Business Model Generated Can Have A Direct Impact On A Firms Performance

As for external factors one of the external factors would be perhaps a new law that is given and affects directly or indirectly the business and that business needs to make some changes.

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).

When manipulating a business’s strategy, it is important to focus on the external factors in the environment. An external analysis is where a business conducts environmental scanning that present a company with the key external forces influencing the organization. The facets of external forces examined are the business environment, remote environment, or the competitive environment. A business environment is all of the external factors in the general environment that a firm cannot control, but can affect their strategy. The remote environment is the forces that affect most firms. Lastly, a competitive environment is the firm’s specific industry and its entirety. The external analysis is pertinent to a company called Dick’s Drive- In; without it, Dick’s would not be a thriving popular business today.

The first factor is the availability of substitute goods, which are goods that can be utilized instead of the original good. If there is a substitute good available, the demand is likely to change more because people can buy different products. On the contrary, if an item has few substitute goods, it may not gain or lose customers. In Canada, Nike shoes have lots of substitute goods like Adidas

When vision, mission, or values contradict strategy negative consequences could include the loss of reputation, the loss of consumers, the loss of profits, and the loss of the business itself. Reputation is defined by the Merriam-Webster Dictionary as “overall quality or character as seen or judged by people in general” (n.d., https://www.merriam-webster.com/dictionary/reputation). Companies whose strategies go against their values could lose the consumers respect and loyalty. Loss of loyalty and respect could cause consumers to reject the business’s products or services and to turn to the competitors, therefore, causing the loss of consumers and profits. Consequently, the loss of customers and profits could lead to bankrupting the company.

According to Slack et al. The corporate strategy or business strategy is the guide lines for the whole corporation’s businesses in relation to its markets, customers, and the competitors (2007). In the same context, the same authors discussed the link between the corporate strategy and

A good example is a children?s clothing store. They must be able to understand what has made their competitors like Carter?s and

These factors influence the internal environment of an organisation and they help in identifying the past and the present of the company, It also provides a frame work for reviewing strategy position and direction of the company.

Explain how the demand curves for normal products and for prestige products differ, what are demand shifts and why are they important to marketers? How do firms go about estimating demand? How can marketers estimate the elasticity of demand?

Figure 2 demonstrate how any change in one of the other determinants causes demand to rise or to fall by shifting the whole curve to the right or the left. Other factors that determinates of demand

In order to build a successful business model, the organization must analyze the business environment for external forces. Osterwalder and Pigneur (2010) discuss the importance of understanding the external factors in the business environment when developing a business model; the organization must be able to adapt quickly to the changing environment. External factors of demand play a critical role in developing a business model, an organization must quickly identify external threats and opportunities to stay competitive. External factors include: competition; legal and ethical; economic and socio-economic; political; and technological. Industry competition is an external factor that firms must carefully monitor to ensure that the organization is creating customer value through better product/service offerings and cost savings. Mapping the external forces can help an organization see future trends that may be disruptive to the current business model so that the organization can take a different direction to achieve their goals (Osterwalder & Pigneur, 2010, p. 200).

In the business world, strategy is probably the most often used and the most often confused term. The article ‘Why Business Models Matter’ clarifies and elaborates on crucial element of any organization. The Author, who also wrote, ‘What Management is’ asserts that the business model and strategy is the basis of any organization whether it be profit or non-profit. Magretta shows the outlines of business model and strategy. To make a big success in business, the first step is making a business model, when making a new business model, managers must think about all possible outcomes. She goes on further in the article to give examples successful organizations and their use of strategies to compete within the industry.

Business managers evaluate and choose strategies that they think will make their business successful. Two most major sources of competitive advantages are business 's cost structure and its ability to differentiate the business from competitors. (Pearce II & Robinson, Jr., 2013) In order for a business or an organization to enjoy the highest level of profitability or the growth in an organization, it is suggested that both competitive advantages should be used.

“Competitive strategy involves positioning a business to maximize the value of the capabilities that distinguish it from its competitor’s” (Porter 1980:47). A successful business plan requires first and foremost the formation of an appropriate strategy. Through the implementation of a suitable strategy, the company is able to obtain its own industry niche and gain an understanding of its customers (Porter 1985). Whichever strategy is adopted it must be adequately integrated within the firms goals and missions to achieve a competitive advantage (Parker and Helms 1992).

An analysis of the external environment includes the factors in a business’s external environment about a business's industry, competition, and political and social environments, and affects the firm’s strategy (Aaker, 2001).