Which about Is strategy and business model.
The essay discusses the relation between the technology with recent business strategies. Businesses have been transforming rapidly as well as presenting more services than they used do before. For supporting and assisting these fast changing business environment technologies especially information systems have begun to become more flexible as well as easy to change. The researchers in this filed have widely recognised that the information technology is the life of the companies operating both domestically or internationally. Despite the fact that Information Systems (IS) were considered to be separated part of organizations which used to assist only in providing some infrastructural help or as supporting mechanism for few business activities. This scenario has completely changed now and IS has become an integral part of business of an organization. The global organizations are introducing designations like chief information officers which marks the transformation. They have started to recognise technologies as chief elements to build their business strategies thus gain competitive advantages. The focus has been on automating the transactional-based systems in all the areas of their business such as logistics and production. The essay analyses the relevant theory on business model by Chesbrough and Zott and Amit. For the empirical data the essay discusses Lenovo’s organizational framework, business model, competitive opportunities as well as basic challenges build by the advanced technology.
The business model concept refers to a rationale of methods that the corporations create, deliver and capture values in particular economic, cultural and social contexts. Business model formation is a sections of business strategy of an organization. According to Zott and Amit (2010), it is essential for a farm to set a model immediately after they select the target industry. Different industries follow different business model which allow them to exploit internal resources such as employees and their capabilities and external such as partners, customers and the suppliers. The researchers, it is vital for the entrepreneurs or the managers to follow perfect model because this has implications for gaining performance potential both within the firms as well as beyond them. Business models regulate capital expenditures of the firms along with making core decisions within the corporations. According to Zott and Amit (2010), the interdependent activities are chief theme of the ideology of an activity system which provide knowledge about the evolution process. The companies change themselves according to the competitive environments change. Weaving all these activities performed by both the internal as well as external factors is the chief element of the business model design. Business system has numerous components as well as dynamics which are defined by the understanding of selection of the activities, methods of performing them along with the specific time by a specific firm. The business model is discussed as the mode through which the firms depend on the resources as well as capabilities of the third parties and control the external ideas or technologies through open business models.
There are two business parameters which focus on the purposeful designs of activity systems such as design elements and design themes. The former attends content, structure and governance. The activity system content focuses on the assortment of activities. The system structure refers to the method of connecting the activities with each other. Activity system governments states the owner or the performer of the activities. The design theme details the systems’ chief value creation derivers. It discusses adoption of new activities, keeping the third parties attracted to the business and increasing efficiency through building complementarities. The advantages of the activity system of a company include providing systematic or holistic thinking of a firm, method of linking activities with current business model and proper utilization of different resources.
In the words of Chesbrough (2010), the firms commercialize new concepts and ideologies through their respective business model. In some cases, the technological innovations define the firm’s business model and sometimes, he company’s business model incorporate technological advancements for gaining more competitive opportunities. This literature chiefly focuses on the experimentation for adopting new business models with support of technology. To the author, the companies face various difficulties or barriers when exposed to a market but they essentially follow some models which will create scope for experimenting and clarify the processes underlying them. Experimentation allows them to generate various possibilities prior to invest in reality. Thomke has advised to use tools like mapping which is useful for explicating business models. The experimentation focuses on the innovation of product and process. According to the discovery driven concept of McGrath and McMillan, this concept has ability to model the unknown assumptions which clarify required results.
The essay discusses the relationship between the business model and the information system through a representational framework of a very famous company namely Lenovo. It folows four segments which are: business model, architecture, information system architecture and its implication. First two analyses from business perspective and last two are from IS domain.
It reflects the core actions of the organizations. It is based on the conception through which the companies deliver products to their customers. Business model basically focuses on the methods utilized and behaviours of the organisations for satisfying their customers’ request for services. Model does not capture the structure or operation of the companies for accomplishing its goals but only discusses the business architecture which is considered to be implementation of the business models. Organizational restructuring does not revise the business model as they focus on altering the business architectures which implements the model.
A business model contains of a range of objects which reflect either the role of the business unit as well as agent or the actions of the external entities that are in continuous interaction with business. Interactions are modelled as requests interchanged between the objects. The object type has the state variables that reflect their physical state as well as knowledge and the services demonstrating its responsibilities along with capabilities.
