Discuss about the Business Model and Disruption.
According to Wirtz et al., (2016)business models are indispensable to a business enterprise since business models elaborate on value creation, delivery and capture mechanism. Business models were known for their comprehensive outline of revenues, costs and profits associated with the entire business enterprise in order to deliver value to the customers. It helps a company or organization to operate business in an organized manner. A business model helps the company to deliver value to its customers in order to attract them by assessing what customers want and how the company/enterprise can meet those wants. However, in the opinion of Bocken et al., (2014) in a globalized economy customers have more options to choose from since business transaction and access to new products have been made easier with communication. Therefore business models are slowly re-shaping themselves in order to help the companies becomes more customer-centric by the use of innovation and technology. Today business models lack innovation and are imitated by other companies. Many companies fail to create a business model that will be responsible for a sustainable approach to business and differentiated from other business models. It is utmost necessary to implement business models wherever there are the questions of consumer choice, transactional expenses and heterogeneity amongst consumer products. Innovative business models according toArmada & Martin, (2016) are the best weapon to meet customer needs. In this context, it is relevant to take into consideration one of the most successful business models implemented by Southwest Airlines, specifically the hub and spoke model which was later on copied by Easy Jet. In the views of Wirtz et al., (2016) business models must change according to the changing needs of the market with the introduction of technologies and policies. What has been the major source of disruption for business models is the birth of information industry. Accelerated rise of internet and innovation and made many companies to rethink about their pre-existing business models since digital era has brought forth a major change in the scenario of culture. With the introduction of DVD rental Netflix, e-newspapers, online shopping sites there has been a major shift in consumer behavior itself. As globalization is about a fast-paced and more connected world companies need to align their business according to consumer demands and introduce differentiation so that it cannot be easily imitated and used by another company. Companies can only come up with a strategic business model on a careful segmentation of the market and subsequently creating a value proposition for each of the segment.
As opined by Wirtz et al., (2016) disruption in business models is primarily caused by digital innovation which provides value to the consumers at a far lower cost. This disruption has been apparent since 1997. The various facets of technology and digital innovation like cloud computing has changed the way one executes business by bringing forth innovation in the section of consumer interaction. Companies are grapping to come up with innovative business models that would place them in a competitive position by customer satisfaction. In the opinion of Christensen, Bartman& Van Bever, (2016) technology has also acted as a boon to many companies by helping them to develop a business model that placed them in direct contact with customers. One of the major disrupted industry that has failed to reshape their business model is print news media industry which is plagued by workers’ discontent and paper distribution.
Smart connected products are a result of wireless connectivity has vastly altered the entire structure of industry. McDonalds, Philips and other companies with smart-connected products are remarkable and have become emblematic of global operation. According to Osterwalder and Pigneur (2010), there are four basic aspects of their theory and they are product innovation that includes company’s value proposition to the targeted market segment, customer relationship which forms of customer loyalty and trust, infrastructure or resources for networking and revenue model for the determination of cost and profit. Accordingly business models are all about communication. The ground-breaking BRIXO blocks are one of the best examples of LEGO smart-connected products, they are coated in chrome, add light, sound and motion to any given building block.At Lego smart connected products they have targeted a particular consumer segment by producing web connected toys with electronic sensors, motors and lights. In this way according to Osterwalder and Pigneur (2010) business model theory they have reoriented their business model with the help of product innovation therefore today their profits have increased by 30% (Christensen, Bartman& Van Bever, 2016). One of the many advantages that Lego has secured with smart connected products is that they have now become one of the leading producers of diversified products in an age when battery technologies and artificial intelligence have been threatening the old-fashioned industries. Lego has adapted a business model from a traditional marketing strategy to a viral and collaborative marketing strategy (Christensen, Bartman& Van Bever, 2016). The business model has huge room for innovation where the consumers are allowed to manipulate the products according to their imaginative faculties.
LEGO has a clear market segmentation that targets children and young tech-inclined professionals. Lego has acquired Osterwalder and Pigneur business model by including six principles of using customer insights, visual thinking, ideation, storytelling and prototyping in producing smart-connected products. Lego has studied the market carefully and therefore discarded its old business model with a sharp decline amongst children of traditional toys. Its business model has adapted computer modelling and computer aided design in order to keep up in a fast-paced design world and maintain relevancy amongst consumers.
Their business model is an example of business models of value propositions with which Lego has delivered value to customers and earned revenue growth. Their smart-connected products have helped them to achieve competitive advantage by being valuable, innovative, non-substitutable and hard to imitate. Lego with the help of its firm managerial abilities have demonstrated ways by which they can hold on to profit in the market by adjusting to new business models (Abrell, &Durstewitz, 2016).
<>
|
Key Partners · Disney · Warner Bros · WWF · MIT Media Lab · Plastic Suppliers |
Key Activities · Manufacturing · Sales · Customer Service · Business Consultancy |
Value Propositions · Video Games · Book and Magazines · Children’s Clothing |
Customer Relationship · Has developed a global LEGO structure · Has a Strong Community · Developed Social Networking · Online Stores · Huge Collection |
Customer Segments · Children · Young Professionals · Schools · Business Leaders · Families theme park regulars |
|
Cost Structure · Headquarters · Offices · Design Tools · R&O · Manufacturing · Advertising · Purchases |
Key Resources · World’s most innovative brand · Talent · Creativity and Innovation · 1 tire manufacturer · 700 million of interlocking toys distributed worldwide |
Channels · Schools · Google Play · App Store · Legolands · Amazon |
||
|
Revenue Streams · Product sales · Tickets · Business Consulting Services · Licensing and Royalties |
It has changed the old business model of LEGO by integration Osterwalder and Pigneur, 2010 model and accommodating a clear definition of products, creating a clear customer interface pillar, enhancing customer relationship, managing the resourced in order to create value for the customers and creating a clear cost structure.
