Business Models Analysis

This essay delves into the concept of business models, outlining their significance in maximizing profits and sales for organizations. It discusses various components such as customer segmentation, value propositions, and the impact of e-business. The essay also highlights the importance of adapting business models to changing environments and technological advancements, providing a comprehensive overview of how businesses can structure their operations for success.

Running head: BUSINESS MODELS
Business Models
Name of the Student
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Author’s note

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The concept of Business models
A business model is a frequently used jargon that means the process by which a company
runs the day to day operations of so that they can maximize the profit or sales. Pricing and cost
are the two variables of a business model. It is the visual or an analytical explanation about the
day to day working of a business organization. There are several steps that are undertaken by an
organization to create a business model (DaSilva & Trkman, 2014).
Customer segmentation: creating a profile about the customers who are going to end up
paying for the product or the service that the organization offers is very crucial. It is the first step
to creating a model (Casadesus‐Masanell & Zhu, 2013).
It also depends upon setting objectives or short term goals that will help the organization
move towards the larger aim (Martins, Rindova & Greenbaum, 2015).
Assessing the business environments is another important step in building the business
model. All internal and external environmental factors have to be considered as it directly or
indirectly affects the daily operations of the organization (Markides, 2013).
Value proposition of the organization is the way to get a return on the products or
services that are being sold. Strategizing the revenue of the product or service which essentially
means pricing strategies is an integral part of building the business model (Zott & Amit, 2013).
Another significant part of a business organization model is to focus on the resources
available and ways and means to use it optimally for the betterment and the benefit of the
organization (Bocken et al., 2014).

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According to Zott, Amit and Massa (2011), there are at least three concepts that might
warrant distinct consideration: (1) e-business model archetypes, (2) business model as activity
system, and (3) business model as cost/revenue architecture.
E-business model archetypes
When business is being done electronically it is called as e- business. It comprises of e-
commerce, e-markets, and Internet-based business organizations and refers to organizations that
have the uses internet to have commercial transactions with their customers and other business
associates.
E-business does not refer to those organizations that just have the description of their
products or services on the internet for the knowledge of the potential customers.
As we can see that internet plays a vital role in this kind of business and this type of
organization has evolved and increased in the recent past with the advancement of modern
information and communication technology along with the decreased cost of internet usage all
over the world. There have been monumental changes in the operations of many business
organizations due to the above stated reasons (Barnes & Hunt, 2013).
The e-business model is just like any other business model but the point of difference is that
these businesses are electronically based and has a significant presence online. Any business
models are based on the participants, the resources and the flow of value. For an e-business
model the steps that are kept in mind while creating a business model are:
Value proposition: It is the fulfillment of the requirement of the customers through the product or
service that the company has to offer. Because the buying and selling of the product or service is

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done through internet and no transaction takes place in front of the customer or the seller like in
retail a lot of trust has to be incorporated in to that minds of the consumers hence the value
proposition is essential for an e-business to flourish.
Revenue model: Even e-commerce giants like Amazon suffer from large revenue setbacks
because of the pricing strategies. There has to be a concrete plan to receive the revenue of the
company. All the monetary transaction that takes place in e-business is through internet.
Business opportunities and business environment: Internet enables an individual to connect with
the world. But for an e-business organization to create footprints all over the world is a
challenge. Amazon, e-bay and many other international financial institutions which offer internet
based services are have their presence globally. And hence the opportunities along with the treats
are not geographically limited. Internal and external business environment affects the daily based
operation of any business and hence they should be kept in mind while creating a business
model. Technological advancement, policies of the government, legal jurisdictions of the nation
state where the organization is willing to operate has a huge role to play in the development of
the business and long term profit maximization (Veit et al,. 2014).
Marketing and branding strategies of an e-business is different from that of other businesses. The
target customers of the e-business are the people who have access to internet and hence most of
the marketing and the branding strategies are done through digital marketing.
There is both B2B and B2C presence of business in the e-business platform. For a B2B
platform there can be various types of model example exchange model, industry conglomerate
etc. B2C platforms includes portals, content provider, transaction broker, market creator, service
provider, community provider or better known as social media.

