A business model is a new tool for designing and planning business processes. They are aimed at finding the most effective solutions in making a profit. The process of building business models received a powerful impetus with the massive development of e-commerce. Today, these tools are used not only in the online sphere, but also in traditional business industries. We will talk about what a business model of an enterprise is, what its types exist and why they are needed at all.
Business model concept
Briefly describe the essence of the business model, it is worth noting that this is a simplified, schematic, conceptual representation of the flow of business processes. This concept arises in response to the many challenges of the new economic reality that developed at the end of the 20th century. More and more newcomers came to the business, and they did not have the time, money or knowledge to develop in-depth development strategies; they needed effective and fast tools to maximize profit. And the business model is a clear, visual way to see all the components of the business and find points for development and increase profitability.
Business Model Approaches
For the first time, the term “business model” appeared in works on economics in the 40s of the 20th century. But then it was not widely used; for a long time it was used in combination with the concept of corporate strategy. And only in the 90s, business models became popular in connection with the understanding of business on the Internet. Later, the term organically entered the vocabulary of managers and economists in various fields, not only online. There are two main approaches to the definition of a business model. The first is associated with an emphasis on the flow of production processes in the company and is aimed at finding the internal reserves of the company for additional profit. The second approach is associated with the external environment of the company, in particular, with the consumer and his needs and values. The company in this case selects the consumer segment, develops the buyer, establishes a relationship with him. There are also many copyright concepts, within the framework of each of which an own interpretation of this concept is formulated. In its most general form, we can say that a business model is an analytical tool that, in a schematic, visual form, gives a description of all the processes in the company and helps to find points for profit.
Construction goals
The main goal of creating a business model is to find the development path of the company. It helps to identify the advantages and competitive differences of the enterprise and evaluate new business processes. Also, the business model allows you to determine the need to make changes to the already familiar ways of the company in order to maximize profits. In addition, modeling helps identify firm weaknesses and eliminate vulnerabilities. The business model is a good tool for evaluating the effectiveness of production processes and organization of management. It gives a holistic view of the activities of the company and the state of the internal environment, and allows to improve the course of all processes.
Business model and company strategy
It is often possible to come across the fact that the terms “business model” and “corporate strategy” are used as synonyms. Or do they represent the strategy as an integral element of the model. However, there are serious differences between these phenomena. The strategy is based on a comprehensive analysis of the external and internal environment of the company and the formulation of long-term goals. A business model is associated with relatively close goals, it is rather a tactic, as it provides specific answers to questions about how to achieve goals. The business model of the project includes a set of necessary actions as close as possible to the current reality. It is more related to the financial sector of the company. The strategy, to a greater degree, sets the direction of the development of the company; it has much less specificity. The optimal planning sequence is the development of a strategy, and on its basis - the creation of a business model. Strategy in this case is an ideological platform for modeling.
Components
Since the business is extremely diverse, there are a large number of options for business models. Theorists and practitioners find various approaches to the definition of this phenomenon and identify diverse sets of components in it. So, there are many supporters from the point of view that the organization ’s business model includes such components as the organizational structure, resources, business process, organization functions, corporate strategy and manufactured goods and services. The generalized model of a business plan includes the following components: market and competitor analysis, organizational structure, marketing, production, finance, risk assessment, legal grounds. However, these concepts are not entirely business models. Osterwalder’s most popular business model consists of 9 main components: customer segments, customer relationships, distribution channels, sales propositions, resources, core business, key partners, cost structure and revenue streams. Below we will consider this model in more detail. Traditionally, today the business model includes such blocks as consumer, product, marketing, suppliers and manufacturers, finance, competitors, market, non-economic factors of influence.
Stages of building a business model
Any modeling begins with an assessment of the existing situation and the formulation of goals. Further, the construction of business models is associated with the selection of a suitable template and its competent completion. Osterwalder - the main ideologist of business modeling in the world, says that the “design” process includes five main stages:
- Mobilization . At this stage, it is necessary to conduct preparatory research, evaluate resources, set goals and, most importantly, assemble the necessary team.
- Understanding . This stage is associated with immersion in the situation, that is, at this time you need to understand what is happening on the market and in what conditions it is necessary to conduct business.
- Design . This stage is associated with the generation of ideas, most often they appear as a result of the brainstorming of the team. At this stage, you need to find several viable ideas for doing business and choose the appropriate business model templates for them.
