Smartphone Industry: A Firm's Business Model Essay

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Introduction Our client, XYZ, has designed a radically innovative smartphone yet its current business model is ill suited for its commercialisation. A firm's Business Model (BM) is the articulation of the processes through which resources are leveraged to create and deliver value to stakeholders allowing the firm to generate a profit (Chesbrough,i2010). XYZ must therefore undergo a fundamental overhaul of its BM to successfully bring to market its new smartphone. The smartphone industry is characterised by high competition especially amongst manufacturers with Samsung (30%) and Apple (13%) dominating the market (Gartner). It recently experienced a disruptive shift with the success of Google's Open Source Operating Software (OS),…show more content…
I. Open Business Model – Leveraging outside competencies The first step for XYZ is to undergo Business Model Innovation (BMI) to foster its new technology and commercialise it. OI theory poses a rationale for value capture incorporating both elements internal to the firm and external agents. As argued by Henry Chesbrough (2003), a firm can no longer hope to control the best factors of production as some outside elements are bound to outperform those inside the firm be it on cost, quality or specific technology. 1. The Challenge of BM experimentation A business model reflects a firm’s hypothesis of customers’ want and how resources should be organised to meet those needs, get paid for doing so and thus generate a profit (AmitiandiZott,i2012). Our client’s new product is radical in nature meaning it has the potential to significantly alter the standards of the market by setting a new performance trajectory (Christensen,i2000). Assuming the radical technology has market potential XYZ must “develop a business model matching the nature of its innovation, the motivations of the innovators and long term market expectations” (LakhaniiandiBoudreau,i2009,ip75) for that, a great product in a poorly designed BM will likely yield little value. Yet few companies truly grasp their BM and the interdependencies between processes thereby significantly limiting their ability to adapt their BM

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