Kickstarter's Business Model

A business model is an important and integral part of the business a strategy of any firm whether big or small. The way a business model is developed determines and indicates the values, ethics and principles on the lines of which the business at large will be operating. It also indicates how the business is going to function and covers various internal and external dimensions of a business and the organization as a whole.

Strategy refers to an organization’s “overall efforts to gain and sustain competitive advantage” (Rothaermel, 2013, p. 9). An organization’s business model, on the other hand, “details the [organization’s] competitive tactics and initiatives”, which includes the steps necessary to put the organization’s strategy into action (Rothaermel, 2013, p. 11). The strategy is the theory of how the organization will make money, while the business model is the action necessary to achieve the theoretical strategy (Rothaermel, 2013).

Blue ocean strategy, as a business method, is about company creating a new market or industry where there is no competitor. Companies play not by traditional rules, never use the competition as a benchmark. They could ether create greater value for customers at a higher cost or create reasonable value at a lower cost. Thus, the name of the program – find a blue ocean, a new ocean to swim in.

According The Wall Street Journal” … Cirque du Soleil, the Canadian company that redefined the dynamics of a declining circus industry in the 1980s. Under conventional strategy analysis, the circus industry was a loser. Star performers had “supplier power” over the company. Alternative forms of entertainment, from sporting events to home entertainment systems, were relatively inexpensive and on the rise. Moreover, animal rights groups were putting increased pressure on circuses for their treatment of animals.” (Murray, 2014) A new era was created transforming the concept of what is a circus today. As the Wall Street Journal described, “Cirque du Soleil eliminated the animals and reduced the importance of individual stars. It created a new form of entertainment that combined dance, music and athletic skill to appeal to an upscale adult audience that had abandoned the traditional circus. (Murray, 2014)

Business models have a huge impact on how an organizations operate. It is crucial that an organization chose a business model before inception in order to succeed. Basically, business models have become the new basis of competition, replacing product features and benefits as the playing field on which companies emerge as dominant or laggards (Plantes, 2013).

This research paper is analysis and overview of the business model canvas to highlight its genesis and features. The model will be compared to other business models to help strategic managers make a rationale decision. This paper underlines the advantages and the limitations of the of the business model canvas. The goal is to understand and to apply in the work environment the concept of the business model canvas.

This is done by creating a leap in value both for the buyers as well as for the organization thereby creating a new and uncontested market space. Companies left out in the red ocean usually follow a conventional approach, running to beat competition by creating a defensible position in the current market space order.

Porter 's Five Forces Model is a critical instrument to break down an outer aggressive environment of the business. The model incorporates threat of entry, the threat of rivalry, the threat of suppliers, the threat of purchasers and threat of substitutes.

This strategy seem challenging since this strategy focus on capture new market and new demand, which it’s required extra efforts in term of innovation of products and promotion in order to make customers realize about their product. Even there are some discussions about the blue ocean strategies; however, based on my review on customers comment said that the practical guidance on how to create them is limited. Therefore, without usual analytic framework which can be used as guidelines to create blue oceans as well as effective principles to manage risk, creating blue oceans viewed as too risky for managers to pursue as strategy for their company.

A business model is a company’s perception and conception of how the set strategies that a company pursues

Blue ocean strategy is just about thinking outside the box to your competitors. A lot of people are stuck in the red ocean just because they are not aware of the benifits to a blue ocean strategy. By using this together it brings great ideas which will push for further finiancial needs. Using this as a tool would be essential in order to out gun your competitors and develop new and great relationship with consumers.

As mentioned in the article, a good business model tells a good story. Effectively communicating an organization’s business model and strategy to all the members (employees) of the organization can enhance the company’s performance. By understanding where each individual stands and how they contribute to the value chain,

Porter’s five forces are used to determine the competitive intensity and attractiveness of a market. These are close forces that affect a company’s ability to make a profit and serve customers. If any of these forces change, a company must reassess its marketplace. The five forces include: the threat of substitute products, the threat of the entry of new competitors, the intensity of competitive rivalry, the bargaining power of customers and the bargaining power of suppliers.

However, this paper chooses this definition as theoretical perspective of analysis for this paper subject to the following modifications: A business model is overall framework and philosophy by which a company (intends or) creates value in the market place through enhancement of its own combination of raw or in-put materials to create products (tangible and intangible including services), product packaging and systematic distribution in order to generate some or the best possible profit.

There are some tool produce to help implement blue ocean strategy. The Eliminate-Reduce-Raise-Create (ERRC) Grid is the matrix that help execute blue ocean strategy with the four action framework: eliminating, reducing, aising and creating. ERRC Grid help company to remain on their competitive factors. Eliminating and reduce the factor that the transitional industry take it for granted can help the new strategy to remain unique from the transitional market. Nevertheless, raising and creating some unique competitive factor the transitional market never or seldom offered that is above the industry standard. With all these “Four Actions Framework” the company can escape the transitional red ocean market by activate a new blue ocean market and create a new value curve. (Kim & Mauborgne, 2005)