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Business Model as Activity System
The writers have developed the concept of a firm’s business model as a system of
interdependent set of activities that not only encompass around the particular organization but
also exceed the boundaries so as to expand the limit of the organisation (Reichert et al., 2015).
Based on their research the authors have found two sets of factors that activity systems
designers need to keep in mind: the elements of the design, which includes the content of the
design, the structural design of an activity system along with the authority of the activity. The
second factor of the design is the themes of the design that considers the innovation, enclosure,
complementarities and efficiency - that describe the sources of the activity system's value
creation (De Clercq, Lim & Oh, 2013).
Business Model as Cost-Revenue Architecture
Cost is the monetary values associated in creating a product or service so that it is
available for consumption by the customers. Revenue on the other hand is the monetary value
that has been gathers in exchange of the product or service that has been delivered to the
customer by the organization. In the concept of cost and revenue there is another important term
to know, which breakeven point is (Bini, Dainelli & Giunta, 2016). It is the status of a business
organization when the cost of production is equal to the revenue that is gathered. It is a point
where the company is not making profit and is also not incurring any losses. The cost and
revenue analysis id conducted to determine the proceedings of the organization in terms of profit
making and pricing etc. The business model that works on the fundamentals of cost revenue
focuses more on how to increase the sales and thereby maximize the profit of the company
(Gerasymenko, De Clercq & Sapienza, 2015). The steps to create this model will surround the

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factors like: cost of production, pricing strategies, customer segmentation and location of
distribution etc (Saebi & Foss, 2015).
Some of the common problems that are encountered by any business organizations is
related to the business environments and the business strategies. A model can help a business
structure organize and analyze the problem in a tactical manner and help the management come
up with a creative and simple solution to complex issues within or outside the organization. A
business model helps the management to ask the right questions and enables then to identify the
problem areas in the process (Spieth, Schneckenberg & Ricart, 2014).
Business Context
It is the particular vocabulary or jargons that are used by the organisations in the day to
day operation of the business.
Changes in the business
Change in business is inevitable because business it itself a dynamic concept. There is no
phase where a business is stagnant because if that is the case then there is no business anymore.
In every organisation that has transaction involved is business, be it small scale or a large scale
business everyday has new set of challenges and a new set of obstacles that has to overcome in
order to run the business successfully. Business has to grow with the change in the environments
here technology plays an important part with the modernisation of technology business has to
renew and reinvent itself o match up with the competition (Why business models matter, 2017).
The changes that take place in the business should have a separate module in the
business model of the organisation there should be options and guideline to combat with the

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changes and use it to the benefit of the organisation (Carayannis, Sindakis & Walter, 2015). The
decisions that are taken related to the business by the management are based on market research
and the pattern of the business model and hence it is important for the organisation to focus on
the model (Wirtz et al., 2016).
The business model of any organisation depends on the scale of the business, the nature
of the business, the industry that the business is operating in and the product or service that the
organisation has to offer. It is a crucial step in performing decision making and reformations in
the policies of the organisation. It also helps the company to base its research on the model of the
business; it lays the foundation of a large data.

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Reference List:
Barnes, S., & Hunt, B. (Eds.). (2013). E-commerce and v-business. Routledge.
Bini, L., Dainelli, F., & Giunta, F. (2016). Business model disclosure in the strategic report:
entangling intellectual capital in value creation process. Journal of Intellectual
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Bocken, N. M. P., Short, S. W., Rana, P., & Evans, S. (2014). A literature and practice review to
develop sustainable business model archetypes. Journal of cleaner production, 65, 42-56.
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organizational sustainability. The Journal of Technology Transfer, 40(1), 85-104.
Casadesus‐Masanell, R., & Zhu, F. (2013). Business model innovation and competitive
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De Clercq, D., Lim, D. S., & Oh, C. H. (2013). Individual‐level resources and new business
activity: The contingent role of institutional context. Entrepreneurship Theory and
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Gerasymenko, V., De Clercq, D., & Sapienza, H. J. (2015). Changing the business model:
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performance. Strategic Entrepreneurship Journal, 9(1), 79-98.

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Markides, C. C. (2013). Business model innovation: What can the ambidexterity literature teach
us?. The Academy of Management Perspectives, 27(4), 313-323.
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Why business models matter. (2017). hbr.org. Retrieved 22 August 2017, from
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strategic analysis. Strategic Organization, 11(4), 403-411.

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Zott, C., Amit, R. and Massa, L., 2011. The business model: recent developments and future
research. Journal of management, 37(4), pp.1019-1042.