Business model:
Value creation and competitive advantage are related to value captured
Dynamic expression: business model
Think how it works over time.
Newspaper and magazines: create value and value captured: subscription etc
Google: iPhone: value capture by smartphone: telecom operators pay Google for data created by
search engines
Business models:
Choices that managements has made. Including governance choices and also there can
consequences of these choices.
Retailing: Wal-Mart
Low prices =Large volume = virtuous cycle.
Large volume= it investments – sale forecast – lower inventory – low cost – large volume = cycle
Low advertise – lower cost- cycle
Lower shrinkage – lower cost – cycle
Business model:
senior executives across industries regard developing innovative business models as a major priority.
The success or failure of a company’s business model depends largely on how it interacts with
models of other players in the industry because they make models without thinking about
competition.
Appraising models in a stand-alone fashion leads to faulty assessments of their strengths and
weaknesses and bad decision making. This is a big reason why so many new business models fail.
Good business models create virtuous cycles that, over time, result in competitive advantage. Smart
companies know how to strengthen their virtuous cycles, weaken those of rivals, and even use their
virtuous cycles to turn competitors’ strengths into weaknesses.
Three Characteristics of a Good Business Model:
1. If it is aligned with business goals: the business model should be designed in such a way that
it would help organisation to capture value.
2. Is it self-reinforcing: the choices that management makes in business models should be
reinforcing or complementing each other, there must be internal consistency. If it lacks
reinforcing it is better to abandon such choices and make new ones.
Value creation and competitive advantage are related to value captured
Dynamic expression: business model
Think how it works over time.
Newspaper and magazines: create value and value captured: subscription etc
Google: iPhone: value capture by smartphone: telecom operators pay Google for data created by
search engines
Business models:
Choices that managements has made. Including governance choices and also there can
consequences of these choices.
Retailing: Wal-Mart
Low prices =Large volume = virtuous cycle.
Large volume= it investments – sale forecast – lower inventory – low cost – large volume = cycle
Low advertise – lower cost- cycle
Lower shrinkage – lower cost – cycle
Business model:
senior executives across industries regard developing innovative business models as a major priority.
The success or failure of a company’s business model depends largely on how it interacts with
models of other players in the industry because they make models without thinking about
competition.
Appraising models in a stand-alone fashion leads to faulty assessments of their strengths and
weaknesses and bad decision making. This is a big reason why so many new business models fail.
Good business models create virtuous cycles that, over time, result in competitive advantage. Smart
companies know how to strengthen their virtuous cycles, weaken those of rivals, and even use their
virtuous cycles to turn competitors’ strengths into weaknesses.
Three Characteristics of a Good Business Model:
1. If it is aligned with business goals: the business model should be designed in such a way that
it would help organisation to capture value.
2. Is it self-reinforcing: the choices that management makes in business models should be
reinforcing or complementing each other, there must be internal consistency. If it lacks
reinforcing it is better to abandon such choices and make new ones.
