Abstract
In the scope of this paper, the analysis of the business model was conducted from the perspective of the following aspects –as they are represented by the scholars in scientific literature: cost structure; key partners; central activities; major resources; value proposition; revenue structure; customer relationships; channel and customer segment. Additional emphasis was put on the case studies, which demonstrate effective utilization of the innovative business models
Key words: segmentation, business model, strategy, customers, planning.
THE BUSINESS MODEL CANVAS
First of all, in the scope of the business model canvas development, the cost structure would be discussed. In the scope of the article by M. Barth, A. Livet and R. De Guio (2008), the authors have made a statement that the accurate production costs’ evaluation has become absolutely essential component of the success in terms of running the business in the 21st century. In the timeframe of last 20 years, the activity-based costing method, which is also referred as ABC, has offered a solution or the indirect costs allocation while applying into the practice the cost driver concept.
At the same time, Cooper R and Kaplan (2000) have made a statement that the activity-based costing method does not offer the general criteria for relevant resources, cost drivers and activities identification on the shop floor. Barth et al. (2008) have offered the model of reference activity, which enables the saving the resources and optimizing the activities, which are related to systematic deduction of the major part of the cost objects of a particular shop floor. The practical utilization of this model is offered by its industrial application. Additional emphasis is put by the authors on the practical value and significance of the offered approach.
Babad and Balachandran (1993) have also offered the shop floor reference model, which was tested by researchers in the set of enterprises in order to find the shop floor’ cost drivers in a systematic and rapid manner by utilizing the classification of the entire set of possible activities, resources, and objects.
Barth et al (2008) have made a claim that the approach, offered by them in the scope of this research, implies the following advantages:
Minimization of the risk of omitting certain particular activities and resources by systematic utilization of the reference concepts for searching the particular concepts;
Guarantying that the outcomes are more easily reproducible in the case if the concepts’ interviewer standard list is offered in such way, that the option of capitalized knowledge utilization emerges.
Significant reduction of the time, needed for investigation;
Facilitation of the knowledge capitalization by offering a modeling frame, which discovers the new activities or resources in the timeframe of a new case study;
Development of the means, which have the option of comparing the entire set of the production costs for the shop floor of reference resources and activities in two separate production systems.
The set of the models, which has been obtained by the authors in the process of utilizing their approach, provides a solid background of information for the using of the problem for cost driver optimization (Homburg 2001, Kim and Han 2003).
More than that, the exhaustive awareness in the area of activities and the related means of CDs that, quantitatively and qualitatively, are linked between the objects of cost, resources and activities of the shop floor, has become a known factor. Such information is particularly important and essential for managing problems, which are involved into the process of continuous improvement, where central issue is costs’ reduction. In such case, the manager has a thorough awareness and experience in the area of the cause of the costs.
Additional emphasis of Barth et al (2008) has been put on the fact that the enterprises accept the time-scale in terms of the relevance of the information and its precision, which, in turn, is obtained while using the particular model. Furthermore, there is an option of reducing the time scale by integrating the model, offered by the author of the research, into ERP (Enterprise Resource Planning) type software, which is already equipped with the activities and reference resources given in their model.
In the process of opting for a new investment in terms of manufacturing plant, the traditional methods, which are usually unitized, take into account only the contribution, directly interrelated with the new plant – for instance, production time’ minimization. In the case of using the model, offered within this investigation, there is an option taking in consideration the entire set of the links, which are modified or created by keeping the new plant activities list up-to-date. In the set of the cases, it is possible to see an increase of the cost of activities, which have the potential of undercutting the expected gains. That is why, it is possible to make a stament that this model may reassure the manager in terms of the new investment impact on the production system’ overall operation.
The next issue to be considered in the scope of this paper is the Key partner – as an integrative part of business model. After conducting an analysis of the interrelation between components of business model such as key partners, which contribute the media concept, the authors of an investigation (Peters et al 2013) have made an attempt of discovering the interrelations between the elements of business model. The literature analysis was conducted by the investigators, and it has revealed that there are three types of the business models: descriptive, calculative and dynamic. Authors have conducted two case studies, which, in turn, have suggested that an important contribution is provided by key partners to the proposition value, in terms that media concept is co-created by them. While referring to these results, Peters et al. (2013) have offered the first sketch of a new framework for the business model.
Additional emphasis should be put on the fact that despite increasing efforts among the scholars in terms of investigating the strategic management-related business models, insignificant research has been conducted in analysis of interrelation between the elements of business model (Teece 2010). In the scope of their research, Peters et al. (2013) have suggested that such interrelations may represent essential factors for the complete understanding of the way the business models work in practice. Additional contribution of the research in the area of business model components is that it has revealed that the business models may be applied not only as the essential tool for describing and evaluating the value creation, but in addition, for description of the interrelation between the elements of business model. For instance, an important contribution is provided by the key partners to the value proposition, in the sense the media concept may be co-created by them. Thus, the authors of the investigation have offered the first indicative proposal for a framework of business model, involving the explicit description of this relationship. That is why, it is possible to make a statement that such approach is relevant for the business model research advancement in the strategic management domain as well as in the entertainment and media industry sector.
