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School of Business & Management Business Leadership Executive MBA | ITB | Jakarta PRE-ASSIGNMENT Name IMAM WAHYUDI Student ID 29111478 Mobile phone 087770001111 Course code and title Business Strategy Course time and place 03 February 2013 Program BLEMBA 11 Lecturer Dr.Ir.Mohammad Hamzal, MSE, MBA, MQM Assignment number 1 Due date 3 February 2013 Combined summary: Reinventing your business model; From Strategy to Assignment title/topic/case Business Models and onto tactics; Assignment type (choose one) ( ) Midterm Exam ( ) Final Exam ( V ) Individual Assignment ( ) Group Assignment ( ) Other Further information (e.g. state if extension was granted and attach evidence of approval, revised submission date)I declare that the work contained in this assignment is my own, except where acknowledgement of sourceis made.I authorize SBM ITB to test any work submitted by me, using text comparison software, for instances ofplagiarism. I understand that this will involve the SBM ITB or its contractor copying my work and storing it on adatabase to be used in future test work submitted by others.Note:The attachment of this statement on any electronically submitted assignments will deemed to have the sameauthority as a signed statement.Signed DateFilled out by lecturer/tutor Date received from student Assessment/grade Assessed by Recorded Dispatched (if applicable) Reading summary pre-assignment Business Strategy
School of Business & Management Business Leadership Executive MBA | ITB | Jakarta Combined Summary: Reinventing Your Business Model (Johnson et al, HBR, 2008) & From Strategy to Business Model and onto Tactics (Cadesus et al, LRP, 2010)These both papers review the increasing importance of business model innovation tocompany competitive advantage in proposing value to customer, and offer a framework anddefinition to redefine our business model. Innovations in business model within the past 10years have shown a significant proportion in the winning company in the Fortune 500.Business model innovations have reshaped the entire industries and redistributed billion ofdollars of value. However, less than 10% of innovation investment at global companies isfocused on developing new business model.Despite most of executives believe business model innovation will become even moreimportant for success in the future, senior managers at incumbent companies sometime find itdifficult to pull off a new growth that business model innovation can bring. The study showsthere is at least two main reasons: lack of definition and uncertainty whether changing theircurrent business model will leverage their core business (Johnson et al, 2003)..The first article offers a road map in simple step to understand and design business model thatmay bring better customer value proposition. It defines business model into four elements:Customer Value Proposition, Profit formula, Key resources, and Key processes. The case inApple Inc, and Hilti shows that their new business model boost their competitive edge andbring them as new market leader until the competitors trying to cope with their businessmodel change.The second article offers a guideline to deploy strategy into business model and onto tactics.As choosing the right business model as “the logic of the firm” is the one of key important ofcompany to achieve its vision, understanding business model and how to implement intotactics are important step for a winning strategy. The article offers a generic two-stage ofcompetitive process framework. In the first stage firm choose a logic of value creation, and inthe second stage make tactical choices guided by their goals.Reading summary pre-assignment Business Strategy
School of Business & Management Business Leadership Executive MBA | ITB | JakartaIMPLEMENTING BUSINESS MODEL IMPROVEMENTTo implement a reinvention of business model of a company and deploy such into furtherstrategies and tactics, it is very important to understand what the existing business model ofthe company is. Executive should be able to see what their existing customer valueproposition is and formulate better customer value proposition to maximize company corecompetences.In the first stage, logic of value creation and value capture is defined. From the first article,we first shall define key element of our business model: 1. Customer Value Proposition It is very important that we understand what our existing value proposition to customer is and what the competitors value proposition to our customer is. Then what can we do to better give value proposition that may win the competition. 2. Profit formula Based on the CVP, company should define the profit formula. A working business model shall has profit formula to achieve its metric objective. A better value proposition without good profit formula will not help the company to improve its performance at all. 3. Key processes Company shall define the rules, metric and norm to make profitable delivery of customer value proposition repeatable and scalable. This might include processes (design, product development, sourcing, hiring, and training), rules and metrics (margin requirement for investment, credit, terms, lead times), and norms (opportunity size needed for improvement, approach to customer and channels) 4. Key resources. It is very important that we understand what our existing value proposition to customer is and what the competitors value proposition to our customer is. Then what can we do to better give value proposition that may win the competition.After firm choose the Business Model firm shall make tactical choices made from amongstthose available, depending on the business model.Reading summary pre-assignment Business Strategy
School of Business & Management Business Leadership Executive MBA | ITB | JakartaIMPLICATIONBusiness model innovation in the past 10 years had shown as a game-changer for thecompetition. Many firm come up as new champion in the Fortune 500 with new proposedbusiness model that differentiate them and make their competitors’ proposition to customerno longer relevant.The implication of this phenomena is firm must adapt into the new game of business modelinnovation. Decades ago, manufacturing or service business model can last for 10-20 years ormore. Nowadays firm must adapt to change their business model when competitor is offeringa new edge, within less than 5 years period.Firm then must have deep understanding of the what business are they in and what businessmodel will give best value proposition to customer while providing profit to the firm. To doso executive of the firm must have deep understanding of strategy and business model, andlater on deploy the strategy and business model onto tactical choice and management plant toexecute.Tactics as the residual choices open to a firm after choosing its business model are crucial indetermining firms value creation and capture. The challenge of this reinvention of businessmodel is not only in the planning stage when drawing the board for strategy and businessmodel, but also to its execution. A good business model will always only be in the drawingboard if the execution of the tactics is not excellence.LESSON LEARNED.Current increasing competition indicates that changing our business model to better providecustomer value proposition is sometime change the game-plan how a company can outrun itscompetitors. To perform such business model redefinition understanding of our andcompetitor’s existing business model is important.Reading summary pre-assignment Business Strategy
School of Business & Management Business Leadership Executive MBA | ITB | JakartaTo reinvent firm business model, both article suggest framework that can be combined intotwo stages. First stages is redefining the element of the business model based on the strategyof the firm and select which business model is the most suitable to win the market. Thesecond stage shall be deploying into more tactical choices for management action plan.Reading summary pre-assignment Business Strategy