A business model is defined as a process of an organisation to create, deliver and capture value. In any context, a business model is interrelated to a business strategy [8].
Components of a successful business model are: Strategic Decisions Value Creation Value Capture Value Network [9]
Figure 1 below shows components and subcomponents of a business model. Figure 1: Components of a business model [9]
4V Business Model
A 4V business model will be used to help build a model that should assist the South African metered industry. The 4V business model has four components namely value proposition, value creation, value capture and value network. Details of each component is as follows. Value Proposition
A value proposition in definition is a statement that is made with regards to why customers should buy products or services offered by a company. In essence, a value proposition is a promised benefit that a company delivers through its products and services. One of the reasons why a customer prefers one company over another, is due to value proposition [10].
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A value proposition should aim to solve problems of customers or satisfy the needs of customers [10].
There is a need for a value proposition within companies, in order to add value to the experiences of customers. There are three elements of a value proposition namely capacity, impact and cost. Capacity has to do with what a company is able to do or offer a customer. Impact means that, in what way the offered products or services will be of help to the success of a customer. Cost is, in this regard, what the customer will have to pay for the treat
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 model entails many facets. To narrow down the meaning of business model, it refers to the way businesses intend to create products to sell and to generate revenue in a particular industry (Ovans, A., 2015). As business decided elements necessary to accomplish goal and objectives, they must consider many factor that influence business models. According to Band (2009a), people, process & strategy effect business models. People effects business models through skilled or unskilled employees, organizational structures and incentives. Studies found that user adoption is the top problem that organizations face when implementing CRM solutions. Lack of training and education compound implementation CRM solutions. Change in
Customer Value is ‘the performance characteristics, features and attributes, and any other aspects of goods and which customers are willing to give up resources’ (Robbins, Bergman, Stagg and Coulter, 2012). This broad definition highlights the fact that there are multiple aspects that contribute to create a sense of value within the customer.
Customer value proposition refers to what is meaningful to the customers. In other words, it is the further description of the real demand of the customers. For the customers who were using Web-based shopping, their value proposition might be different. However, the main value proposition always kept same. They all believed that shopping on-line was able to provide more flexibility and cost-time efficient than shopping to the real store. Those innovations in customer service Ives mentions at the end of the case such like bank clerks, gas jockeys and pay telephones are all aimed at provide more customers convenient. Web-based shopping provide not only customers convenient in customer service, it completely change the way customer shopping. On-line shopping provide the possibility for customer to break the boundaries of space and time, it means that you can purchase what ever you want without going to the store. Products and services came to you, but not you went to them. This is the most different between them.
Value creation is creating value for the customer. Being able to solve or meet the customer requirements. Value is created whenever an action is taken for which the benefit exceeds the cost.
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.
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).
Value creation means increase the value of products, service and even business to meet the customers’ needs and requirements so that they can get competitive advantages. (Business Fundas, 2012) As we analyzed, fast food industry’s threat of new entrants is low and the availability of substitutes is high. It’s a fare market which the buyers have strong powers.
This research paper is analysis and overview of the business model canvas to highlight its genesis and features. The model will be compared to other business models to help strategic managers make a rationale decision. This paper underlines the advantages and the limitations of the of the business model canvas. The goal is to understand and to apply in the work environment the concept of the business model canvas.
“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).
3) A business model describes how a company produces, delivers, and sells a product or service to create wealth.
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,
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.
The value proposition is the, “set of beliefs or values it (the company) promises to deliver to consumers to satisfy their needs (Armstrong & Kotler, 2013)”. Netflix promises to deliver their diverse and ever expanding content library to the consumer for a set monthly fee. Netflix builds