Business Model Innovation and Development

Question: Discuss about the Business Model Innovation and Development. Answer: Introduction: As stated by Kodama, (2009), a business model is commonly made up of two elements, a business system and a profit model. A business model is a clear conceptualization of picturing how a business operates. The business model describes how an organization shall utilize its revenue to earn or increase profit for the organization. The business system shows the system of work that is designed by a company to deliver its products to the consumers. The profit model describes how the organization shall gain profit in its business (Kastalli Van Looy, 2013). A good business model is the one that is designed to aim at maximum utilization of the resources and bring out most profit from its business activities. The objective of forming a business model is to exploit the business opportunities by creating values for the stakeholders involved in the business. The aim of creating a business model is to increase the number of consumers of the particular firm that would increase the profitability of the organization (Kindstrm Kowalkowski, 2014). In addition to this, the business model also focuses on creating opportunity for the people related to the firm to involve them in the business. The involvement remains to the centre of the activity so as to gain profit for the business activity. Business models are often related to innovation and technologies. It has to be understood that in the recent business sphere, coming up with innovative approach is indeed an important part (Casadesus?Masanell Zhu, 2013). Some of the business problems are caused due to intense competition in the market. In order to fight against these odds, it is important to come up with certain innovative approaches. A busine ss model helps to develop ideas on innovation and build the business likewise. This way a business system or business model helps to overcome the any kind of static or dynamic problem. Business model is designed keeping the strategic alliance of the business partners into consideration. For example a manufacturing company depends on it suppliers. Companies forge partnership with other companies to optimize their business model and reduce risk (Saebi Foss, 2015). Different types of strategic alliances include, partnership or alliance between non-competitors, at times even partnership with competitors becomes feasible as well. In addition to this, other forms of partnership are joint venture or merger with other companies for the expansion of the business. This is a common form of partnership and it is often found to be included in the business model of an organization (Schneider Spieth, 2013). For example, the giant fast food companies like McDonalds or KFC often undertakes the approach to make partnership with other companies to expand their business in other countries. No doubt that these instances are included in their business model. The aim of the business pa rtnership is to optimize their economy of scale and reduce the risks of uncertainty. In addition to this, partnership and acquisition also helps in utilization of particular resources and make it easier for the companies to work even in a new place (Carayannis, Sindakis Walter, 2015). Business models are fundamentally linked with technological innovation. Business model cannot be essentially separated from technology. In the view point of Zott and Amit, (2010), business models as a system helps to identify the targeted group of customers and help to engage the consumers with their needs. The aim of the business model is to deliver satisfaction to the consumers and monetize the value. Therefore, the business model depicts a cause effect relationship. In addition to this, the business model system also helps the business organization to take the right decision regarding openness and user engagement (Carayannis, Sindakis Walter, 2015). Technology development shall also facilitate production for mass. For instance, the business models of the well known companies like Amazon or the Easy Jet are not new but the companies have copied other business ideas. However, the acceptability of the business models of these companies has increased because they utilized the innovat ive approach well. Therefore, if the innovative approach was not undertaken by the company, the business model would have not been successful. Reading Kodama (2009), it has been observed that the knowledge integration model takes place inside and outside a business firm. Internal knowledge is integrated through the internal network while the external knowledge takes place through external network. The knowledge integration model is important to create network transcending of the corporate boundaries. Innovation is the ultimate result from these knowledge innovation techniques. As pointed out Maglio and Spohrer, (2013), a firms corporate activity always depends on the boundaries were it operates. The major drivers of the business activities are directly and indirectly related to the innovation of the business model. Therefore, it has been evident that a firms corporate strategy shall always depend on integrating the technology. Keeping this particular instance into consideration, a firm is always determined towards strengthening the corporate governance under the constantly changing environment. Reading the article, it has been found that the Japanese companies focus on the creativity and technology in order to build their own corporate dominance (Kodama, 2009). The business models of the Japanese firms are quite different from those of the western countries. It has been found that the Japanese firms have been exploiting the vertically integrated network business model for the purpose of carrying out their business activities. An example of the companies utilizing the vertical integration business model is DoCoMo (Schneider Spieth, 2013). The Company has been effective enough in building a communication carrier and value chain of the business in the region of its operation. The Japanese firms have been creative enough to involve these strategies in their corporate domain and upgrade their own path of integration. This way the companies have been observing the ideas and expanding their business in the corporate world. Example of an organization with a particular business model can be stated here. The business model of Google was designed in a way that the users would not have to pay a single penny for using this firms resources. Instead the idea developed was to sell the space of the search engine to the advertisers and earn revenue from them. It was evident that to increase the acceptability of the advertisers to operate in the sites of Google, the Company needs to increase its opportunity to the advertisers (Itami Nishino, 2010). This was the reason the Company started working on various contents and made itself the most acceptable search engine. Another important aspect of the profit model of Google is their effort to reduce the cost that they have to pay by providing free service to its users. Realizing this aspect, the Company not only developed various be-spoke in-house software elements but also invested in in-house server system in order to provide huge range of services of search engine within a minimum expenditure (Itami Nishino, 2010). These approaches together can be considered as the major elements of the business model of Google. Therefore, the business model of Google has been successful because of the combined approach of both innovation and technology. The success of the company can be ascertained due to this particular business model that they have adopted. The article of Kodama has helped to gain much knowledge and understanding on how an organization designs its business model to work in a competitive environment. It has been understood that the business model varies from one firm to other depending on the area of its operation. The business model is always focused in engaging the firms activity to increase the profitability. It has to be understood that in the recent perspective, technology plays a vital role in shaping the business model of a firm (Kodama, 2009). The examples of Google, Toyota and other such companies are built on the innovative technique combined with technology. The advancement of internet and the availability of various platforms have created better place for the companies to operate in the market. In fact, the whole organizational system is designed on the basis of availability of technology. Innovation has indeed widened the horizon for the firms to operate in the market. A detailed analysis has been carried on to understand the stance of innovation at the time of formulating the business model of a company. It has been found that there are various reasons behind the formation of different kinds of business models. For the Japanese firms it has been found that they have been utilizing the vertically integrated form of business model for carrying out their corporate strategy. Therefore, it can be easily said that at the time of designing the business model and the system, innovation plays a vital role in shaping the business. In fact, in the recent time, the business models have been developed keeping the innovative approach into consideration. This has helped to gain much knowledge and understanding how an organization works and how its business model is designed keeping the competitive market situation into consideration. References: Carayannis, E. G., Sindakis, S., Walter, C. (2015). Business model innovation as lever of organizational sustainability.The Journal of Technology Transfer,40(1), 85-104. Casadesus?Masanell, R., Zhu, F. (2013). Business model innovation and competitive imitation: The case of sponsor?based business models.Strategic management journal,34(4), 464-482. Itami, H., Nishino, K. (2010). Killing two birds with one stone: profit for now and learning for the future.Long Range Planning,43(2), 364-369. Kastalli, I. V., Van Looy, B. (2013). 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