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FE6613 Business Model Innovation
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FE6613 Business Model Innovation
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Course Code: FE6613
University: Stockholm University
MyAssignmentHelp.com is not sponsored or endorsed by this college or university
Country: Sweden
Question:
Provide an argument either for or against the following statement.
Business models are poor indicators of future success.
Answer:
Business Models are poor indicators of future success
Numerous development players believe that one of the most important aspects for the success of any business is gaining social impact with the help of sustainable business solutions (Chesbrough, 2010). In order to achieve this sustainable solution, they are in need of a strong business model. The business model is actually a structure that strengths the feasibility of a product or business and involves the aim and goals of the organization and ways to achieve them. Business model involves all the business procedures and related policies which any company adopts (Zott, Amit & Massa, 2011). It can also be said that a business model is basically a detail of how an organization forms, delivers and attains values for its products or service in the business market.
Many organizations are in believing that if a company really wants to grow or develop, it is not in need of any competency. All it needs is a strong business model which can help the organization especially in the case of changing the trend in business or to handle external forces of this dynamic business model (Zott & Amit, 2010). In any case business models are blamed for the failure of some business but it is not so, it actually depends on the maturity of any business from how many years the company is operating in this business. Sometimes it also depends on the number of factors like endorsing a pull product or a push product. Another factor is the amount of ecosystem that this business model must manage and finally whether the company is going for market entry or market formation (Demil & Lecocq, 2010). These factors are very important for the scale-up of any business model, some models scale up very quickly where some require a year to create an impression over the market. The success of any business model totally dependents on how quick the model can reach the large numbers of the potential customer.
For any professional, becoming more pioneering is constantly a top importance and inhabits abundant of the senior organization’s period. In various circumstances, though, the emphasis of a business’s energy to advance its capability to be more advanced inclines to be barely explained (De Reuver, Bouwman & Haaker, 2013). Focusing on what occurs in most businesses nowadays, particularly those businesses that making physical merchandise and have current product outlines, and in small and medium-sized companies. The leading deliberations are more likely related to how to advance the current merchandises, or perhaps making a new creation to serve a novel marketplace, or infrequently even emergent an essential, novel to world creation. Here is a countless contract of importance on attending to the client for novel ideas or the usage of exposed revolution. The difficult, and as it goes out the chance, is that there is no deliberation of the business model himself (Birkin, Polesie & Lewis, 2009). There are marvelous probabilities that go well outside innovation connected to the product himself and the marketplace attended by reconsidering the whole business model in a technique that can deliver a maintainable modest improvement.
MC Donald`s success in the world of franchise business is one of the best examples of the successful business model. The business model of MC Donald’s was mainly focused on three key elements which are consistency, innovation, and resiliency.
Consistency
It has been noticed that the service of MC Donald’s all over the world are of the same nature whether it is in Australia or America. In this element, the organization focused on offering the same kind of service to their potential customers all over the world. For this one of the salespeople named Kroc`s motto proposed an idea of the franchise to the founder of MC Donald, which they immediately accepted (Baden-Fuller & Morgan, 2010). Then they focused on the training part of the management so that service will remain the same. The main purpose of this idea was that Customer may already know what they are expecting from their meal. This kind of repeated process helps the MC Donald to become one of the successful businesses in its segment.
Innovation
In its beginning innovation seemed to contradict consistency but MC Donald continued to grow by combining both these aspects. As per MC Donald’s being consistent does not mean that the product should remain same, it’s the taste which should not get affected (Sorescu, Frambach, Singh, Rangaswamy & Bridges, 2011). The consistency must be maintained related to the core mechanisms of the business. Innovation helped the organization to increase its responsiveness for the customer’s expectation. MC Donald’s came up with the new idea of drive-thru in which customers can make order and take away their order without coming out of their car. This idea was inspired one of the acts of soldiers in which they came out of their car to help people by wearing their fatigues. The organization started its first drive-thru near the local military base. Then they started a series of innovation like happy meal, Big Mac, Hot apple pie etc which termed to be the most successful innovation for franchise business.