Business Model as Value Proposition
Business Models as a Set of Capabilities and Resources
Therefore to conclude the discussion it can be stressed that smart connected products have transformed the face of competition. Some of the key findings from the above discussion are that in any business smart-connected products are bound to bring customer value with the help of product differentiation. LEGO has revolutionized itself and adopted new business model with the help of smart-connected products. This is the future of business since these products have enabled many companies like Philips, Ralph Lauren to establish long-term relationship with consumers and achieving a harmonious consumer experience. The future of toy industry that Lego is creativity and innovation and to encourage the same within children like they have planned in 1958 with the introduction of brick. If LEGO continues to spot trends and replenish its business it can maintain the competitive advantage that they have created in the market. If LEGO can maintain its IT innovation they can easily turn their fortunes in order to deal with future challenges.
References:
Abrell, T., &Durstewitz, M. (2016). The role of customer and user knowledge in internal corporate venturing: the viewpoint of the corporate entrepreneur. International Journal of Technology Management, 71(3-4), 171-185.
Armada, A. A., & Martin, A. (2016). Business model disruption: innovation as a catalyst. Frontiers of health services management, 33(2), 39-44.
Bak, M. (2015). LEGO Studies: Examining the Building Blocks of a Transmedial Phenomenon. American Journal of Play, 8(1), 134-137.
Baldassarre, B., Calabretta, G., Bocken, N. M. P., &Jaskiewicz, T. (2017). Bridging sustainable business model innovation and user-driven innovation: A process for sustainable value proposition design. Journal of Cleaner Production, 147, 175-186.
Bartneck, C., &Moltchanova, E. (2018). LEGO products have become more complex. PloS one, 13(1), e0190651.
Bocken, N. M., Short, S. W., Rana, P., & Evans, S. (2014). A literature and practice review to develop sustainable business model archetypes. Journal of cleaner production, 65, 42-56.
Christensen, C. M., Bartman, T., & Van Bever, D. (2016). The hard truth about business model innovation. MIT Sloan Management Review, 58(1), 31.
Connor, M. (2015). Creating Customer Value in a Digitally Transformed Future. Journal of Creating Value, 1(2), 204-213.
Dudin, M. N., Lyasnikov, N. V. E., Leont’eva, L. S., Reshetov, K. J. E., &Sidorenko, V. N. (2015). Business model canvas as a basis for the competitive advantage of enterprise structures in the industrial agriculture. Biosciences Biotechnology Research Asia, 12(1), 887-894.
El Sawy, O. A., Kræmmergaard, P., Amsinck, H., &Vinther, A. L. (2016). How LEGO Built the Foundations and Enterprise Capabilities for Digital Leadership. MIS Quarterly Executive, 15(2).
Hofmann, E., &Knébel, S. (2016). Supply Chain Differentiation: Background, Concept and Examples. Journal of Service Science and Management (JSSM), 9(2), 160-174.
Joachimsthaler, E., Chaudhuri, A., Kalthoff, M., Burgess-Webb, A., &Bharadwaj, A. (2015). How smart, connected products are transforming competition. Harvard business review, 93(1), 4.
Porter, M. E., &Heppelmann, J. E. (2015). How smart, connected products are transforming companies. Harvard Business Review, 93(10), 96-114.
Van Der Aalst, W. M., La Rosa, M., & Santoro, F. M. (2016). Business process management.
Veit, D., Clemons, E., Benlian, A., Buxmann, P., Hess, T., Kundisch, D., …& Spann, M. (2014). Business models. Business & Information Systems Engineering, 6(1), 45-53.
Visnjic, I., Wiengarten, F., & Neely, A. (2016). Only the brave: Product innovation, service business model innovation, and their impact on performance. Journal of Product Innovation Management, 33(1), 36-52.
Wirtz, B. W., Pistoia, A., Ullrich, S., &Göttel, V. (2016). Business models: Origin, development and future research perspectives. Long Range Planning, 49(1), 36-54.
Wortmann, F., &Flüchter, K. (2015). Internet of things. Business & Information Systems Engineering, 57(3), 221-224.
Essay Writing Service Features
Our Experience
No matter how complex your assignment is, we can find the right professional for your specific task. Contact Essay is an essay writing company that hires only the smartest minds to help you with your projects. Our expertise allows us to provide students with high-quality academic writing, editing & proofreading services.
Free Features
Free revision policy
$10Free bibliography & reference
$8Free title page
$8Free formatting
$8How Our Essay Writing Service Works
First, you will need to complete an order form. It's not difficult but, in case there is anything you find not to be clear, you may always call us so that we can guide you through it. On the order form, you will need to include some basic information concerning your order: subject, topic, number of pages, etc. We also encourage our clients to upload any relevant information or sources that will help.
Complete the order form
Once we have all the information and instructions that we need, we select the most suitable writer for your assignment. While everything seems to be clear, the writer, who has complete knowledge of the subject, may need clarification from you. It is at that point that you would receive a call or email from us.
Writer’s assignment
As soon as the writer has finished, it will be delivered both to the website and to your email address so that you will not miss it. If your deadline is close at hand, we will place a call to you to make sure that you receive the paper on time.
Completing the order and download