What is a business model?
Define the Concept of a Business Model.
A business model is considered being a clear, brief process of analyzing in what ways a business is functioning. Every organization is striving towards providing value for the consumers. When there is an increase in the strength of value proposition especially due to the comparison being done with the competitors, then there will be an increased possibility that large numbers of customers will be purchasing from the organization. The business model is considered being a process to translate the value proposition into the possibility for rapid growth in revenue as well as profitability (Dentchev, 2016). For instance, the Business Model Canvas was considered being the effective standard of planning in respect of new ventures throughout the globe to plot their views as well as to shape their future aspects.
The business model provides the description of the methods, which are used by the organization for generating profits. The business model also does the showcasing of the factors regarding business operation that will be enabling it in becoming profitable. An organization might be having higher margins in comparison to its competitors due to its lower sources of cost regarding supply. Moreover, business models go through careful scrutiny by the potential investors. A business model is not always inert, stating that it might undergo change afterwards and discard the model that got created when the organization was started. With the evolvement of the organization, there always occurs scope regarding new streams of profit (Schaper, 2016). In addition, there might occur drastic business model changes in an organization due to the entry of competitors in the market with a different as well as improved model, which will be getting better response from the customers.
It can be stated that an organization’s business model is a system of interdependent activities that does the transcending of the focal organization and spans its confines. The activity system does the enabling of the organization, in association with its partners for creating value as well as appropriately sharing that value. It is suggested that there are two sets of strictures that the designers of activity system are required to take into consideration, which are design elements as well as design themes. The design elements is associated with the content, structure as well as governance that provides the description of the architecture regarding an activity system, whereas the design themes is associated with novelty, effectiveness as well as lock-in, which provides the description of the sources relating to the value creation of the activity system (Larson, 2017).
Importance of business models
The most necessary aspect of understanding the cost-revenue structure of an organizational business is via forecasting. This is considered being an exercise that is carried out all through the tenure of business since with the evolvement of the business climate as well as industry, the forecast also starts getting evolved. There are considered to be two kinds of forecasts that organizations are carrying out such as top-down forecasts as well as bottom-up forecasts (Welford, 2013).
Although, a business model having static characteristics within an organization supports it in carrying out its present activities without any hindrance, however, for being innovative in the business model, companies are required incorporating as well as continuously taking into consideration the requirement for integrating the elastic attributes within their business models. These flexible attributes will assist the company in earning a dynamic business model that will be positioning the company in having the ability in responding in an appropriate manner to its surroundings (Richter, 2013).
The term business context explains the setting of the opportunity in respect of requirements gathering as well as agreement. There occurs the employment of a specialized vocabulary. This might include an individual establishment, a bigger community of business or a specific project.
Change in business is inevitable due to the fact that it is driven by factors within the organization itself, like the desire for repositioning the organization within the market, or implementing a new business model, or to merge with another organization or to make its expansion into a new market. In addition, change is driven by factors that are external to the organization like market competition, troublemaking technologies, changes in the demography as well as new regulations of the government (Boons, 2013).
In the context of explaining the organizational impact of the phenomenon relating to the rise of ‘big data’, it can be stated that Nokia is mobile communications organization whose products are considered being an essential part of the lives of individuals. Numerous individuals throughout the world do the utilization of the mobile phones of Nokia for communicating, capturing photos as well as sharing experiences. Therefore, Nokia does the gathering as well as analyzing of huge amounts of data from mobile phones. On the other hand, for supporting its extensive utilization of big data, the company is relying on a technology ecosystem that is including a Teradata Enterprise Data Warehouse, large number of Oracle as well as MySQL data marts, technologies for visualization as well as Hadoop (Mantos, 2013). Nokia is having more than 100 terabytes of structured data on Teradata as well as petabytes of multi-structured data on the Hadoop Distributed File System or the HDFS. It does the allowing of the storage of every data that is either semi-structured or multi-structured as well as assists in offering the processing of data at the petabyte scale.
Forecasting and flexible business models
The business model of Nokia has been changed from the present business model of Product development to the Product Plus Service model. Due to this organizational change, there occurred the separation of the organization’s present Mobile Networks business group into two distinctive but closely associated establishments. One of which is having a focus on the products as well as solutions considered as Mobile Networks whereas the other in services such as the Global Services. Regarding the business model transformation of Nokia, it can be stated that due to the external triggers in respect of changing scenarios such as technological as well as market deregulation, there occurred the deterioration of performance at the business unit level of the organization (Kanda, 2015). As a result, of this there occurred the need for changing the business model of the organization radically.
To conclude, it can be stated that the overall approach regarding the aspect of transforming the business model have assisted in highlighting certain significant transformational aspects. In particular, it can be stated that there is occurring the emergence of the business model as a new evaluation unit. The future business models will also be emphasizing upon a system-level, holistic approaches for explaining in what ways organizations are conducting business. In this context, it can be stated that organizations are playing a significant role in the different business model conceptualizations that have been recommended. The aspect of business model has reached the stage of global influence, both in respect of the competitive success of the organization as well as regarding management science. There has been the rise in the levels of income in many countries countries that have assisted in opening up new scopes and as a result, an opportunity for the flourishing of the business models. As a result, there has occurred the scope for creating new marketplaces that cannot get effectively served by the traditional models whose designing was done for the older markets. The business model also does the showcasing of the factors regarding business operation that will be enabling it in becoming profitable. An organization might be having higher margins in comparison to its competitors due to its lower sources of cost regarding supply. In addition to that, business models go through careful scrutiny by the potential investors.
Reference
Boons, F., & Lüdeke-Freund, F. (2013). Business models for sustainable innovation: state-of-the-art and steps towards a research agenda. Journal of Cleaner Production, 45, 9-19.
Boons, F., Montalvo, C., Quist, J., & Wagner, M. (2013). Sustainable innovation, business models and economic performance: an overview. Journal of Cleaner Production, 45, 1-8.
Breuer, H., & Lüdeke-Freund, F. (2014). Normative innovation for sustainable business models in value networks.
Dentchev, N., Baumgartner, R., Dieleman, H., Jóhannsdóttir, L., Jonker, J., Nyberg, T., … & van Hoof, B. (2016). Embracing the variety of sustainable business models: social entrepreneurship, corporate intrapreneurship, creativity, innovation, and other approaches to sustainability challenges. Journal of Cleaner Production, 113.
Kanda, W., Clausen, J., Hjelm, O., & Bienkowska, D. (2015). Functions of intermediaries in eco-innovation: a study of business development organizations and cluster initiatives in a Swedish and a German region. In Global Cleaner Production and Sustainable Consumption Conference, 1-4 November, Sitges-Barcelona, Spain.
Larson, A., Larson, A., Larson, A., & Larson, A. (2017). Method: Entrepreneurial Innovation, Health, Environment, and Sustainable Business Design. Darden Business Publishing Cases, 1-7.
Matos, S., & Silvestre, B. S. (2013). Managing stakeholder relations when developing sustainable business models: the case of the Brazilian energy sector. Journal of Cleaner Production, 45, 61-73.
Richter, M. (2013). Business model innovation for sustainable energy: German utilities and renewable energy. Energy Policy, 62, 1226-1237.
Schaper, M. (Ed.). (2016). Making ecopreneurs: developing sustainable entrepreneurship. CRC Press.
Welford, R. (2013). Hijacking environmentalism: Corporate responses to sustainable
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