Concept and evolution of business model


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Concept and evolution of business model

  1. 1. Concept and Evolution of Business Model Udit Vikram singh 11ex052
  2. 2. Content  Introdution  Existing theory  Business Model Concepts  Types of Business model  Conclusion
  3. 3. Introduction:  What is a Business Model?  How business Model Change over time?  Different types of model
  4. 4. Existing Theory:  Deconstrustion Phenomenon: Construction of vertically integrated value chain in many industries . Proclaimed by industrial organisation theory. Best applied when boundaries of an industries are clearly defined.  Since the end of the 20th century, various industries are undergoing fundamental changes and a deconstruction of these integrated business models can be observed.  The deconstruction of former integrated value chains of industries into ever smaller segments (layers) becoming distinct businesses took place.  As a consequence, traditional de®nitions of businesses and industries become obsolete and vertically integrated companies are facing competitors either specialised in one step of the value chain, or combining various value steps in a network of companies applying best-practice resources in a given industry.  Such business migration does not only create new businesses and markets, it also causes separate industries to converge
  5. 5. Business Model Concept  deconstructing the value chain provides many opportun- ities for the creation of new businesses. Because of that, the deconstruction phenomenon can be considered as a necessary development and basic condition that allows di€erent business models to emerge.  Amit and Zott refer to the architectural configuration of the components of transactions as the core of business models, meaning the specific information, service, or product that is exchanged and/or the parties that engage in the exchange.  Hamel favours the other extreme in applying a spectrum of modules to form the business model, including customer interface, core strategy, strategic re- sources and value network.  Mahadevan has developed a framework for the understanding of business models in the internet context and has identi®ed three elements of a business model, which include the value stream for the business partners and the buyers, i.e. the revenue stream as well as the logistical stream.
  6. 6. Contd….  Venkatraman and Henderson define a business model as a co- ordinated plan to design strategy along three vectors (customer interaction, asset configuration, knowledge leverage).  Timmers considers a business model as an `architecture for the product, service and information ¯flows, including a description of the various business actors and their roles; a description of the potential benefits for the various business actors; and a description of the sources of revenues. He classifies them on the basis of the degree of innovation and functional integration required.  Magretta states that business models are kinds of stories that explain how companies work and that contain specific characters, a plausible motivation and a plot that describes how value is delivered.  More simply, the term `business model is composed of the words `business and `model‘ . The expression `business refers to the fact that a company does business with the purpose of making profit, while the term `model is a simplified description or representation of a system that is composed of different elements and the relationships between them. Thus, a business model tries to give an integrated and consistent picture of a company and the way it aims to generate revenues.
  7. 7. Types of Business Model • Integrated Model
  8. 8. Orchestrator Model
  9. 9. Market Maker Model
  10. 10. Layer Player Model
  11. 11. Conclusion • The developed concept presents a challenging research opportunity that builds on the few existing theoretical pieces, but goes beyond the existing literature on business models. The contribution of this paper lies in developing a con®guration (typology) of di€erent business models (In- tegrator, Orchestrator, Layer Player, Market Maker) by including the value chain constellation, a revenue potential perspective and the market power of innovators compared to the owners of complementary assets based on the underlying argument of the resource based view.
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