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STMGT203 Business Model Innovation

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STMGT203 Business Model Innovation

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Course Code: STMGT203
University: University Of Waikato is not sponsored or endorsed by this college or university

Country: New Zealand


Identify the type of business model innovation used, and explain why you have chosen it as an example with reference to how the business model was designed.


Generally, business model innovation describes the change of existing models in a company or formation of new models that target to satisfy the needs of customers in market. These models tend to be unique and different from the existing models in business (Zott & Amit, 2010).This discussion analyses the case study in Yalumba Company. It is a winery company that is found near Angaston in South of Australia. The founder of Yalumba was a British brewer called Samuel Smith. The company has been successful by using the business innovation model in different ways. It is through its determination in targeting different segments in market.Yalumba works closely with all relevant business model such as manufactures, retailers and distributors. Also, when new strategies are needed the company tries -design prototype test which includes trial and error method in market when launching its products (Zott & Amit, 2010).Therefore, the write up will analyze those business model innovation concepts used by Yalumba, analyzing critical procedures used by the company to persue in market and lastly analyzing the importance of business innovation model to Yalumba.
Business model that was adopted by Yalumba Company
Yalumba opts to adopt for the sale of its products to its customers so as to ensure maximum satisfaction of their needs (Wei, Yang, Sun, GU, 2014).Some of the most common business models used by Yalumba company  are; manufacturer, distributor, retail and the franchise model.
Yalumba majorly uses manufacturer business model.Yalumba is a wine making industry, it specializes in the conversion of grapes into a final product that is wine. It is well known that a manufacturer uses raw materials and converts them into final products. In the same way this business model applies to organizations that specializes in conversion of raw materials into end products (Bocken, Short, Rana, Evans, 2014).
Aspects of design process to success of Yalumba firm
There are some certain aspects of design process that can be considered to be the key to success of Yalumba.Yalumba uses manufacturer business model, and from this fact alone then there are a number of reasons and also tangible evidence that can be seen that has resulted to the success of Yalumba over time (Cavalcante, Kesting, Ulhøi, 2011).There are specific aspects about this manufacturing model that Yaumba is using that can be tagged to its success, these aspects are explained below;
Manufacturing model has the unique ability of identifying specific target, for our case specific customers. It is always advisable that before one decides to choose a business model then they should consider the specificity of that model in regard to the customers it targets. A model that is not specific will tend to have problems in identifying the customers who genuinely need the product (DaSilva & Trkman, 2014).A specific model on the other hand narrows down to specific audience, it tends to get to know the customers and their needs in particular thus creating a chance to tailor and improve the products/services according to the customers preferences. Yalumba has been successful over time because the manufacturer model it adopted puts into consideration the very crucial aspects regarding its customers as mentioned above (Sosna, Trevinyo-Rodríguez, Velamuri, 2010).
Developing a strong value proposition is also another means of enabling/facilitating a firm’s success in regard to the business model adopted (Schneider & Spieth, 2013).Competition is inevitable. It should therefore be the effort of all companies in a particular industry to struggle for the top stop be in a position to be significantly distinguished from the rest of its kind. Well, the business model adopted plays a very great role in this, there is a very vital question that one should ask themselves, does this business model provide/accommodate any means of innovation? A model that takes care of future innovative capabilities is very flexible and should be considered. Yalumba company uses manufacturer business model which carries with it a very great range of innovation capabilities, with this Yalumba has been in a position to standout despite the very intense competition and this has made it so successful over time (Storbacka, 2011).
