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NRMT90019 - The Concept of Business Model - Essay

   

Added on  2020-02-24

9 Pages2192 Words88 Views
Running head: CONCEPT OF BUSINESS MODELCONCEPT OF BUSINESS MODELName of the UniversityName of the StudentAuthor Note

1CONCEPT OF BUSINESS MODELThe business model of an organization refers to the clear and brief synopsis of thebusiness operation of the organization. In short, an organization’s business model containsprinciple of business creations and the capture and delivery of the business values in terms ofeconomy, culture and society in which the organization has spread its business. It is consideredthat the business model is a part of business strategies that helps the organization to implementthe strategies in a proper and right way. The business of model of any organization is meant to bethe translating way of value proposition to the potential for revenue growth and overallprofitability (Bocken et al., 2014). This can be said in other way that the business model is theway of creating rapid revenue growth for the company. The business model signifies the business purpose and function of an organization. Forthe proper completion of the business function, the business model needs a background. Themost demanding and effective business models are primarily based on number of fundamentalbusiness templates or business personalities, which are called the business model archetypes(Bocken et al., 2014). This business templates are often called the spectrum templates, which arethe basic fundamental personalities of business models. The business archetype is the necessaryfactor to understand the idea of business model. The primary archetype includes the product,service and trade whereas the secondary archetype includes the brokerage, subscription,marketplace and ecosystem. These seven archetypes are the fundamental basis of the businessmodel, which are necessary for the design of the same. The primary and the overall aim of a business model are focused on creating the businessgrowth, which is the reflection of the customers’ value propositions for the business. Thebusiness activity considers the participation of the capital human resources and the physicalhuman resources for the accomplishment of the business goals. The activity system of the

2CONCEPT OF BUSINESS MODELbusiness model intents the internally dependent range of organizational activities around theorganization. The activities of the business determinates such as customers, stakeholders, firmand the partners of the firm are executed by the activity system of business. The central conceptof the activity system presents the internal dependency of the business activities by the differentcomponents responsible for the same (Bocken et al., 2016). A clear and precise picture isreflected through the interdependencies of the business activities, which are the result of theevolution process of the organization. The evolution process covers the duration of sustainabilityof the business and the expansion of the business boundaries in the competitive and constantchanging market (Schaltegger, Lüdeke-Freund & Hansen, 2012). The potential customers,suppliers and the stakeholders are defined by the activity system of the business.Revenue architecture is one of the basic components integrated into the business model.The pricing strategies and revenue growth of the business are referred by the cost revenuearchitecture of the business model. This revenue architectural business model generates costrevenue of the business and consequently the business model and revenue architecture areinternally connected with each other (Schaltegger, Lüdeke-Freund & Hansen, 2012). Moreover,the cost revenue models and the business model are complementary to each other in terms ofdetermining the pricing and designing strategies of the product or the service provided by thefirm. The ‘razor-blade model’ is one of the popular cost effective revenue architecture modelsthat include the inexpensive pricing razor and marking up of the consumables (Baden-Fuller &Haefliger, 2013). Precisely, the business model and the revenue model are interdependent interms of generating the cost revenue for the business. The business model of an organization includes the capabilities of problem solving. Thebusiness model solves the static and dynamic problems inherited from the organization’s

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