Digital Business Model Framework

Running head: DIGITAL BUSINESS MODEL FRAMEWORK
Digital Business Model Framework
Name of the Student:
Name of the University:
Author Note:

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Table of Contents
1. Mapping of different digital business model framework:.......................................................3
St. Gallen Business Model Navigator:.........................................................................................3
Who:........................................................................................................................................3
What:........................................................................................................................................4
How:........................................................................................................................................4
Value:.......................................................................................................................................6
Open source business model:...........................................................................................................7
Three horizons of growth:...........................................................................................................8
Summary of comparison of the three models:.............................................................................9
2. Literature review:.....................................................................................................................9
2.2 Definition of digital business model framework:......................................................................9
Factors affecting digital business model framework:....................................................................10
Political and legal factors:.........................................................................................................10
Political stability:...................................................................................................................10
Bilateral relationships between governments:.......................................................................11
Facilitating digital transactions:.............................................................................................11
Export and import laws:.........................................................................................................12
Intellectual property rights:....................................................................................................13
Economic and social factors:.....................................................................................................14
Gross domestic product:........................................................................................................14
International currency exchange rate:....................................................................................18
Demand of goods:..................................................................................................................19
Technological factors:...............................................................................................................20
Technological advancements:................................................................................................20

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References:....................................................................................................................................25

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1. Mapping of different digital business model framework:
The following are the main digital business model framework which the research would
take into the account:
St. Gallen Business Model Navigator:
The first digital business model which the research would take into account would be St.
Gallen Business Model Navigator. The business model takes into account four main
dimensions namely, who, what, how and the value. The following are the explanation of the
components of the St Gallen Business Model navigator:
Who:
The ‘who’; component of the digital business model refers to the customers which the
companies owning the respective business models would serve. It can be clearly pointed out
from this description that the digital business model draws heavily from stakeholder theory.
Peters, Blohm and Leimeister (2015) opines that companies prior developing their digital
business model framework have to identify their target consumers whom they would serve.
Thus, customers are one of the main dimensions which the companies take into account while
forming their digital business models. For example, automobile companies have to identify the
consumers who are likely to purchase cars marketed by them. The automobile companies mainly
segment their consumer bases into two segments, individual consumers and business consumers.
As far as individual consumers are concerned, the upper class customers, upper middle class
customers and the middle class customers are mainly targeted for domestic cars. As far as
business customers are concerned, the automobile manufacturing companies segregate them
depending on the scale of operations. The large carriers are manufactured to meet the
requirements of the large scale companies while the low budget commercial vehicles are
manufactured keeping the needs of the small case firms in need (Korpela, Hallikas and Dahlberg
2017). The same fact applies for companies operating in the hospitality industry as well. The
management of hotel chains take into account the income of the target consumers prior to
designing the accommodation service products. For example, the economic accommodation
facilities target middle class customers having less amount of spending capability. They similarly
offer premium rooms and suits for the wealthy customers. Thus, it is evident that the customers

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or the ‘who’ component plays a very significant role in designing the Gallen Business Model
Navigator.
What:
The second component of the Gallen Business Model Navigator is ‘what’, the
component which takes into account the products offered to the target customers identified in the
previous steps. Kumar, Lahiri and Dogan (2018) pointed out in this respect that business
organisations while forming their digital business model frameworks have to take into the
products which they are offering to the customers. The companies take into account the attributes
of the products which they would market to the consumers. For example, products like
automobiles and high end electronic goods are extremely expensive. Thus, in order to provide
financial assistance in purchasing these expensive products, companies offer financial assistance.
Companies in order to ensure financial assistance to customers, enter into partnership with
banking and non-banking financing companies. This aspect becomes component of the
partnership of the business model canvas of these companies. As far as fast consumer goods
companies are concerned, the products of these companies are not as expensive as products of
high involvement products manufacturing companies like automobile and high end electronic
products. The buyers generally do not require financial assistance in purchasing these products.
Thus, the companies manufacturing fast moving consumer goods which are not expensive do not
generally provide financial assistance to their buyers. It can be pointed out in this respect that the
digital business models of these companies do not include partnership with financial institutions
to make product purchase financing facilities available to customers.
How:
The ‘how’ component of the digital business model of business organisations refer to the
several processes or methods which the companies use to serve customers to ensure value
creation of the latter. Hlady‐Rispal and Servantie (2018) mention that considering the fact that
very structure of the digital business model starts with consumers, it can be pointed out that
marketing is the key process which companies execute in order to sustain in the market. The
digital business models following the Gallen Business Model Navigator category take into
account the needs of the customers. Porter and Kramer (2019) point out in this respect that
companies in order to ensure that they create products according to the needs of the customers,

