The first step in implementing an effective business model is to adequately understand its definition. According to Osterwalder and Pigneur (2010), a business model is “the rationale of how an organization creates, delivers, and captures value” (14). In simpler terms, a business model is an outline or blueprint that an organization uses to construct effective processes, structures, and systems. Although business models can be complex and unique, a basic understanding and definition of a business model is crucial for success. To simplify the complexities of defining a business model, one can view customer segments, value propositions, channels, customer relationships, revenue streams, key resources, key activities, key partnerships, and cost structure as the nine basic building blocks of a business model (Osterwalder & Pigneur, 2010, p.16-17). Each of these segments is a subcategory that is essential in building an effective business model that is adequately defined and ready for implementation.RQ2: According to the literature on Business Model Generation and Strategic Management Concepts and Cases, what is a business model, and how does it affect an IT project? Please discuss and analyze well beyond a definition.
Need at least 2 scholarly articles and subsequent write-up. As described in the previous answer, a business model is defined as the rationale of how an organization creates, delivers, and captures value” (Osterwalder and Pigneur, 2010, p. 14). While this definition is just a starting point, there is much more to a business model than this description provides. A role of a business model is to “provide a set of generic level descriptors of how a firm organizes itself to create and distribute value in a profitable manner” (Baden-Fuller and Morgan, 2010, p. 160). Often, business models become synonymous with the company that implements them. Apple, McDonald’s, and Starbucks are each known for the business models in which they implement, and credit for the success of these organizations is often given to their models. Likewise, a poor business model is often blamed for a firm’s failure.
Models, like strategies, are important ways that a company can plan, adjust, and succeed. As described previously, a business model can be seen as a blueprint, and such plans give direction, meaning, and purpose. Business models can also be perceived as scale models used for larger implementation (Doganova & Eyquem-Renault, 2009). Whether implemented by an entrepreneur or by an established market-leading organization, business models allow firms to put a plan to paper and support their plan with data. This allows an organization to plan carefully for the risks and opportunities that they will face as they put the model into practice.
RQ3: What role do value propositions perform in successful business models? At least two paragraphs.
Osterwalder and Pigneur (2010) describe value propositions as the bundle of products and services that create value for a specific customer segment” (22). This building block of a business model is essential because it is the reason why consumers value one company over another.
A value proposition is a statement that explains what benefits a company’s product or service provides to its customers. It is the unique selling point that sets a company apart from its competitors. A successful value proposition should be clear, concise, and focused on the customer’s needs. It should also be backed up by evidence that demonstrates the value that the product or service provides.
Value propositions can also help organizations create customer loyalty and retention. With intense competition in markets, value propositions are an important part of a business model because they address competition and attempt to set the firm apart from the other choices presented to its customer base. Value propositions relate very closely to the customer segment that an organization is attempting to reach. Each value proposition is designed specifically for that customer segment in that it caters to the products or services believed to be desired by the consumer. To set itself apart from the competition, value propositions can include price, design, innovation, effectiveness, convenience, and brand recognition. In considering each of these elements, value proposition becomes an important part of the business model so that companies can plan and expand upon the customer base within the market segment.
Answering the “what if” questions through brainstorming new business models can have a significant impact on the success of a business. By exploring new ideas and possibilities, businesses can identify potential opportunities and threats in the market. Brainstorming can help businesses to think outside the box and come up with innovative solutions to problems that they may not have considered before. This process can lead to the development of new products or services that meet the needs of customers in a unique and valuable way.
Furthermore, brainstorming can help businesses to identify gaps in the market that they can fill with their products or services. By understanding the needs and desires of their target customers, businesses can create value propositions that are tailored to their specific needs. This can help businesses to differentiate themselves from their competitors and create a loyal customer base. In conclusion, brainstorming new business models by answering the “what if” questions can be a powerful tool for businesses looking to succeed in today’s competitive market.
One roadblock to designing innovative business models is the idea that businesses lack the ability to think outside of the box and are too concerned with the status quo, or business as usual. Brainstorming new ideas is one way that can allow businesses to come up with new ideas and methods for improvement. To do this, it is suggested that organizations ask What if” questions to spur thinking. “What if” questions often help organizations to challenge their thinking and break from norms (Osterwalder and Pigneur, 2010). These questions allow for a beginning where answers can be formed and implemented in the business model. “What if” questions can be asked regarding any of the 9 building blocks to a business model and allow for a more robust plan to be designed. “What if” questions also allow for organizations to be proactive rather than reactive to problems that can occur during implementation of a business model. For these reasons, “what if” questions become an important aspect of the brainstorming process.
