External Factors And The Business Model

1545 Words7 Pages
External Factors and the Business Model 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). Osterwalder and Pigneur (2010) explain the different external factors as: • Market forces, the health of the industry, customer segments, growth potential, switching costs, and profitability. • Industry forces, which are the stakeholders, competitors, customers, new entrants, and substitute products. • Key trends, emerging technologies, regulatory changes,
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