Business Model and Disruption

This article discusses the definition of business models and how disruptions can affect them. It explores the impact of smart products on the banking industry and the Osterwalder model. The article also covers the importance of value proposition and capabilities and resources in business models.

Running head: BUSINESS MODEL AND DISRUPTION 1
Business model and disruption
Name
Institution

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BUSINESS MODEL AND DISRUPTION
Definition
The business model is the unique innovation an organization, entrepreneur, and
companies employ that fits into their view of business so as to increase the operational scope of
the company. The business model adopted by a company is aimed at maintaining the
organization for a long period of time ad versing the different market conditions that might
come. The business model targets customers, solutions to various company stalemates, the best
areas to venture e.g. youth programs. There are different types of business models. Business
models vary from organization to organization. Some of the commonly used business models
are; direct sales, franchise model, freemium model and subscription model.
A company feeling it’s not serving the purpose it should and does not get profits should
change their business model. Business environment might change a particular time making it
necessary to change the model. There could be new government policies that include tax rates.
Such factors are called business disruptions. Business disruptions are factors that influence the
business models of a company both in the negative and positive ways. This enables the business
to suit the rapidly changing business environment (Bocken, Short, Rana & Evans, 2014). These
disruptions include; change of culture, globalization, and customer dependency, among others.
This is according to Harvard business review and literature.
Smart Products and the Dominion Bank
Smart products can act as disruptions to companies in conducting their business. The
products affect business models of great companies for instance. Commonwealth bank that
provides finance and banking services in Australia. The disruption of smart products influence
opportunities in the market or disadvantage them.

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Smart connected products have many, of these physical components that influence the
decision of the company through soft wares updates, and made through to services to continually
improved and optimized with the visits to the leader.
The competitive landscape reshaped by smart products in the positive way include;
Monitoring
Customer accounts are easily monitored by the account owners and the bank. The
customer can receive bank services from anywhere they are not necessarily on the bank
premises. Assisted by the use of a smartphone as a form of a smart product.
Control
The bank makes software in places where the bank services are needed and a premise is
still far-fetched to put. An ATM machine controlled by the bank to provide banking services to
customers. This is a form of the smart product.
Autonomy
The bank uses self-coordinated smart products that help customers get round the clock
services. The machines that are forms of smart products are self-automated and can on their own
balance the accounts, calculate profits and detect any imbalances. These even make work easier
for the bankers.
The smart products influence the decisions in the following ways;
Since there are deeper relationships between the company and customers created
by the smart products. The company has to improve their market strategies and accountability to
the customers in order to maintain the company’s stability. Possible account delays should be
avoided with the 24-hour customer service.

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High market barriers are created by this, there are so many companies that provide
banking services and with this smart products. They all compete for the same platform, therefore,
limiting the advertisement market. This, in turn, creates a high market barrier for the
Commonwealth Bank.
High fixed costs:
With customers accessing so many products of the same kind, the company has to
provide services at affordable costs. This is a model seeking to maintain the customer’s interest
while it’s influenced by the smart product.
Feature arm races
The additional of smart products in the bank services, sometimes do not benefit the
company. The aim of improving the services using smart products aims at achieving customer
satisfaction while getting revenues. The revenues might not be immediate as hoped.
This is some of the ways that smart products have influenced the decision at the banking
service, therefore, influencing the business model.
Osterwalder Model
For a starting business entrepreneur, it’s logical to look at all the disruptions before
setting business models (Paquin, 2016). This is to help get a perfect startup. The future of the
banking industry in relation to the two business model is to get back to societal purposes that will
steer them to a safe harbor rather than compete with the government’s upheaval (Esnard, 2016).
The business model of Osterwalder has nine important features that can be used to explain the
influence on the finance and banking service
Use of key partners

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Stakeholders from whom the business sources key resources or partners with. This
illustrates that company should have good connections with a key stakeholder. Mobile air
network operators that provide mobile banking services to the customers should be part of the
decision makers of the company as they are important in the implementation of the smart
services.
Key activities required to deliver the service or product, such as channels of
distribution, customer relationships, and revenue streams. The smart products improve feedback.
The feedback can be used to the relationship between the customers. It’s easier to learn about
challenges, customer demands and many more when the feedback is an instance, therefore the
stakeholders can react with the help of the smart products.
Key resources
Resources that are needed to sustain the company. With the smart products, it’s easier to
get resources through making social advertisement on the customer’s phone. Physical machines
can also be made and used at the press of buttons and improve workability at the banking firm.
Value propositions
The needs of the customers that are satisfied with the company’s new product. The use of
smart product enhances value proposition. The use of simple smart cards that link debit master
card that is easily portable to the customers. The value proposition is therefore likely to improve
through such smart products.
Customer relationships
The smart product improves customer relationship. The bank uses ATM machines for
over 40000 places. These, therefore, means they relate to about three times the ATM numbers of
customers. These numbers show largely an improvement of the customer relationship.

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Channels to reach each customer
Furtherly monitor each of them. The use of mobile banking creates a good channel by
which, the customer is reached through their mobile phones. This makes the channel direct and
effective
Customer segments on which customer is the most valuable asset to the company. The
customers who are involved in the transactions through the bank is the most important
customers. They are supposed to be served with all the products they have to, including the
model by developed by commonwealth bank that serves customers internationally, over sea
services (Strahan, 2014).
Cost structure
The smart product costs a lot of money both to procure and install in the banks and fields.
If they do not get a good response from the customer, this might affect the revenues of the
company negatively as there is much investment to them too (Vik, 2016).
The last of the structure of the model is the revenue streams (Krumwiede, 2015). What
does the customer pay for, to whom and through what means? This revenue streams have
significantly improved with the coming of the smart products. The payment is electronically
monitored and this, therefore, improves accountability. The customer also has an easier method
of pay just through the phone.
Business models perspectives
Value proposition
The value proposition in the cases of business. As much as the customers have a taste
they look for unique features and value of a product over another. The customer will normally go
for a business that makes their world even easier. The business model canvas stresses this

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looking at it as the intermediate feature of the service offered countered against the needs of the
customer (Osterwalder, Pigneur, Bernarda & Smith, 2014). Failure to the business model for
value proposition is likely to lead to the failure of the business. Some of the features that can be
considered for value proposition include,
The newness of the product – New services are likely to attract a large number of
customers.
Performance of the product – Quick performing products are liked by customers hence
ATM machines are preferred to the long lines in banks
Customization – Service that relates to the customers are easily accepted by the customer.
Getting the job done – Service that helps the customer achieve their goals will always be
preferred by the customers.
Design – Unique designs like the oversea debit cards attract the customer’s interest.
Brand and status – Selling brands are seen to be authentic by the customers and not a
fraudulent deal, especially in banking services.
Price- Free mobile banking services are likely to attract customers.
Risk reduction- Secure services like the mobile banking would attract customers even
more.
Accessibility – Readily available products are preferred.
Convenience – ease of use of a product makes the customer want to get it
Business models as a set of capabilities and resources.
Global chaos might erupt in a sector. This chaos might disorient the organization, the
resources and abilities that will help the organization get back to its normal ways are to be
considered in the business model (Namitulina, 2015). The banking sector realized a lot of chaos

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ranging from government policies to tax enactment. The bank leaders respond by creating an
organizational crisis program that uses its capabilities into the post-crisis era. (Vogler, 2015)

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