Business Model Essay: Definition, Disruption, and Opportunities for Volvo Group

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Business Model Essay
Every organization has a mandate to execute it mission to defined stakeholders. Businesses have
an obligation to meet different stakeholders’ objectives and be sustainable for long term benefits.
The primary objective of a business is to continuously increase returns. Organizations require a
framework to follow to transform their products and dispose them in the market. A framework or
structure of how a company or a nonprofit organization that creates, captures, and delivers values
is known as business model (Osterwalder, & Pigneur, 2010). A business model outlines a plan
for an organization on how to generate revenues in a specific marketplace. An organization’s
business model has to reflect the business strategy and business innovation in order to maintain a
competitive advantage in the industry (Achtenhagen, Melin, & Naldi, 2013). The following essay
defines business model and disruption by reviewing its literature. The essay also analyzes
opportunities and threatens that have been caused by smart connected products to a company
business model. This will use Osterwalder & Pignuer (2010) business model framework for
illustration
Business models have been used by businesses in the past to run their operations. The business
model has evolved over the years from a simple logic of how business undertook it operations to
a complex tool for creating business value. Wirtz, Pistoia, Ullrich, & Göttel, (2016) defined
business model as step by step layout plan of action that a business profitably uses to operates in
a specific market. Boons, & Lüdeke-Freund, (2013), outlines that business model transforms
business value proposition to action. The value proposition of an organization is the statement
that defines the difference that the business has to it competitors. The value statement is the
competitive edge that every organization should have to differentiate itself and its products in the
market. Baden-Fuller, & Haefliger, (2013), on another account defined business model as a basic
means that an organization creates value and delivers value to target consumers and collection of
revenues to make profits. A business model illustrates all business activities that have to be
undertaken in an organization to create value and earn profit. The business model should include
an organization strategy, target customers, financing, marketing strategy, projected revenues,
competition, and expected expenses. Each organization is unique in its own way and therefore
should use develop its own business model that strategically positions it image and value in the

market. Therefore business model is an important tool to executing busiess strategy and should
be designed to support the organization strategy.
Bocken, Short, Rana, & Evans (2013) found that business models nowadays are not durable.
They noted that businesses models are highly disrupted by new technology that made the
existing methods and equipments absolute. They found that artificial intelligence,
communication network, and computing power as the lead innovations that disrupt business
models. Innovations create new methods of production and systems of operations that increase
efficiency in organizations. Casadesus‐Masanell, & Zhu, (2013), noted that organizations that do
not adopt new innovation risk losing their competitive edge in the market. Organizations have no
control over business innovations that disrupt their business models. Businesses should invest in
research and development to continuously improve their business model and operate within their
business strategy. Casadesus‐Masanell, & Zhu, (2013), conclude that businesses should strive to
align their business model with the business strategy and accommodate business innovation to
maintain their competitiveness in the market.
The smart connected products present both opportunities and threats for Volvo Group. The smart
connected products are made up physical, connectivity, and smart components that allow data
exchange. In Volvo Group, the machinery and trucks are embedded with software, sensors, and
connectivity allowing the automotives to exchange data with the operators, environment, and
manufacturer. The advance of smart connected product has several opportunities to Volvo Group
business model. First, the Volvo Group has an opportunity of using smart connected product to
increase automobile safety (Porter, & Heppelmann, 2015). The company can use the smart
connected product technology to advance the automobile safety measures. For example, the
company can use sensors to control safety belt or install more reliable emergency breaks that can
reduce chances of an accident happening and protect the driver and passengers from getting
injuries. Secondly, Volvo Group has an opportunity of using smart connectivity increase
automobile fuel efficiency. Fuel efficiency is an important aspect of Volvo and smart
connectivity product can be used to monitor and regulate fuel to achieve high fuel efficiency.
Another opportunity of Volvo Group with smart connective product is intelligent maintenance.
Intelligence maintenance can monitor the automobile and suggest repair when is require and also