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.
“Business Modeling is often seen as process to rearrange the building blocks to an innovative business model. What people forget is that a business model is not just the building plan of your business but also should give answer to the question “Why should your business exist from a customer perspective?” So a business model is not just a building plan but also how you give meaning to your customers and your employees” ( blog- business model,2016).
The word model is defined as “a standard or example for imitation or comparison” (Dictionary.com, 2017). Correspondingly, a business model is a standard or example for a business to follow in order to execute their strategic plan. It provides the directions for the delivery of a product or service that fills a consumer need and creates value. As learned in Rothaermel (2017) a business organization’s structure must follow its strategy to be successful. A business model describes the format a company will use for its structure, the systems it has in place, as well as the processes it will use, to implement its strategy (Osterwalder & Pigneur, 2010).
Differentiation strategy is generally reserved for companies with a clear competitive advantage. Companies such as Mercedes and Apple employ this strategy. Differentiation strategy is demonstrated when a company provides value to customers through unique unique features and characteristics of a company's products rather than by the lowest price (Open Learning World 2010).
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.
In order to accomplish the organization’s goals, the product differentiation and positioning strategies will be used. In some cases both will be used while other goals will only use one of the strategies. To meet the ticket sales goal of being in the top one third of the league both will be used. Product differentiation will be used by showcasing the elite
Differentiation approach refers to the organizations unique designing creations. These approaches appeal to the customers who prefer upscale and exquisite specialty products or services. These include
3) A business model describes how a company produces, delivers, and sells a product or service to create wealth.
It has been held in the United Brands case that product differentiation acts as a barrier to entry. Product differentiation is the development or incorporation of properties such as pricing, style etc. that the intended buyers of a product perceive to be different from others and therefore desirable. In the instant case the product differentiation has been made by different annual fee for licence of patented product.
A business model design and innovation is the value a company brings to the market. Osterwalder, & Pigneur (2010) mentions four mapping four primary areas of environment, market forces, industry forces, key trends, and macroeconomics forces (p. 200). Each one of these four factors are important to a business model. The innovation that is required to make each mapping to become a success is much needed.
In differentiation strategies, the emphasis is on creating value through sustainable uniqueness. This can be achieved through product innovations, superior quality, or superior service, which is then sustained and leveraged through creative advertising; brand-building and strong supply chain relationships. Another requirement for a successful differentiation strategy is that customers must be willing to pay more for the uniqueness of a product or service than the firm paid to create it. A differentiation strategy will lead to higher firm performance only if buyers value the attributes that make a product or service unique enough to pay a higher price for it or if they choose to buy from that firm preferentially. If
Differentiation can be achieved in a variety of ways: unusual features, responsive customer service, rapid product innovations, technological leadership, perceived prestige and status, appeal to different tastes, and engineering design and performance. Methods of controlling costs, however, may be limited. The ability to price differentiated products competitively will be important for reducing upward pressure on customer prices so that they do not exceed the level customers are willing to
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).
A business model is a company’s perception and conception of how the set strategies that a company pursues
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,