Matters of the business models are not only processes, particular agents or some database components but they are actions done by the agents for example people as well as departments accountable for the delivering of services among themselves thus eventually to the customers. Specifically, an assumed agent may play diverse roles. Similarly, the same role may be played by quite a few agents.
It is the implementation of the business model. It specifically describes the definite organizational units as well as their relationships for example hierarchical. As every organizational unit can perform various different roles or responsibilities and every objects of business model may be implemented through numerous organizational units, the connection among them are many.
An information system architecture specifies the logical arrangement of the components that according to theory needs to support the business model. It rather provides the functional requirements of the system instead of addressing actual implementation of the IS.
This level refers to actual implementation of the Information System architecture that includes database design as well as implementation, dispensation of the components that may or may not use an object architecture, and Graphical user interface designs and implementation. Alignment of the IS strategy with business model or strategy is a significant objective in case the organizations aim for using the IT resources effectively (Abbasi, Sarker and Chiang 2016). The proper incorporation of the business strategies and IS strategies in the organizations is required for maintaining consistency with the general business strategy along with the Information System. It helps to guide the overall direction to the IS divisions objective that they need to achieve. Numerous examples of strategic alignment can be found where the business strategy would have corresponded to sell the services or products globally. The IS strategy of a company helps to provide a worldwide sales information system to enable the selling of goods internationally.
Figure 2. business strategy and information system
The traditional concept of introducing the IS strategy in the business model was related with reduction of high expenses of manpower and introduce reliable and effective technology. In recent modern technical environment, expenditure containment means achieving a high level of flexibility which allows the corporations to adapt as well as change themselves quickly (Saebi and Foss 2015). The main idea has become incorporation of new technologies as well as align the business model with innovative business alliances without disturbing the existing business infrastructures.
Introduction of IS strategies in the corporations also improves processes of the business. Improvement of business process refers not the replication of an existing business process rather improving them by the means of technological implication as well as systems to some specific process (Hsu, Lai and Chao 2014). Information system strategies have the capability to deliver more attentive and quicker access to the information that generates relevant business intelligence. This leads to better decision making thus provide the corporations more competitive advantages.
Popular Information systems such as customer relationship management (CRM) are utilised for building customer devotion, increase long term consumer retention, advance customer productivity as well as accomplish a more attentive marketing techniques. Information systems also play an important role in increasing the work environment and foster innovation (Economist.com, 2018). This is a major value added element of the information systems. They help to exploit the talent in the corporation, by means of new hardware, software, networking tool as well as a virtual environment that create opportunity for the corporations.
The concept of being different has taken the company from a small computer manufacturer working in China to one of the principal technology companies in this world, that operates in more than 160 countries. In business, their best patrons also believe that Different is Better. Over their careers, they have reliably proven that being an unlike IT solution cannot only drive the meaningful occupational results, but also gives IT a base in the management field.
Figure 3. Lenovo annual report 2016/2017
(source- Lenovo.com, 2018).
Sale from goods and services revenue from the sales of software, hardware and peripherals, services along with mobile devices has been documented, net value-added taxes, and grant for the estimated returns and discounts. As both ownership as well as risks of loss are successfully transferred to the customer, commonly a convincing evidence that sales preparation exists, the fee is fixed as well as determinable; collectability is sensibly assured finally delivery has been occurred (Mary and Rm 2015). Revenue from prolonged warranty contracts has been deferred as well as repaid as received over the contract period, extending from one to four years. Revenue from the provision of system integration services and information technological service is predicted over the terms of contract or as services are rendered. At March 31, 2017, patent and technology of US$61,939,000 (2016: US$33,069,000) is under development.
For enabling the effective corporate strategies at its best extend the companies needs to exploit their competencies which demonstrate the maximum potential. IS is a potential catalyst for building business model and corporate strategies (Wirtz et al 2016). It is beneficial for the company if utilized completely. Information System has proved to offer the corporations a method for developing new assistances, proactively improve the customer experiences along with building collaborative arrangements internally in the organization. There are several challenges that the corporations face while focusing the strategic attention to their IS competencies. According to Fichman et al (2014), it is difficult to measure the impact of IS on a corporation as it does not determine the manner of reducing cost, increase or promote collaboration and power distribution among the business owners.