Resiliency
Even though MC Donald’s has been successful for many years, it has gone through many lawsuits related to various issues like children health issues, sustainability environment issues and some more. Here the organization to put more focuses on these issues which are impacting negative effect on their image in the society (Souto, 2015). Hence, McDonald’s decided to form communities in their business operation which will look after these issues. One of the communities which they created related to childhood health issues was global Advisory council which consists of health experts. This expert provided necessary suggest introducing health nutrition in their products in order to children well-being. Another community which they created was a global environment community which was responsible for conducting all necessary action that can improve the environment around the organization (Morris, Shirokova & Shatalov, 2013). For improvement they came with the suggestion of reducing solid wastes, conserve and protect natural resources and also motivating society to work for the environment.
There’s another, new section that shacks additional focus on the connection between business models and approaches. Different from Sam Walton, Michael Dell was an accurate business-model innovator. He created a model which is well known: Many personal computer makers used to sell their products through resellers, Dell decided to sell their product direct to the end customers in order to remove resellers or middleman (Di Gangi & Wasko, 2009). This kind of activity will not only help the helped the Dell to bring cost optimization in their business process by removing a costly connection from the value change but it also help the Dell company to gather the information about exact order in order to manage the exact inventory because it has been seen that the in many cases the company implement more cost just to maintain the inventory of their product. Managing this inventory cost helped the Dell Company in introducing lean operation in their business operation. This kind of innovative business model helps the company to brought down the extra cost on the manufacturing and transportation of the product which they used in cost optimization in their computer manufacturing process (Sosna, Trevinyo-Rodríguez & Velamuri, 2010). These models helped the Dell Company to bring down the price of their personal computers and helped the Dell to capture the major portion of the computer business market.
It can also be said that here the business model acted as a strong strategy for dell and provided them that unique identity which was very difficult to copy by any of the computer maker company. Even if they even tried to copy this model and tried to implement in their business model, they had to first break down their already existing distribution channels by putting their resellers in the uncomfortable zone on which they used to rely (Sabatier, Mangematin & Rousselle, 2010). This created a very uncomfortable business environment for all the competitors because they were not able to understand whether they should copy Dells business model or not. If they would there are chances that they may be blamed and if they do not they are changes that they will be blamed for not copying this innovative model. Hence a new model can change the whole economy of any company and also can provide them that strategy which can provide the company that necessary competency which will be very difficult to copy.
Strategic preparation frequently gravitates to a procedure of generalizing past and a promise to organizational creativities. This performance frequently replicates an organization that has a slight vision concerning cause and effect and is hence destined to endure the status quo. With this attitude, the business model instrument has very inadequate possible for achievement. If an organization is attentive on considerate cause and effect, the Business Model pattern can be a very operative instrument for producing ideas and arranging choices (George & Bock, 2011). The pattern is actually intended for group problem resolving. With justly slight training, a collection of purposeful leaders can quickly produce a sequence of replicas and then appraisal and arrange them. The finest models can be worked is better detail in groundwork for presence in the tactical plan. Participation endorses common determination and promise. The procedure can be intended to clarify the business model to stages and functions not signified in the unique energy thus attaining vision, reaction, and possession through the association (Al-Debei & Avison, 2010). Hence, the pattern becomes a managerial vision bar for concentrating on bringing worth and moving the company cohesively near a feasible strategy of modest benefit.
In many terms people think that business model has no relation with innovation but, it has been seen that business model is closely related to new innovation. It can also be said that the business model is a set of all new opportunities which is being provided by this dynamic business environment. Every organization working pattern is known as a golden circle which consists of three element circles that is what, why and how. The main purpose of this business model is to provide value to this why a portion of this golden circles instead of what and how. There are much businesses which focus on what and how and there are very few which focus on why (Lamb, 2016). From various researchers, it has been found that the main element which has made this organization a very successful business hub is their business model totally focused on why the section of the organization. Their main focus on why section instead of how and what has made them bring values to their products or services by providing a clear set of direction for their growth. It has been seen in the case of the mobile phone when they brought different value proportion in the segment of the line phone and fixed their presence in the market.
