Business Model Innovation in the Information Age

This assignment delves into the concept of business model innovation in the context of modern information systems. It examines various paths to innovation, drawing on examples like Microsoft's acquisition of Nokia and Lenovo's rise as a technology giant. The analysis considers factors influencing business model evolution, including digital disruption, data-driven economies, and open innovation strategies. Students are expected to synthesize these concepts and critically evaluate the implications of business model innovation for information systems.

Running head: INFORMATION SYSTEM STRATEGY AND BUSINESS
INFORMATION SYSTEM STRATEGY AND BUSINESS
Name of the Student:
Name of the University
Author Note:

1INFORMATION SYSTEM STRATEGY AND BUSINESS
The essay discusses the relation between the technology with recent business
strategies. Businesses have been transforming rapidly as well as presenting more services
than they used do before. For supporting and assisting these fast changing business
environment technologies especially information systems have begun to become more
flexible as well as easy to change. The researchers in this filed have widely recognised that
the information technology is the life of the companies operating both domestically or
internationally. Despite the fact that Information Systems (IS) were considered to be
separated part of organizations which used to assist only in providing some infrastructural
help or as supporting mechanism for few business activities. This scenario has completely
changed now and IS has become an integral part of business of an organization. The global
organizations are introducing designations like chief information officers which marks the
transformation. They have started to recognise technologies as chief elements to build their
business strategies thus gain competitive advantages. The focus has been on automating the
transactional-based systems in all the areas of their business such as logistics and production.
The essay analyses the relevant theory on business model by Chesbrough and Zott and Amit.
For the empirical data the essay discusses Lenovo’s organizational framework, business
model, competitive opportunities as well as basic challenges build by the advanced
technology.
The business model concept refers to a rationale of methods that the corporations
create, deliver and capture values in particular economic, cultural and social contexts.
Business model formation is a sections of business strategy of an organization. According to
Zott and Amit (2010), it is essential for a farm to set a model immediately after they select
the target industry. Different industries follow different business model which allow them to
exploit internal resources such as employees and their capabilities and external such as
partners, customers and the suppliers. The researchers, it is vital for the entrepreneurs or the

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managers to follow perfect model because this has implications for gaining performance
potential both within the firms as well as beyond them. Business models regulate capital
expenditures of the firms along with making core decisions within the corporations.
According to Zott and Amit (2010), the interdependent activities are chief theme of the
ideology of an activity system which provide knowledge about the evolution process. The
companies change themselves according to the competitive environments change. Weaving
all these activities performed by both the internal as well as external factors is the chief
element of the business model design. Business system has numerous components as well as
dynamics which are defined by the understanding of selection of the activities, methods of
performing them along with the specific time by a specific firm. The business model is
discussed as the mode through which the firms depend on the resources as well as capabilities
of the third parties and control the external ideas or technologies through open business
models.
There are two business parameters which focus on the purposeful designs of activity
systems such as design elements and design themes. The former attends content, structure
and governance. The activity system content focuses on the assortment of activities. The
system structure refers to the method of connecting the activities with each other. Activity
system governments states the owner or the performer of the activities. The design theme
details the systems’ chief value creation derivers. It discusses adoption of new activities,
keeping the third parties attracted to the business and increasing efficiency through building
complementarities. The advantages of the activity system of a company include providing
systematic or holistic thinking of a firm, method of linking activities with current business
model and proper utilization of different resources.
In the words of Chesbrough (2010), the firms commercialize new concepts and
ideologies through their respective business model. In some cases, the technological

