Business Model Importance in Innovation and Sustainability

This report delves into the critical role of business models in fostering innovation and ensuring sustainable business practices. It explores the fundamental elements of a business model, emphasizing its function in generating and delivering customer value. The report examines various aspects, including e-archetypes, the business model as an activity system, and the cost-revenue architecture. It highlights the importance of value creation, value appropriation, and innovation within a business model, drawing examples from companies like Amazon. The analysis extends to the nine blocks of the business model canvas, the activity system's content, structure, and governance, and the cost-revenue architecture's impact. The report also discusses conceptualization components, such as value streams, competitive advantages, and technological innovations. Ultimately, it underscores the necessity of adapting business models to drive revenue, reduce static and dynamic issues, and achieve long-term sustainability.

Importance of business model 1
Innovation and sustainable business
Importance of business model in the business, e-archetypes, business model as
activity system and business model as cost revenue system.

Importance of business model 2
A business model has the nature of logistic which is able to provide data along with
evidence that describes how a business would be able to generate and deliver values to the
customers. It also form of costs, revenue and profits associated with the business so that value of
customers can be delivered. There is a different element of business model to create value for
customers and divert payment into profits (Richter, 2013). In core, a business model of the
business comprises nothing less in comparison of architecture of organizational and financial of
a business. business model cannot be compared with spread sheet or computer model, although
business model may well lodged in the plan of business and the statements of the income and
cash flow projections. But in a clearly manner, the concept of it refers in the phenomenon to a
conceptual, in comparison of financial.
Figure 1: elements of business model design

Importance of business model 3
Source: (Teece, 2010).
Business model is important for every sector; there is no need to determine certain sector
for applying it. A good business model is able to gain value proposition that are captivating to
customers and able to obtain the structure of advantageous cost and risks. It is able to generate
significant value capture through the business that make and delivers products and services. It is
required to design the business in an appropriate manner after those implementing e-
commercially viable architectures for revenues to the success for an organization. It is most
important if business is created at first but along with that it is important for this business to keep
the model viable (Cantù, 2013). It is required for business to focus on effectiveness of excellent
people because they would be able to generate the sustainability and profitability.
It has been argued by Teece, (2010), the concept of business model is value creation,
value appropriation and innovation. Value creation is most important element of the business
model. Value creation consider as major aspect in the business to attain the profit from end user
For example, Amazon is a multinational company that is able to provide better services and
products to their customers, it sets 14 principles within an organization and whosoever would be
unable to follow these principles will be get punished by monetary or non-monetary terms. These
unnecessary principles are being the reason of lack of creation that is why Germany is the
country that does not prefer a single product from Amazon. Value appropriation is considers in
the business in the order to gain profit or margin of the company. Two model strategies, leading
strategy and rear guard strategies are being used to describe the value appropriation in the
business. Innovation is the part of success of the company; business model innovation is a unique
concept which supports business in the term of financial viability. It has been analyzed that there
are number of successful business model in all over the world, for instance, Wal-Mart, Apple,

Importance of business model 4
Google, Toyota, and Zara and so on. These are the well developed companies that made changes
in their business model to gain more reparative position in existing market. There are nine block
of business model which defines the strategy without facing any complexity.
Figure 2: Canvas of business model
Source: (Baden-Fuller & Morgan, 2010).
Cantù, (2013), stated that business model as an activity system work an s the design
elements of content, structure and governance. It goes beyond independencies in among
activities and notions of the structure of networks. It has three elements in it activity system as
content, activity system as governance and activity system as structure. Activity system of
business model refers to the selection of number of activities. For instance, Banclombia has
initiated activities to design microcredit for those Colombians who do not have the access of
banking services. To perform the activities, it is required to business to give proper training from

Importance of business model 5
the top management to employees. Activity system structure refers that the interlinked of
activities in the business model. Activity system governance refers that will be liable to perform
the activities in appropriate manner. Along with them business model as activity system can be
categorized in to novelty, lock-in, complementarities and efficiency (Dentchev, et. al., 2016).
Business model as cost revenue architecture can involve key partner, activities and
different resources of business. The modes as cost revenue architect focus on variable and fixed
economy. Customer segment and price contribution is being considered in this business model. It
forces the business to earn more profit by controlling all unnecessary expenses and provide the
business new opportunities to turn business into annuities (Schaltegger & Wagner, 2011).
These models will be able to resolve the issues of static and dynamic. Business model is
able to have impact of reducing issues on the problems. Number of conceptualization component
involves in business model which helps out business to get rid of static as well as dynamic issues
(Zhang & Wang, 2016). There are various components of conceptualization value stream,
logistic stream, internal capability factors, economic growth, market factor, competitive
advantage and revenue stream. Along with that there is a conceptualized components such as
competitors, technological input, system architecture and network architecture, value
proposition, value creating, competitors are elements which are able to design or re-design the
business model for the purpose to analyze the issues regarding static and dynamic (Sanchez &
Ricart, 2010).
A business model is able to articulate the data and the logic that support a value
proposition not only for customers but also maintain a viable structure of revenues and costs. A
good business model will be able to deliver the valuable services to value customers. A business

Importance of business model 6
context is considered as the tool which is taken is use for analyzing the environment of working
within an organization (Boons & Lüdeke-Freund, 2013). The choices of business model define
the architecture of the business. It can be difficult for the business s to make amendments in
established business model. For example, American express and Discover card have experienced
to change its hybrid models where they issued cards themselves. It was inappropriate for its
competitors which provide only network services, as per technology innovation American
express issued credit card. Innovative business model helps out to redesign the models and
provide opportunity to generate higher returns to the pioneer until and unless their features of
novels do not copied (Bharadwaj, El Sawy, Pavlou & Venkatraman, 2013).
It has been analyzed that there is number of business notions such as value creation, core
business, customer, management and addressable market. There is a notion of open innovation
which refers that companies relying on internal ideas to make its business advance. Open
innovation is the part of notion which depends on the outsiders as the source of views and new
ideas to commercialize them. Addressable market is focuses on market segments, face book is
the example of it, when marks Zuckerberg launched its business, and he set to have the system of
monopoly on customers’ response and commitment. It is the most important for the business to
make changes in business without hurting anyone. Value creation is the example of saving time
and efforts of the customers; it comes under the performance indicator of strategic. Inventory
management is essential tool for the business for bringing changes in business model because it
is important for the business to know about the demand of the customers. Business need to
replace the notions of expertise by learns ability and innovations (Breuer & Lüdeke-Freund,
2014).

Importance of business model 7
Figure 3: Steps to gain sustainable business model
Source: (Teece, 2010).
As per the evolution of the company, opportunities for generating revenue at large scale
arise. Manager of the organization should take initiative step as per changes in business model. It
has been evaluated that business model is connected with the innovation of technology. It will
certainly have impact on the decisions of mangers while decision. There is an example of
Google, Amazon and Easy jet which is able to demonstrate that how business get influenced
because of changes in business model. Technological innovations definitely have influences on
the performance of business in desired market (Itami & Nishino, 2010).
It has been concluded that business model has crucial role in innovation and sustainable
business. Business models make ensure to the customers or investors that they are going to tie up

Importance of business model 8
with planned organization. In this report the bas of conceptual is thin, but it suggests the various
ways to advance the study regarding model of business. Employing more accurate notions would
permit other researchers to better understand about the importance of business model. E-business
model archetypes, business model as activity system and business model as cost architecture has
been elaborated in this report which will give better understanding for further research.

Importance of business model 9
References
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Importance of business model 10
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