Running Head: BMG 2
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Shayne Short
Liberty University
BUSI 690-D10
November 22, 2016
BMG 2
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External Factors of Demand
There are many factors that affect the way a company can function, with one of those
factors being external factors. The external environment of a particular organization are factors
that can, and will, affect the way an organization can function [SuY16]. These factors can also
affect the economic trends and cycles and how the company responds to such things as stated
before. Some examples of external factors are things such as: price, customers, government, and
competition.
Price can influence the way a company decides to change their business model due to the
fact that the products or services will all have a different susceptibility to the price changes, both
either positively or negatively. The company must find an equilibrium on the price they chose to
sell their product or service. If the price is set too low, the consumer might think that the product
is cheaply made and not worth purchasing. On the other hand, if the product price is set too high,
the product or service might not saturate the market as quickly as hoped.
Another external factor that a company can actually influence is their clientele. This is
due to the fact that through marketing and advertising, a company is able to influence their
customers. The main goal for this factor is to get the consumer to purchase the company product
or service.
Government can affect a business in many ways. Some examples of this are things such
as new regulations or international laws [Jol151]. If the government were to pass new
regulations, this could affect the way a company does business in more ways than one.
Competition would be another external factor that could change the way business is conducted.
This is due to the fact that the competition could change the way that the target market is
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addressed. If, for example, a competitor goes out of business, the company must change their
business model to pounce on the new consumers without a provider for their needs.
Business Model Design & Innovation
For an organization to be successful, they must design and implement a proper business
model. For this to occur, the organization must have an appropriate business model design.
Business model design and innovation can be defined as the development of unique and special
techniques that an organization uses in conjunction with their overall goal to obtain revenue
[Yan16]. By using different techniques, the company can redefine themselves at a later time to
line up more appropriately with the ever changing business market.
Osterwalder and Pigneur [Ost10] define business model design and innovation is how a
company redefines, or reinvents, themselves by moving their resources around to better meet
consumer needs at a later time once they are established in the market. A sound business model
design will allow for the company to appropriately identify which areas there is potential for
growth, as well as areas that are not. With this information at hand, the board of directors or
management will have a better opportunity as to which decisions to make. A successful business
model will allow a company to appropriately engage with the consumer on every level. The
pricing will therefore become more affordable and market appropriate with the transition of
product and services to the consumer more affective.
With an affective business model design and implementation of that design, an
organization can expect much growth. This is due to the change of landscape of the business if
they have been complacent. With more ways to contact the consumer and more and more
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markets becoming available, the organization will be able to revamp their business model and
reach more consumers, which would in theory, create more revenue.
Challenges to BMDI
As with almost anything in life, there will be challenges to the business model design and
innovation. There are challenges in many forms for the business model design and innovation.
Some examples of these are strategic, technological, learning, and financial. Change that will be
accepted does not happen overnight and the leaders of a business must accept that.
A prime example a strategic challenge would be the alienation of the current clientele. By
switching the current business model with hopes of attractive more consumers and therefore,
more revenue, the business could end up alienating a portion of their current consumer base. The
business must stay true to themselves while not only searching for the quick profit that could
come with the new fad.
A technological challenge of a business model design is the increase in technology. This
is due to the access of information online and the ease of finding such things. Once upon a time a
consumer would have to call or travel to the store with questions in mind. Now, they simply type
the question into their smartphone or tablet and the information needed is there. This is a
challenge due to the fact that many businesses built their companies on solid face to face
customer service which does not happen via the internet. This are just a few ways in which a
business must overcome challenges in the ever changing field of business.
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References
Jolink, A., & Niesten, E. (2015). Sustainable development and business models of entrepreneurs
in the organic food industry. Business Strategy & The Environment 24(6), 386-401.
Osterwalder, A., & Pigneur, Y. (2010). Business model generation . Hoboken: John Wiley &
Sons.
Su Young, L., & Minsuk, S. (2016). Intellectual property business models using patent
acquisition: A case study of Pharma Inc. Journal Of Commercial Biotechnology 22(2), 6-
18.
Yang, M., Evans, S., Vladimirova, D., & Rana, P. (2016 ). Value uncaptured persepctive for
sustainable business model innovation . Journal Of Cleaner Production 140(3), 1794-
1804.