Finally, the business model adopted should at some point be in a position to determine they key business partners in the industry and also create a demand generation strategy. Literally, no business can survive leave alone becoming successful on its own. There is need to have some partners or maybe allies that will be working together with the company to facilitate its success. The business model to be adopted should also consider this very significant aspect. Creating a demand generation strategy is also another extremely important aspect for the success of a company (Lehoux, Daudelin, Williams-Jones, Denis, Longo, 2014).The model to be adopted should therefore be in a position to create a demand generation strategy in that it even before the company is launched, means of how the customers are to find you should be well elaborated and what the customers should do and the specific steps they should take once they have become aware of your brand. Yalumba uses manufacturer business model, it is a model that incorporates all these two very important aspects and this is one of the reason why it has been successful over time.
 Key issues and decisions/actions enabled Yalumba to become a successful enterprise
There are key decisions and actions that Yalumba company took to become a successful enterprise in the industry, the most important action, however, was the adoption of a high solid cross flow filter system that was installed at Angaston and Oxford landing wineries. Yalumba Company had spent decades trying to find better and appropriate options for its wine making processes, the adoption of cross flow filter system came as a breakthrough after many years of labour and struggle. It initially used Rotary Drum Vacuum filters like most wine companies around (Gambardella & McGahan, 2010).
Other alternative solid mesh filters were available but had not yet been properly looked at and put into test and it was uncertain if indeed they can be used and deliver successful results in the wine industry. Yalumba Company took the initiative of carrying out various uncountable tests and trials and with the quality of its human resource, a breakthrough was found. This method was adopted and this has been known to be one of the reasons why Yalumba Company has been so successful. This was a decision that was made and the appropriate action taken to make it happen.
Yalumba’s head of winemaking, Louisa Rose says that something is always changing and for any business to be successful then it must by all means try to embrace the change and be part of the change. Yalumba is a 165 year old business and since it was started then it is evident that various changes have been taking place, an attempt of Yalumba Company to embrace this change has been the key to its continued success (Gambardella & McGahan, 2010). 
For instance, the finding and knowing about of rootstock was a major change that took place in Yalumba Company and it came with it numerous advantages. It was a technique that played a very crucial role in the ripening. Other issues such as climate change came into place, but with this technique it was certain that the vineyards could not be affected. It is known to be one of the major reasons that put Yalumba Company in the map for decades and made it the leading producer of wine in the industry (Walravens, 2012).
What is innovative about the chosen business model?
The chosen business model by Yalumba Company is manufacturer business model, this model is considered to be very flexible and elastic. A number of innovations can be incorporated in it and make it even much better. Some of the innovative aspects about manufacturer business model are explained below;
The first innovative aspect about manufacture business model is technology. Well, technology is a broad term, but in this context it has been used to imply to all the necessary changes and advancements that take place in the manufacturing sector. Each and every day, new pieces of technology are being designed and created (Johnson, 2010).Basically, manufacturing sector is characterized by continuous advancements in technology and so on.
The customer model assisted Yalumba through marketing process .There is increased online marketing which correspond to the digital marketing. This has been enhanced through business innovation. The company advertises in new platforms such as online websites.Ths innovation helps the business to reach large number of customers in the market and thus enhancing the production output.
Sources reflecting importance of business model to Yalumbafirm.
Different articles and other resources in business describes the key steps incurred when Yalumba is conforming to manufacturing business model. As discussed above on how Yalumba can use manufacturing  model ,there are other strategies which can only be achieved through the business innovation model (Björkdahl & Holmén, 2013).The following sources have relevant  concepts of business innovation model .These sources in business includes;

