Discuss about the Importance Of Strategic Business Model In The Business Industry.
Strategic business model refers the framework that is developed by the organization to meet the requirements of their business operation. However, the strategic business model is crucial for the organization to establish a strategic outline to achieve the desired goal. Formulation of the strategy is a vital part of the strategic business model to maximize the profit of an organization (Angeloska-Dichovska & Mirchevska, 2017). Identification of the value proposition is the important step of the strategic business model. However, by using the strategic business model an organization will be able to detect their target market and to achieve competitive strength. Therefore, to reduce the cost of production is another purpose of the adoption of the strategic business model in an organization.
One of the major issues of using the strategic business model is the proper implementation of such model. However, the organization often faces the issues regarding high cost, lack of skill and time constraint while implementing the strategic business model (Lawton, 2017). This current literature review aims to underpin the significance and challenges regarding the use of a strategic business model in the business industry. However, such literature review reveals various aspects of the use of a strategic business model in the context of many organizations to improve their market position and to maximize their sales revenue generation. Moreover, critical analysis of the each factor of the strategic business model will be addressed in this literature review section. Apart from this such study highlights on the importance of the application of the strategic business model in every business.
Business strategy or strategic business model is considered as the high-level plan of a business organization to obtain the specific business objectives. The success of a strategic business model includes business growth, good financial performance, competitive advantages and valuable position of an organization in the global market (Tsai & Liao, 2017). However, if an adopted business strategy is failed then it is essential for the business organization to adopt the new strategic business model to cope up with the challenges. Selection of the business objectives is the core area of the strategic business model. However, a business strategy enables the firm to differentiate them from their competitors in the global market based on their profitability and revenue. The strategic business model includes many business models that are essential to maximize the performance of the business.
The business strategy includes various models that are beneficial to maximize the performance of an organization in the global market (Rauter, Jonker & Baumgartner, 2017). One of the most important strategic business models is Porters five forces model. However, this model is used by various organizations to analyze their industries. Bargaining power of the consumer, threat of new entrants, threat of substitute products, bargaining power of supplier and the competitive rivalry are the basic five components of such strategic business model. This model is popular in the business industry as it is important for each organization to understand the nature of their industry to survive in the competitive market. This model enables the business organization to gain competitive advantages in the global market (Ye et al., 2017).
BCG matrix is another vital strategic business model and it is adopted by the organization to understand their current position in a new or existing market (França et al., 2017). This model enables the organization to allocate resources based on their current position in the market. Therefore, Porter diamond model is a crucial business strategy model to identify and analyze the location of a particular business. This model allows an organization to understand the demand condition, factors condition and supporting elements of an industry. Apart from this the marketing mix is another popular business strategy model consists of product, price, place, and promotion such four elements. These basic elements are mandatory for any business to satisfy the needs of their target market as it customer satisfaction is the important part of the business strategy (Al Humaidan et al., 2017).
Several factors are associated with the implementation of the strategies in a business. One of the most important factors is the business growth. However, to enhance the business growth every organization tries to develop the new strategy that will enable them to enhance the performance of the employees as well as the business growth (Snihur, Kiss & Barr, 2016). Formulation of the strategy is another factor as based on it the implementation of the strategy depends. However, formulation of the strategy provides a framework based on which the strategy can be implemented. Failure of the old strategy is another reason of adopting a new strategy. However, if an organization does not get success through a strategy then they try to develop the new and advanced strategy to meet their business objectives (Joyce & Paquin, 2016).
Establishment of the effective communication is a big factor of incorporating strategic business model within the organizational structure (Foss & Saebi, 2017). In order to communicate with the employees regarding the vision and mission of an organization, it is important for the organization to develop the strategy that makes an effective communication between the employees and the organization.
The success of any good organization is based on the measurement of internal and external stakeholders of the business. In order to fulfill the objectives of a commercial setting, it is important for any enterprise to incorporate new strategies in their existing system (Saebi, Lien & Foss, 2016). Implementation of the strategic business model is associated with the expanding, growing and diversification of the business. However, for a flourishing company, it is mandatory to set strategy that will lead them to achieve the business goal in the competitive market. In order to get a healthy position in the international market business strategy should be developed, which is customer and technology oriented. Growing industry uses functional strategy in their business to maximize their production (Pedersen, Gwozdz & Hvass, 2016). However, increased production is the main target of using the strategic business model in an organization as it will allow the employees to improve their performance level as well as their working efficiency.
Strategic business model is important for achieving sustainable growth in the competitive market. However, development of unique strategy in the business leads the organization to understand the demand of the current market and the nature of the competitors. A well-formulated strategy acts as the protector of a business, which enables an organization to reduce their operation cost and to increase their revenue generation (Saebi, Lien & Foss, 2016). However, for every specific business objective, an unique strategy is required. Apart from the profitability and the competitive advantages, strategic model has a significant role in improving the management structure of an organization. However, application of the proper strategy will enable the business organization to manage their resources properly, which ensures their sustainable growth in the current market (Bini, Dainelli & Giunta, 2016).
