Running head: Business Model EXERCISE 1
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Business Model Exercise 1
Liberty University
Sept 2015
BUSI 690
EXERCISE 1
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Discussion Question RQ1
A business model is a process or strategy necessary for a business to develop and sell a
product or service to a customer in the marketplace. It is an essential tool for competing in the
marketplace. A business model can be considered a strategy for an organization because it
identifies customers, a marketplace value for the product and competitors that good organizations
much know to make a profit. A business model defines a company’s value and how it delivers a
product or service to the consumer. It may also provide market factors, process design and
quality suppliers to develop the end product so the company has an idea of how to market the
product or service in the industry.
A business model “details the firm’s competitive tactics and initiatives” (Rothaermel,
2013). Every organization should have a business model that is structured and an organizational
strategy so it can be proficient. A company’s strategy needs a business model to determine the
marketplace and value of the product or service. (Rothaermel, 2013). A good business model can
improve profits and enhance product quality or value while cutting costs. By using innovative
thinking to improve a process a company can generate profit.
A description of your company should be included in your business model along with
what customers you plan to target. Understanding the competition and how to market your
product effectively using differentiation a company can provide market value for a product or
service. Supporting customers by providing quality service and satisfaction can provide success
or bring failure to an organization. A business model can provide an overall look at a company
and this is valuable to an organization.
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Discussion Question RQ2
A business model can be used as a management concept. It provides introductions and
defines a goal or mission for the organization. The concept is used to develop and provide a
service or product to the marketplace. A business model creates structured value to an
organization and their products. According to the Business Model Generation it creates value
proposition design to provide customers products and services they want. It describes how an
organization creates, delivers and provides value. (Osterwalder, 2010)
The article by Osterwalder discusses ““The 9 Building Blocks” used in a business model.
The 9 Building Blocks are: Customer Segments, Value Propositions, Channels, Customer
Relationships, Revenue Streams, Key Resources, Key Activities, Key Partnerships and Cost
Structure, (Osterwalder, 2010). A business model is a design or plan the organization uses to
determine, customer channels, value propositions and distribution channels. By creating value
for a customer segment an organization will be able to cater to a mass market or niche market
that can benefit a company and the shareholders. A business model can assist an organization in
understanding what products can be bundles together providing customer satisfaction. Quality of
a product, the speed of shipping an item to the customer and the overall customer experience
provides value to an organization. An example of this would be Dell Computers.
Dell Computers provides a quality product for the best value price and support customers
concerns quickly. This company has value proposition in the technology industry therefore their
company continues to thrive and provide new and innovative products. Dell computers and their
strategic partnership with Microsoft was an excellent decision that provided the consumer with a
quality product.
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Another example of a great business model is Gore. Gore has a unique method to
leadership. Leadership inside Gore is “not part of a hierarchical structure and traditional
authority”, “leaders are defined by “followership”” (Hitt, 2012). Knowledge based decision
making is based on flexibility, knowledge and adaptation. It is at the forefront of technology and
effective management to capture data from an organization to support strategic decision making
ideas.
The U.S. Government has tried for many years to empower their employees to become
great leaders. Knowledge based decision making was highly sought after to encourage
innovative thinking to old ideas however, failure in communication broke down this structure
and stifled the workplace environment. Without the knowledge to understand how to implement
Knowledge based decision managers continued to micromanage their employees limiting
creativity and hindering morale. A fleeting fad encouraged employees to learn and share
knowledge with management. However, problems arose when managers were unable to let of the
power and control. Knowledge base learning brought empowerment to the workforce and morale
was high but fundamentals changed and managers wanted to control at the top level. This top
down eliminates a learning environment and suppresses employee’s growth. A central issue for
organizations in the twenty-first century will be how to balance top-down control with bottom-up
empowerment, (Johansen, 1995).
Empowering the workforce using a good business model can decrease costs and enhance
the product or service and maybe change an industry. A business model needs to have employee
buy in and a structured foundation or strategy. Centralized decision making was enhanced by the
use of computers and made to be economical by advances in technologies such as television,
radio, telephones, etc. (Malone, 1997).
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Discussion Question RQ3
Value proposition is a key factor for a business strategy. It is the belief that the consumer
will value the product or service. It is what attracts customers towards a product or a service. A
good strategy is based on a customer’s decision and value proposition. The key to create value in
a product or service is to satisfy the customers, (Kaplan, 2004). Value proposition identifies and
communicate unique elements of a product or service that can empower a company into an icon
such as Apple or Kodak. Creating and implementing continuous improvement to ideas and
innovation is value proposition to any organization.
At one time Kodak was a huge iconic giant in the camera and film industry. Lack of
innovation and restructuring of their business model led this global giant into economic failure
with slight recovery. By losing value proposition Kodak Company was forced to layoff and force
retire thousands of people in the community of Rochester, N.Y. Understanding the market or
industry is required of value proposition. By reviewing the business model, making changes and
innovations when needed to maintain the value propositions companies like Kodak may reenter
the market and continue on in the industry. A company must have a product or service to be
competitive in the marketplace. Value proposition is the leading factor for overall success.
Discussion Question RQ4
The technique of brainstorming takes a team to think collectively on how to resolve a
problem. Groups tend to give unique ideas to solve problems more effectively. Employees
understand a company on a more intimate level thus generating new ideas. A brainstorming
session will help clarify major points for the nine building blocks. When using the brainstorming
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method invite a diverse group of employees. Encourage free and open communication to develop
a variety of methods to solve the problem.
By taking action on developing or redesigning a business model one may ask the team
members if the existing business model is currently in practice with the business strategy. Is the
business model working for the company? Is there information missing that needs to be added?
Are there new marketplaces that we can reach into to increase profit or sales? Exploring the ideas
and changes that need to take place a business model is a great way to encourage morale.
Companies like Google and Apple have great diversity and develop strategies using
brainstorming ideas. Google plus is a social marketing tool used to interact with customers, get
feedback more quickly and gain innovative ideas. It is an inexpensive way to solve problems and
gain trust of your customers. It allows people to analyze a problem and look at all the alternatives
to solve the problem.
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References
Hitt, M., Ireland, R. D., & Hoskisson, R. (2012). Strategic management cases:
competitiveness and globalization. Cengage Learning.
Johansen, R., Saveri, A., & Schmid, G. (1995). Forces for organizational change: 21st
century organizations: Reconciling control and empowerment. Institute for the Future, 6(1), 1-9.
Kaplan, R. S., & Norton, D. P. (2004). Strategy maps: Converting intangible assets into
tangible outcomes. Harvard Business Press.
Osterwalder, A., & Pigneur, Y. (2010). Business model generation: a handbook for
visionaries, game changers, and challengers. John Wiley & Sons.
Malone, T. W., & Team, L. Y. (2013). Is empowerment just a fad? Control, decision
making, and IT. Sloan management review, 38(2).
Rothaermel, F. (2013). Strategic Management Concepts and Cases. New York, NY:
McGraw-Hill.