While investigating the key activities, which contribute the success of business structure Erez-Castillo and Piattini (2013) have put an emphasis on the fact that the concept location is a major activity for the software modernization because it allows the maintainers to conduct exact determination of the pieces of source code, supporting a specific concept. In addition, there is a high probability of misaligning those information systems and processes in the real world. Thus, such approach provides the managers with IT support for the respective processes, which were caused by uncontrolled maintenance over time. As the concepts, which are supported by an information system become misaligned or outdated, concept location becomes an error-prone and time-consuming task (Perez-Castillo et al. 2011). More than that, the enterprise information systems (which are responsible for the practical implementation of the business processes) inculcate significant business knowledge over time, that is neither documented nor present anywhere else (Jeston et al 2008).
That is why in order to support the existing information systems’ evolution, the embedded knowledge must first be depicted and retrieved in up-to-date process models of business and then be integrated into the source code.
The next issue to be considered in this paper is the key resources –as an integrative part of the business model. In accordance with an investigation, conducted by Newman (1967), most central managers recognize the cardinal importance master strategy. At the same time, these participants of the business process are less certain, concerning the way of developing a resource strategy for their particular organisation. Thus, in the scope of the investigation Newman (1967), the major strategic approaches towards shaping the master strategies, were offered. Additional emphasis was put on outlining the key elements and an approach for determining these strategies. Author has offered the resources allocations strategy both for the business enterprises and nonprofit ventures.
The practical way do the master strategy of resources allocation development is represented in the following consequence:
Picking particular niches or roles, appropriate in terms of company's resources and the competition;
Combining different various facets of the efforts, made by the company for gaining the synergistic effects;
Setting up the timing and sequences of changes, reflecting the capabilities of the company and its external conditions (Newman 1967)
- While conducting an analysis of Value proposition, additional emphasis should be put on the business model road mapping. This factor was investigated by Reuvert et al (2013) from the perspective of its practical approach to transfer the current business from an existing to a desired business model. Reuvert et al (2013) have put an emphasis on the fact that the literature, related to the business models, is mainly concerned on the way of designing the new business models.
At the same time, there is a lack of scientific investigations, related to the ways of conducting a transition from the existing to a newly-developed business model. Phaal et al (2007) and Gronroos (2007) have uncovered that the several strategic and practical issues are set by the transition to a new business model – for instance, the way of replacing an existing value proposition with an innovative one, in the process of acquiring the new capabilities and resources, and in the process of new partnerships establishing. Reuvert et al (2013) have offered the term business model road mapping as an effective approach towards defining the path for transition from a current to a desired business model, this approach is mainly grounded on the basic concepts from literature on business model as well as technology road mapping.
Authors have concluded that visualizing model road maps for business elicits the way, the impact is made by the business model and operational actions and how these impacts are interrelated.
Beat Burger and Matthias Fuchs (2004) in the scope of their investigation of dynamic pricing from the perspective of airline business model, have analyzed the economic impacts made by strategy of dynamic pricing for the airline industry. The research of Holloway (2003) has revealed that practical use of a dynamic strategy of pricing has a positive or a neutral impact on revenues. It mainly depends on the strategy of managing the competitors’ revenue. Furthermore, not only revenue is impacted dynamic strategy of pricing, but in addition, the cost structure is affected by such managerial approach, which, in turn, leads directly to a process complexity decrease. Thus, the dynamic pricing is considered to be the background for an efficient pull strategy.
While referring to the customer relationships, David A. Schweidel et al (2008) have investigated the customer relationships from the perspective of customer retention and acquisition Bivariate timing model. Scholars have put an emphasis on the fact that there are two components, which are critical for the customer value calculation - retention propensities and acquisition. At the same time, the major part of the literature on that concern, is dedicated to the incorporation of these such components into various types of models, and only limited quantity of scientific investigations has been dedicated to the types of interrelations, that may exist between them.
In order to investigate the relationship between retention and acquisition, a Bivariate timing model was applied by David A. Schweidel et al (2007), authors have linked an retention and acquisition processes in two distinct yet complementary ways. In the scope of this investigation, the ways of using the proposed methodology for calculating the discounted expected value of acquisition time-based subscription, and discussion of the possible ways of using the modeling framework for the problem solving (resource allocation and customer targeting) was conducted.
Mukhopadhyay et al (2008) in the scope of their research on optimal contract design for mixed channels in conditions of information asymmetry, have made a claim that the increasing popularity is gained by the mixed-channel model in the current marketplace. The major reason for such statement was the fact that in the scope of such model; the firm, conducting its sales through the traditional supply chain of retailer and wholesaler, also provides its clients with a direct channel through Internet sales, which is actual for the business structures operating in the current economical system.
While taking into account the fact that respective advantages are inherent to both channels, this business model is attractive for manufacturers, at the same time, utilization of such model leads to channel conflict, since the retailer may feel threat, posed by a direct competition.
After conducting an analysis of the literature on the concerns of customer segment, it has been revealed that this aspect of doing business becomes more complex with the increases in organizations, emergence of innovative technologies, etc. Thus, people come to additional and increased expectations from their training regimes. The process of development, offered by Grosse (2008) integrates input, made by the key stakeholders, with enterprise and business objectives. In such manner, the high level of consistency and quality in offerings of the business may be achieved.
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