There is a need to develop systems that prioritize the available resources in the companies for example monetary as well as human resources (Hbr.org, 2018). This will help in completing more focus projects along with a long term, planned and cross structural beneficial projects. To exploit the technological investments in a company, it is vital for the operators of IS that they are able to adopt as well as appreciate the values that it incorporates to the business. In case the users proved to be incompetent to operate, the entire potential of invested information system can never be implicitly realised (Veit et al 2014). It is imprudent for a company to leap in and aggressively follow a strategy of investment in the Information Systems in case they do not have a satisfactory base to primarily begin from. A durable technological foundation is a desirable pre cursor for a company prior to begin or initiate business strategy through the use of the Information Systems.
The company suffers much if it cannot develop and protect its intellectual property as well as its suppliers fail to protect the technology licences (Honghua and Juan 2014). The company suffers therefore has to spend the legal expenses for defending against the legal action claiming intellectual property breach as well as any possible resulting settlement and damages. For this, the IS strategy helps taking full benefit of the legal defences by registering the trademarks along with applying for the patents. For approved IP, it takes appropriate initiatives to guarantee its sustained validity.
Therefore, it can be concluded that developing business model innovation is necessary for the firms because they provide hoard of competitive advantages. However, these models are difficult to achieve as the impediments or the external environments are constantly changing therefore the organizations adopt effective attitudes to manage such problems. In this recent competitive world, technological advancement is the only way to assist the corporations to limit loss. With discovery driven strategies the companies may model uncertainties, update financial projections based on their experiments as well as technological changes. For forming better business models most of the importance are put on the introduction of Information system strategies that have provided a lot of advantages both internally as well as externally.
References:
Abbasi, A., Sarker, S. and Chiang, R.H., 2016. Big Data Research in Information Systems: Toward an Inclusive Research Agenda. Journal of the Association for Information Systems, 17(2).
Chen, Mocker, Preston and Teubner (2010). Information Systems Strategy: Reconceptualization, Measurement, and Implications. MIS Quarterly, 34(2), p.233.
Chesbrough, H. (2010). Business Model Innovation: Opportunities and Barriers. Long Range Planning, 43(2-3), pp.354-363.
Economist.com (2018). Data-giving-rise-new-economy. [online] Economist.com. Available at: https://www.economist.com/news/briefing/21721634-how-it-shaping-up-data-giving-rise-new-economy [Accessed 7 Jan. 2018].
Fichman, R.G., Dos Santos, B.L. and Zheng, Z.E., 2014. Digital innovation as a fundamental and powerful concept in the information Systems curriculum. MIS quarterly, 38(2).
Hbr.org (2018). Four Paths to Business Model Innovation. [online] Harvard Business Review. Available at: https://hbr.org/2014/07/four-paths-to-business-model-innovation [Accessed 7 Jan. 2018].
Honghua, Q. and Juan, C., 2014. An Analysis on the Mergers and Acquisitions (M&A) between Microsoft and Nokia from the Perspective of Patent Information: a Comparative Study. Journal of Intelligence, 2, p.012
Hsu, A.C., Lai, S.Y. and Chao, L.H., 2014. Information Transmission Effects between A and H Dual Listing Shares. Global Journal of Business Research, 8(5), p.27.
Lenovo.com (2018). About Us | Lenovo US. [online] Www3.lenovo.com. Available at: https://www3.lenovo.com/us/en/lenovo/ [Accessed 9 Jan. 2018].
Mary, A.A. and Rm, S.D.A., 2015. St. Joseph’s Journal of Humanities and Science. St. Joseph’s Journal of Humanities and Science, p.13.
Saebi, T. and Foss, N.J., 2015. Business models for open innovation: Matching heterogeneous open innovation strategies with business model dimensions. European Management Journal, 33(3), pp.201-213.
Veit, D., Clemons, E., Benlian, A., Buxmann, P., Hess, T., Kundisch, D., Leimeister, J.M., Loos, P. and Spann, M., 2014. Business models. Business & Information Systems Engineering, 6(1), pp.45-53.
Wirtz, B.W., Pistoia, A., Ullrich, S. and Göttel, V., 2016. Business models: Origin, development and future research perspectives. Long Range Planning, 49(1), pp.36-54.
Zott, C. and Amit, R. (2010). Business Model Design: An Activity System Perspective. Long Range Planning, 43(2-3), pp.216-226.
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