Through business is a kind of tangled action, administrative constructions, and incentive arrangements an organization imposes can lead its workers to manage their actions, creating order. Companies do not have an unhindered expert over their connections with other market mediators; they must request the concern of others to enable those dealings. Though, the outside arrangement of an organization is still the configuration of numerous choices that an organization may select for its bilateral bonding with the outside world. In this situation, a business model is an action of motivation rather than merely the creation of its ecological situations (Wiklund, Patzelt & Shepherd, 2009). There are numerous welfares to version the ‘business model’ in this method. Main, by explaining the business model deprived of refuting that the organization is a specialist construction or that occupation itself is disruptive human action, it appears reasonable that they are really vital workings of the face of a specific corporate. Additional, rotting a business model into a gathering of selections makes it conceivable to instigate exploring it, part by part. Since this denotation replicates the business model an appearance of will, it may show valuable to executives absorbed in applying business variations.
References
Al-Debei, M. M., & Avison, D. (2010). Developing a unified framework of the business model concept. European Journal of Information Systems, 19(3), 359-376.
Baden-Fuller, C., & Morgan, M. S. (2010). Business models as models. Long range planning, 43(2-3), 156-171.
Birkin, F., Polesie, T., & Lewis, L. (2009). A new business model for sustainable development: an exploratory study using the theory of constraints in Nordic organizations. Business Strategy and the Environment, 18(5), 277-290.
Chesbrough, H. (2010). Business model innovation: opportunities and barriers. Long range planning, 43(2-3), 354-363.
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.
Demil, B., & Lecocq, X. (2010). Business model evolution: in search of dynamic consistency. Long range planning, 43(2-3), 227-246.
Di Gangi, P. M., & Wasko, M. (2009). Steal my idea! Organizational adoption of user innovations from a user innovation community: A case study of Dell IdeaStorm. Decision Support Systems, 48(1), 303-312.
George, G., & Bock, A. J. (2011). The business model in practice and its implications for entrepreneurship research. Entrepreneurship theory and practice, 35(1), 83-111.
Lamb, A. J. (2016). The power of authenticity. American Journal of Occupational Therapy, 70(6), 7006130010p1-7006130010p8.
Morris, M. H., Shirokova, G., & Shatalov, A. (2013). The Business Model and Firm Performance: The Case of R ussian Food Service Ventures. Journal of Small Business Management, 51(1), 46-65.
Sabatier, V., Mangematin, V., & Rousselle, T. (2010). From recipe to dinner: business model portfolios in the European biopharmaceutical industry. Long Range Planning, 43(2-3), 431-447.
Sorescu, A., Frambach, R. T., Singh, J., Rangaswamy, A., & Bridges, C. (2011). Innovations in retail business models. Journal of retailing, 87, S3-S16.
Sosna, M., Trevinyo-Rodríguez, R. N., & Velamuri, S. R. (2010). Business model innovation through trial-and-error learning: The Naturhouse case. Long range planning, 43(2-3), 383-407.
Souto, J. E. (2015). Business model innovation and business concept innovation as the context of incremental innovation and radical innovation. Tourism Management, 51, 142-155.
Wiklund, J., Patzelt, H., & Shepherd, D. A. (2009). Building an integrative model of small business growth. Small Business Economics, 32(4), 351-374.
Zott, C., & Amit, R. (2010). Business model design: an activity system perspective. Long range planning, 43(2-3), 216-226.
Zott, C., Amit, R., & Massa, L. (2011). The business model: recent developments and future research. Journal of management, 37(4), 1019-1042.
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