business Model Innovation. Research Technology Management, 59(3), 10.
Gobble, M. M. (2014). Business model innovation. Research-Technology Management, 57(6), 58-61.
Johnson, M. W., Christensen, C. M., & Kagermann, H. (2008). Reinventing your business model. Harvard Business Review, 86(12), 50. Scroll down to find the article.
Kindström, D., Kowalkowski, C., & Sandberg, E. (2013). Enabling service innovation: A dynamic capabilities approach. Journal of business research, 66(8), 1063-1073.
Leih, S., Linden, G., & Teece, D. (2014). Business model innovation and organizational design: a dynamic capabilities perspective.
Massa, L., & Tucci, C. L. (2013). Business model innovation. Innovation Management, Oxford University Press, Oxford, 420-441.
Osterwalder, A., & Pigneur, Y. (2010). Business modell generation. Hoboken, NJ: Willey.
Osterwalder, A., & Pigneur, Y. (2010). Business Model Generation. New Jersey: Wiley (the unit textbook). The textbook is available from the CQUniversity library for free.
Porter, M. E., & Heppelmann, J. E. (2014). How smart, connected products are transforming competition. Harvard Business Review, 92(11), 64-88.
Porter, M. E., & Heppelmann, J. E. (2015). How smart, connected products are transforming companies. Harvard Business Review, 93(10), 96-16.
Schaltegger, S., Lüdeke-Freund, F., & Hansen, E. G. (2012). Business cases for sustainability: the role of business model innovation for corporate sustainability. International Journal of Innovation and Sustainable Development, 6(2), 95-119.
Schneider, S., & Spieth, P. (2013). Business model innovation: Towards an integrated future research agenda. International Journal of Innovation Management, 17(01), 1340001.
Serrat, O. (2017). Business model innovation. In Knowledge Solutions (pp. 499-507). Springer, Singapore.
Zott, C., Amit, R., & Massa, L. (2011). The business model: Recent developments and future research. Journal of Management : JOM, 37(4), 1019-1042
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