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innovations define the firm’s business model and sometimes, he company’s business model
incorporate technological advancements for gaining more competitive opportunities. This
literature chiefly focuses on the experimentation for adopting new business models with
support of technology. To the author, the companies face various difficulties or barriers when
exposed to a market but they essentially follow some models which will create scope for
experimenting and clarify the processes underlying them. Experimentation allows them to
generate various possibilities prior to invest in reality. Thomke has advised to use tools like
mapping which is useful for explicating business models. The experimentation focuses on the
innovation of product and process. According to the discovery driven concept of McGrath
and McMillan, this concept has ability to model the unknown assumptions which clarify
required results.
Framework:
The essay discusses the relationship between the business model and the information
system through a representational framework of a very famous company namely Lenovo. It
folows four segments which are: business model, architecture, information system
architecture and its implication. First two analyses from business perspective and last two are
from IS domain.
Business model
It reflects the core actions of the organizations. It is based on the conception through
which the companies deliver products to their customers. Business model basically focuses
on the methods utilized and behaviours of the organisations for satisfying their customers’
request for services. Model does not capture the structure or operation of the companies for
accomplishing its goals but only discusses the business architecture which is considered to be
implementation of the business models. Organizational restructuring does not revise the

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business model as they focus on altering the business architectures which implements the
model.
A business model contains of a range of objects which reflect either the role of the
business unit as well as agent or the actions of the external entities that are in continuous
interaction with business. Interactions are modelled as requests interchanged between the
objects. The object type has the state variables that reflect their physical state as well as
knowledge and the services demonstrating its responsibilities along with capabilities.
Matters of the business models are not only processes, particular agents or some
database components but they are actions done by the agents for example people as well as
departments accountable for the delivering of services among themselves thus eventually to
the customers. Specifically, an assumed agent may play diverse roles. Similarly, the same
role may be played by quite a few agents.
Business architecture:
It is the implementation of the business model. It specifically describes the definite
organizational units as well as their relationships for example hierarchical. As every
organizational unit can perform various different roles or responsibilities and every objects of
business model may be implemented through numerous organizational units, the connection
among them are many.
IS architecture:
An information system architecture specifies the logical arrangement of the
components that according to theory needs to support the business model. It rather provides
the functional requirements of the system instead of addressing actual implementation of the
IS.

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IS implementation:
This level refers to actual implementation of the Information System architecture that
includes database design as well as implementation, dispensation of the components that may
or may not use an object architecture, and Graphical user interface designs and
implementation. Alignment of the IS strategy with business model or strategy is a significant
objective in case the organizations aim for using the IT resources effectively (Abbasi, Sarker
and Chiang 2016). The proper incorporation of the business strategies and IS strategies in the
organizations is required for maintaining consistency with the general business strategy along
with the Information System. It helps to guide the overall direction to the IS divisions
objective that they need to achieve. Numerous examples of strategic alignment can be found
where the business strategy would have corresponded to sell the services or products
globally. The IS strategy of a company helps to provide a worldwide sales information
system to enable the selling of goods internationally.

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Information systems supports business model
Business model utilizes information systems
Analyse Investment
Realize Objectives
Figure 2. business strategy and information system
Opportunities:
The traditional concept of introducing the IS strategy in the business model was
related with reduction of high expenses of manpower and introduce reliable and effective
technology. In recent modern technical environment, expenditure containment means
achieving a high level of flexibility which allows the corporations to adapt as well as change
themselves quickly (Saebi and Foss 2015). The main idea has become incorporation of new
technologies as well as align the business model with innovative business alliances without
disturbing the existing business infrastructures.
Information Systems
Competitive
Advantage
Achieving
Objectives
Business Strategy

7INFORMATION SYSTEM STRATEGY AND BUSINESS
Introduction of IS strategies in the corporations also improves processes of the
business. Improvement of business process refers not the replication of an existing business
process rather improving them by the means of technological implication as well as systems
to some specific process (Hsu, Lai and Chao 2014). Information system strategies have the
capability to deliver more attentive and quicker access to the information that generates
relevant business intelligence. This leads to better decision making thus provide the
corporations more competitive advantages.
Popular Information systems such as customer relationship management (CRM) are
utilised for building customer devotion, increase long term consumer retention, advance
customer productivity as well as accomplish a more attentive marketing techniques.
Information systems also play an important role in increasing the work environment and
foster innovation (Economist.com, 2018). This is a major value added element of the
information systems. They help to exploit the talent in the corporation, by means of new
hardware, software, networking tool as well as a virtual environment that create opportunity
for the corporations.
The concept of being different has taken the company from a small computer
manufacturer working in China to one of the principal technology companies in this world,
that operates in more than 160 countries. In business, their best patrons also believe that
Different is Better. Over their careers, they have reliably proven that being an unlike IT
solution cannot only drive the meaningful occupational results, but also gives IT a base in the
management field.