- Application . This stage is associated with testing the developed model for the real conditions of the markets and its adjustment to existing circumstances.
- The board . This is actually the stage of using the model, with a periodic assessment of its effectiveness and adjustments to its functioning.
Types of Business Models
There are several approaches to isolating the types of objects under study. The basis for the typology may be traded assets. In this case, models with financial, human, intangible and physical assets are distinguished. By the object of the model, such varieties are distinguished as templates for a particular product, for the company as a whole and for the group of companies. In this case, the researchers talk about differentiated, undifferentiated, segmented, integrated, adaptive and externally oriented species. However, the best business models are difficult to typologize, and they usually bear the name of the company for which they were first invented. So, in the 50s of the 20th century, models appeared for companies such as the American McDonald's and Japanese Toyota. 60 years passed under the sign of innovative Wal-Mart and Hypermarket types. In the 80s, Home Depot, Intel and Dell Computer set a new trend. In the 90s, they were replaced by models invented for Netflix, eBay, Amazon.com, Starbucks, Microsoft. And the end of the 20th and the beginning of the 21st century were marked by a boom in models for Internet projects.
Online business models
In recent years, online commerce is only gaining momentum; it is the fastest growing area of ​​the modern economy. One of the secrets of such a boom is the opportunity with small investments to build a successful and profitable business. Since this area, first of all, is a place for young entrepreneurs who have no experience in deep research and strategic planning to implement their plans, it is on the Internet that a large number of models of different complexity appear. The company's most popular business model on the Web is online auctions. There are several super-profitable and thousands of small companies built on this principle. Researchers say that today there are 9 main types of business models on the Internet: brokerage, subscription, trading, advertising, production, information, intermediary, affiliate, consumer and community.
Blanca-Dorf Model
Steve Blank is one of the most successful start-ups, his book with Bob Dorf talks about what new business models should be based on. They are supporters of the approach to business from a consumer perspective. When compiling the model, it is necessary to answer key questions from five groups:
- Consumers : who are they, what can they offer and how to keep it?
- Product : how is it good and how is it better to deliver it to the buyer?
- Income : how to make money and how to increase profit?
- Resources : what is needed to achieve the goal, where are these resources and how to get them?
- Partners : who can help achieve the goal and how to attract them?
According to the authors of the model, for the development of the project it is necessary to overcome 4 stages: identification, verification, attraction and birth of the company. At the last stage, the project is “reborn” into a full-fledged company.
Osterwalder Model
One of the most famous in the world is the business model of Osterwalder, it is suitable for projects in any field of activity. The model has 9 blocks:
- Consumer segments. It is necessary to analyze the market and identify suitable segments on which to focus your attention so as not to scatter resources.
- Value propositions. It should be understood what is important for the buyer, what are his main needs, and on this basis to formulate a proposal that would meet the needs and values ​​of the consumer. He should get something that will help him solve some problems and satisfy his needs.
- Sales channels. Based on the lifestyle of the consumer and his media preferences, one should choose the channels for disseminating information about the product and methods for its sale.
- Relations with the client. You should consider ways to attract and retain customers, as well as methods to encourage them to make a purchase.
- Key resources. Any company needs material, human and intangible resources; an entrepreneur must well understand what he needs and where to get it.
- Key activities. One of the most important blocks, it is necessary to prescribe the production processes and management peculiar to this particular project.
- Key partners. Who can help in achieving the goals: suppliers, manufacturers of basic and related elements, it is important to understand how to attract them to your project.
- The cost structure and revenue streams are the blocks for which the financial business model is responsible. You need to have a good idea of ​​what the costs of producing the product and its delivery are, and where there are points for potential profit growth. All these blocks of the template need to be completed, conducting research and brainstorming.
Model E. Maurya
A lean business model is a modification of the Osterwalder template. It also highlights several blocks that need to be filled: a problem, a value proposition, customer segments, key metrics, and distribution channels. The most important thing in business, according to E. Maurya, is finding an advantage that dishonest competitors cannot copy. This may be technology, ways of interacting with the buyer, distribution features. It is in the presence of such an advantage that lies the main secret of the business.
Johnson Model
According to Mark Johnson, a business model is a way to properly capture the market. He based his template on K. Christensen's concept of a pure capture of space. The model includes three components: value proposition, profit formula and key resources plus key processes. All components are interconnected and affect each other.