Concept and Evolution of Business Model Udit Vikram singh 11ex052
Content Introdution Existing theory Business Model Concepts Types of Business model Conclusion
Introduction: What is a Business Model? How business Model Change over time? Different types of model
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
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.
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.
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.