Establishment of the business strategy is crucial for every industry, however, often challenges occur during the implementation of the strategy. Time constraint is one of the biggest challenges of the implementation of the strategy (Swart, 2016). Due to the short time frame organization often fails to give shape their formulated strategy. Therefore, lack of adequate skill is another big barrier of the incorporation of the strategic business model. On the other hand, poor strategies are discarded by the organization as it will affect the success of the enterprise. Lack of information sharing between the team members resists the strategic implementation in an organization. Apart from this often conflict occurs between the employees and the organizational power that creates a big barrier for strategic implementation (Bocken et al., 2016).
Conclusion
The above literature review gives a brief idea about the application and impact of strategic business models. Hence, it has been found that Porter five forces model, marketing mix model, BCG matrix and Porter diamond model are the popular strategic business models that are applied by various business industry. However, such strategic models are effective to acquire the competitive advantage, good position and enhanced sales revenue in the global market. From the current study, it can be found that there are several factors that influence the implementation of the strategic models in the business. Growth, employee performance, communication are the potential factors of strategic business models. Hence, the above findings show that use of strategic models is significant for any business to get the competitive edge in the market. However, if a strategy is failed then the business organization needs to develop another strategy to make their business operation flexible. On the other hand, to cope up with the changing environment development of advanced strategy is required. Competitive strategy acts as the protector of any business and it keeps aside the business from any type of financial harm. In order to fulfill the business objectives, strategic business models are necessary for the enterprise as it improves the quality of a business. Apart from this short time frame, lack of skill and resources are the major barriers that hinder the implementation of the strategic business models in an organization. In order to develop the organizational structure and the performance of the management strategic business models is essential component for an organization.
References
Al Humaidan, S., Al Humaidan, S., Sabatier, V., & Sabatier, V. (2017). Strategic renewal in times of environmental scarcity: The mediating role of technology in business model evolution. Journal of Organizational Change Management, 30(1), 106-120.
Angeloska-Dichovska, M., & Mirchevska, T. P. (2017). Challenges of the Company in the New Economy and Development of E-business Strategy. STRATEGIC MANAGEMENT, 22(2), 27-35.
Bini, L., Dainelli, F., & Giunta, F. (2016). Business model disclosure in the strategic report: entangling intellectual capital in value creation process. Journal of Intellectual Capital, 17(1), 83-102.
Bocken, N. M., de Pauw, I., Bakker, C., & van der Grinten, B. (2016). Product design and business model strategies for a circular economy. Journal of Industrial and Production Engineering, 33(5), 308-320.
Foss, N. J., & Saebi, T. (2017). Fifteen years of research on business model innovation: How far have we come, and where should we go?. Journal of Management, 43(1), 200-227.
França, C. L., Broman, G., Robèrt, K. H., Basile, G., & Trygg, L. (2017). An approach to business model innovation and design for strategic sustainable development. Journal of Cleaner Production, 140, 155-166.
Joyce, A., & Paquin, R. L. (2016). The triple layered business model canvas: A tool to design more sustainable business models. Journal of Cleaner Production, 135, 1474-1486.
Lawton, T. C. (2017). Cleared for take-off: structure and strategy in the low fare airline business. Routledge.
Pedersen, E. R. G., Gwozdz, W., & Hvass, K. K. (2016). Exploring the relationship between business model innovation, corporate sustainability, and organisational values within the fashion industry. Journal of Business Ethics, 1-18.
Rauter, R., Jonker, J., & Baumgartner, R. J. (2017). Going one’s own way: drivers in developing business models for sustainability. Journal of Cleaner Production, 140, 144-154.
Saebi, T., Lien, L., & Foss, N. J. (2016). What drives business model adaptation? The impact of opportunities, threats and strategic orientation. Long Range Planning.
Snihur, Y., Kiss, A., & Barr, P. S. (2016, January). An identity-based perspective on firm strategic adaptation to business model innovation. In Academy of Management Proceedings.
Swart, J. (2016). A strategic business model and operational management guide for the clinical data management business unit of TASK Applied Science (Pty) Ltd (Doctoral dissertation, Stellenbosch: Stellenbosch University).
Tsai, K. H., & Liao, Y. C. (2017). Sustainability Strategy and Eco?Innovation: A Moderation Model. Business Strategy and the Environment, 26(4), 426-437.
Ye, F., Zhang, L., & Li, Y. (2017). Strategic Choice of Sales Channel and Business Model for the Hotel Supply Chain. Journal of Retailing.
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