Amit, R., & Zott, C. (2012). Creating value through business model innovation. MIT Sloan Management Review, 53(3), 41-49.
DaSilva, C. M., & Trkman, P. (2014). Business model: What it is and what it is not. Long range planning, 47(6), 379-389.
Jeston, J. (2014). Business process management. Routledge.
Sorescu, A., Frambach, R. T., Singh, J., Rangaswamy, A., & Bridges, C. (2011). Innovations in retail business models. Journal of retailing, 87, S3-S16.

Importance of business model innovation to Yalumba.
Business differentiation helps to protect the margins of different companies in market. Therefore, innovation model is the key factor that will enable Yalumba to curb competition in market, help the company to enjoy profits as well as enabling it to emerge as dominant in market (Björkdahl & Holmén, 2013).This is to mean that the model reduces the level of competition since each company utilizes its own technique when designing products.
Also, the manufacturing model innovation helps to answer critical questions in Yalumba firm. Helps to answer questions such who is the target market in business. How will the business satisfy the needs of the customers in the market? These are some of the important questions which the model analyses. Yalumba then tries to come up with apt solutions that describes the questions appropriately. The company analyses the market by designing and innovating new methods that will facilitate production of new products with new features appealing to customers in the market.
It helps in identifying the business scope in market (Wirtz, Pistoia, Ullrich, Göttel, 2016).This shows that the model will describe Yalumba area of operation. This includes considering the business environment. The concept will analyse the external and internal environment comprised by Yalumba firm. The model checks on the effects these environmental factors have to the company and then innovate new strategies that will target to give corrective measures of every factor evaluated in the company.
Business model helps in improving technology. Yalumba firm needs to solve huge problems that may be incurred during the operations (Wirtz, Pistoia, Ullrich, Göttel, 2016).Through handling the challenges Yalumba firm will be innovating new strategies that conforms to the challenges and therefore increasing the level of technology.
Also business model execution assists in designing the culture of the firm. These comprises those strategies Yalumba will use to achieve the core values .The whole process of developing a new culture imparts on increasing the design of work in the company. Through the business culture the model will embrace new changes which will be transformative. Therefore, the models are unique, relevant to the goals of the organization and they are always aligned to the trends that are anticipated in the market. They establish new growth strategies that helps in accessing huge profits from the sale of products in Yalumba Company.
In conclusion, manufacturing business innovation model is important for Yalumba survival in the market. The model need to be complete and consistent (Jansen, 2017). Yalumba should ensure that all aspect of model are keenly addressed to enhance completeness. The model enhances clarity in business .This means that all workers in Yalumba Company should work to familiarize with key strategies of business model. Business innovation model focuses to discuss the misunderstandings and disagreements that may be incurred within the business. It communicates about the importance of different entities such as advisers, new recruits and investors in Yalumba firm (Jansen, 2017).Therefore, through the business model innovation Yalumba Company will be in position to emulate those critical strategies and measures which will lead to success in the market.
Björkdahl, J., & Holmén, M. (2013). Business model innovation–the challenges ahead. International Journal of Product Development, 18(3/4), 213-225.
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.
Cavalcante, S., Kesting, P., & Ulhøi, J. (2011). Business model dynamics and innovation:(re) establishing the missing linkages. Management decision, 49(8), 1327-1342.
DaSilva, C. M., & Trkman, P. (2014). Business model: What it is and what it is not. Long range planning, 47(6), 379-389.
Gambardella, A., & McGahan, A. M. (2010). Business-model innovation: General purpose technologies and their implications for industry structure. Long range planning, 43(2-3), 262-271.
Jansen, W. (2017). New business models for the knowledge economy. Routledge.
Johnson, M. W. (2010). Seizing the white space: Business model innovation for growth and renewal. Harvard Business Press.
Lehoux, P., Daudelin, G., Williams-Jones, B., Denis, J. L., & Longo, C. (2014). How do business model and health technology design influence each other? Insights from a longitudinal case study of three academic spin-offs. Research Policy, 43(6), 1025-1038.
Schneider, S., & Spieth, P. (2013). Business model innovation: Towards an integrated future research agenda. International Journal of Innovation Management, 17(01), 1340001.
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.
Storbacka, K. (2011). A solution business model: Capabilities and management practices for integrated solutions. Industrial Marketing Management, 40(5), 699-711.
Walravens, N. (2012). Mobile business and the smart city: Developing a business model framework to include public design parameters for mobile city services. Journal of theoretical and applied electronic commerce research, 7(3), 121-135.
Wei, Z., Yang, D., Sun, B., & Gu, M. (2014). The fit between technological innovation and business model design for firm growth: evidence from C hina. R&D Management, 44(3), 288-305.
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.
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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