External Factors And The Business Model

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External Factors and the Business Model To build a successful business model, the organization must analyze the business environment for external forces. Osterwalder and Pigneur (2010) discuss the importance of identifying the external factors in the business environment; the organization must be able to adapt the business model 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. Competition in the industry is an external factor that may impact the business model; the firm must monitor the value creation of the competitor. 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). The external factors can affect a firm’s position in the market. Osterwalder and Pigneur (2010) explain the different external factors as: “market forces; industry forces; key trends, and macro-economic forces” (p. 201). Market forces identifies what is driving market demand at a local level as well as customer switching costs and demand pricing. Industry forces identifies new and existing competitors in the industry, substitute products, suppliers and vendors along the value chain, and community and environmental influences. Key trends identify new emerging
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