The first step in implementing an effective business model is to adequately understand the definition. Osterwalder and Pigneur (2010) define a business model as “the rationale of how an organization creates, delivers, and captures value.” (14) In simple terms, a business model is an outline or a blueprint an organization uses to constract effective processes, structure, and systems. While business models can be complex and unique, a basic understanding and definition of a business model is important for success. To simplify the complexities of defining a business model, one can view customer segments, value propositions, channesl, 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 are subcategories that are essential in building an effective business model which is adequately defined and ready for implementation. RQ2 According to the Business Model Generation and/or Strategic Management Concepts and Cases literature, what is a business model? (Please discuss/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 ow 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, Mcdonalds, and Starbucks are each known for the business models in which the implement and credit to these models is often given for the organizations success. Likewise, a poor business model is often blamed for a firm’s failure.
Models, like strategy, 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 establish market leading organization, business models allow for firms to put a plan to paper and support their plan with data. This allows an organization to plan carefully for the risks and opportunites that they will face as they put the model into practice. RQ3 What role do value propositions perform in successful business models? At least 2 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 in that it is the reason why consumers value one company over another.
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 it addresses competition and attempts 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, convienence, 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. RQ4 How does “Brainstorming New Business Models” by answering the “What If” questions impact successful businesses? At least 2 paragraphs.
One roadblock to designing innovative business modes is the idea that businesses lack the ability to think out 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 the9 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 brain storming process.