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Figure 3. Lenovo annual report 2016/2017
(source- Lenovo.com, 2018).
Sale from goods and services revenue from the sales of software, hardware and
peripherals, services along with mobile devices has been documented, net value-added taxes,
and grant for the estimated returns and discounts. As both ownership as well as risks of loss
are successfully transferred to the customer, commonly a convincing evidence that sales
preparation exists, the fee is fixed as well as determinable; collectability is sensibly assured
finally delivery has been occurred (Mary and Rm 2015). Revenue from prolonged warranty
contracts has been deferred as well as repaid as received over the contract period, extending
from one to four years. Revenue from the provision of system integration services and
information technological service is predicted over the terms of contract or as services are

9INFORMATION SYSTEM STRATEGY AND BUSINESS
rendered. At March 31, 2017, patent and technology of US$61,939,000 (2016:
US$33,069,000) is under development.
Challenges:
For enabling the effective corporate strategies at its best extend the companies needs
to exploit their competencies which demonstrate the maximum potential. IS is a potential
catalyst for building business model and corporate strategies (Wirtz et al 2016). It is
beneficial for the company if utilized completely. Information System has proved to offer the
corporations a method for developing new assistances, proactively improve the customer
experiences along with building collaborative arrangements internally in the organization.
There are several challenges that the corporations face while focusing the strategic attention
to their IS competencies. According to Fichman et al (2014), it is difficult to measure the
impact of IS on a corporation as it does not determine the manner of reducing cost, increase
or promote collaboration and power distribution among the business owners.
There is a need to develop systems that prioritize the available resources in the
companies for example monetary as well as human resources (Hbr.org, 2018). This will help
in completing more focus projects along with a long term, planned and cross structural
beneficial projects. To exploit the technological investments in a company, it is vital for the
operators of IS that they are able to adopt as well as appreciate the values that it incorporates
to the business. In case the users proved to be incompetent to operate, the entire potential of
invested information system can never be implicitly realised (Veit et al 2014). It is imprudent
for a company to leap in and aggressively follow a strategy of investment in the Information
Systems in case they do not have a satisfactory base to primarily begin from. A durable
technological foundation is a desirable pre cursor for a company prior to begin or initiate
business strategy through the use of the Information Systems.

10INFORMATION SYSTEM STRATEGY AND BUSINESS
Intellectual property risk:
The company suffers much if it cannot develop and protect its intellectual property as
well as its suppliers fail to protect the technology licences (Honghua and Juan 2014). The
company suffers therefore has to spend the legal expenses for defending against the legal
action claiming intellectual property breach as well as any possible resulting settlement and
damages. For this, the IS strategy helps taking full benefit of the legal defences by registering
the trademarks along with applying for the patents. For approved IP, it takes appropriate
initiatives to guarantee its sustained validity.
Therefore, it can be concluded that developing business model innovation is necessary
for the firms because they provide hoard of competitive advantages. However, these models
are difficult to achieve as the impediments or the external environments are constantly
changing therefore the organizations adopt effective attitudes to manage such problems. In
this recent competitive world, technological advancement is the only way to assist the
corporations to limit loss. With discovery driven strategies the companies may model
uncertainties, update financial projections based on their experiments as well as technological
changes. For forming better business models most of the importance are put on the
introduction of Information system strategies that have provided a lot of advantages both
internally as well as externally.

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References:
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Toward an Inclusive Research Agenda. Journal of the Association for Information
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Chen, Mocker, Preston and Teubner (2010). Information Systems Strategy:
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Chesbrough, H. (2010). Business Model Innovation: Opportunities and Barriers. Long Range
Planning, 43(2-3), pp.354-363.
Economist.com (2018). Data-giving-rise-new-economy. [online] Economist.com. Available
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Hbr.org (2018). Four Paths to Business Model Innovation. [online] Harvard Business
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[Accessed 7 Jan. 2018].
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