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use different communication channels like social media and face to face communication to gain
information about their likes and preferences. The companies use social media platforms like
Facebook and Twitter to gain communicate with customers. Zhang et al. (2017) point out in this
respect that companies acquire and channelize this data obtained from customers to make their
product strategies, the second function. The business organisations align their all other functions
with marketing operations in order to ensure satisfaction of customers, which points out to the
first and second component of the digital business model under study namely, who and what.
Joensuu-Salo et al. (2018) adds to the discussion by pointing out that digital technology is not
only used in the marketing aspect of business operations but also capital acquisition as well.
Business organisations acquire capital using financial technology or fintech platforms. Similarly,
companies invest their acquired financial assets in financial markets both in their resident
countries as well as foreign markets, once again on the digital platform. Thus, it is evident from
the discussion digital factors have gained significance in all the aspects of the business model.
Business digital Model of a company showing use of Gallen Business Model
Navigator
Key
Partners Key activities
Value
proposition
Customer
relationship(Ho
w)
Customer
segments(
Who)
1. Suppliers
of raw
materials
2. Suppliers
of work-in-
progress
3. Supplier
of mobile
app
4.
Markerting
partners
both in
home and
host
markets
4. Banks
(financial
products
like
insurance
and
payment
Marketing of
products using
makreting
channels which
would include
digital
channels like
Youtube and
ecommerce
platforms
1. Providing
high quality
products
including
goods and
services.
2. Round the
clock customer
assistance on
email, mobile
app and
customer
care numbers
3. Providing
after sales
services to
customers on
email, mobile
app and
customer care
numbers
4. Generating
repeat sales as
1. Relationship
with customers
by offering high
quality products
both at the
outlets and on
the ecommrce
paltforms
2. Round the
clock support to
customers on
telephone and
email.
3. Disocunts and
product bundling
to enhance
customer
purchase value.
4. Continuous
communication
with customers
on the social
media to gain
Customers
are
segmented
based on the
criteria like
life stycle.
Economic
conditions,
age etc.

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gateways)
5. Risk
manageme
nt and
insurance
companies
per future
needs of the
customers as
per information
generated on
email, mobile
app and
customer
care numbers
their valuable
feedback.
5. Continuous
communication
with customers
on social
platforms like
Yourtube and
Facebook, even
if they cease to
be customers
Key
Resources(Wh
at) Channels(How)
1. Financial
resources-
Companies
acquire capital
from market
and invest in
asset classes-
all on the
fintech
plartforms
2-material
resources-
Procured from
suppliers using
email, mobile
app and
customer care
numbers
5. Human
resources-
Acquired by
floating
adversiment of
vacancies on
the online job
portals. Human
resources or
employees are
the makers and
users of the
business
model.
Official
website,
Youtube,
Mobile app
Cost structure Revenue structure
Fixed costs(taxes, customs
duties and rent on property
both in the home and host
1. Marketing goods on own outlets and online
portal attached to official website
2. Marketing products on third party

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markets)
Variable costs(Digital
marketing costs, social
media marketing,
ecommerce marketing
costs, marketing etc)
Semuivariable
costs(electricity, telephone,
internet etc)
ecommerce websites.
3. Marketing products on apps
Value:
The fourth and the last component of Gallen Business Model Navigator is value which
refers to the value creation of the companies owning the digital business model. Ozili (2018)
point out that business organsisations use digital platforms to receive payments from debtors.
The business organisations use online gateways which they use to receive payments from
business customers. Similarly, they also receive payments from individual customers. Joensuu-
Salo(2018) mention that customers use digital currency like cards to make payments for the
purchase of products. It can in fact that pointed out that digital platforms have made the
transactions faster and the amount received are automatically recorded in the bank account of the
companies. Yang et al. (2017) point out in support of the previous author that use of technology
to make payment has made the financial transactions in companies more dynamic and automatic,
thus requiring less human intervention. Thus, it can be pointed out that digital platforms have
added value to the business organisations.