Peter Kazmierczak
BusinessModelGeneration2
BUSI690
RQ1
It is made clear that an extensive understanding of an external environment in
Osterwalder and Pignet’s Business Model Generation: A Handbook for Visionaries, Game
Changers,andChallengers.Thisisimportantwhenacompanyperformsit’sbusinessactivitiesin order
to develop a successful business model. If an organization has a proper understanding of the
external environment that they face, they can develop effective business models that lead
tosustainedsuccessandinnovativeandcreativechangestoit’salreadyexistingbusinessmodel. The
authors point out that the role external factors of demand play in business models should carry
four main external environment categories which are: market forces, industry forces, key
trends, and macroeconomic forces (Osterwalder & Pigneur, 2010, pp. 200).
Marketforcescomefirstoftheprimaryexternalforcesthateffectbusinessmodels.The main
components of market forces consist of market issues and segments, the needs and demands
of consumers, and the proposed value of the goods and services offered by an individual firm. If
a firm understands the market forces, they will better understand the direction their market is
headed, as well as defining the specific customer segments of the
organization,whichinturnwillcreatemoreprofit.Also,anunderstandingofmarketforceswill allow
companies to create new products or alter current products in a way that will meet consumer
demands. This will create a high level of consumers and again, raise profits.
The next external factor is industry forces. Industry forces include competitors,
substitutes, stakeholders, and suppliers (Osterwalder & Pigneur, pp. 204). In order to develop
competitive advantages of their competitors, they first need to understand what their
competitorsareofferingtotheircustomers.Also,understandingwhatsubstitutesarewillallow
firms to devolve and market new products that could be used instead of already existing
products.Lastly,suppliersareakeycomponentofindustryforcesbecauseafirmreliesheavily on
them to create products for them, and ultimately to create value for them.
Next, key trends must carefully be examined because they encompass technological,
regulatory, societal and socioeconomic trends (Osterwalder & Pigneur, pp. 206). Technology
plays a large role in companies as it allows them to stay up to date in the newest trends in
technology and advancements. Regulatory trends are of concern for the legal state of the
company, and social trends refer to the values exhibited in the markets where a firm engages
business. Lastly, socioeconomic trends are of high concern for companies because it discuses
theeconomicwell-beingofconsumerswithinthemarket.Theydeterminespendingnormsand will
allow a firm to shape their business around the financial well-being of their market.
Lastly,macroeconomicfactorsdealwiththestateandfutureoutlookoftheeconomy,as well
as the gauging of the availability of resources such as funding and raw materials ((Osterwalder
& Pigneur, pp. 208). If a firm understands macroeconomic principles, they can change it’s
business model to fit current needs, as well as future needs. Particularly understanding how the
economy will perform in boom or bust markets, and the ease of obtaining funding.
RQ2
Businessmodeldesignandinnovationreferstotheprocessbywhicheitheranewor
existingorganizationdecidestoeither:satisfytheneedsofamarket,bringnewproductsor services to
a market, to change an existing market, or create a new market (Osterwalder & Pigneur, 2010,
pp. 244).
The first facto of business model design is the “mobilize” phase. This refers to the
preparation to design a new business model. This means that a firm must first prepare to
understand that there is an actual need for a new business model. The nine building blocks
mustbemetinordertopreparefortheformationofanewbusinessmodel.Also,thisperiod
involvesformingateamtocreateanewbusinessmodelandtoconveytheoverarchinggoals behind
the need for a new model.
Next, the “understanding” phase comes into play. This involves the analysis of the
externalmarketanddefinescustomersegments,andnewandexistingtechnologies.Thisisa key
phase where firms look to create value for their future customers.
Next, is the “design” phase which discusses how an organization changes its external
business model after surveying the market for implementation of the new model (Business
model design and innovation refers to the process by which either a new or existing
organizationdecidestoeither:satisfytheneedsofamarket,bringnewproductsorservicestoa
market,tochangeanexistingmarket,orcreateanewmarket(Osterwalder&Pigneur,2010,pp. 254).
Thelasttwopahsesare“implementation”and“management”.Firsttheimplementation
phase is when the business takes it’s new model and actual put it into play. By communicating
to stakeholders, all are aware of the implementation. The “management” phase requires
constantscanningoftheimplementedmodeltomakesureallaspectsarerunningsmoothly,as well as
focusing on long term golas of the new business model (Nivens, 2015).
RQ3
There are many challenges to business model design and implementation. One of the
mainchallengesrethecontinualchangeoftheexternalenvironment.Whetheritisashiftinthe target
market, legal changes, macroeconomic changes or regulatory changes, they are all a challenge. A
business model needs to be adaptable to these changes. Another challenge is finding and
building the right model for the right firm. Only by researching the external environment,
understanding long-term goals and testing the model before implementing it will this hurdle be
jumped.
Anotherchallengeisunderstandingwhenanoldmodelnolongerworksandneedstobe
redesignedandupdates.Ascompaniesfallintocomplacencyornormality,itwillbehardtofind times
to update models. The final challenge is to ensure that the organization focuses on the long-
term goals and not solely on the short-term objectives.
By understanding that there are hurdles that need to be jumped and challenges
tobefacedwillafirmconquerthesetrials.Aproperfollow-throughandcontinualmanagement need
to be had. Bjorkdahl and Holmen write that by understanding the challenges that are going to
be faced in design and innovation and understanding how to overcome them, then only a firm
will be successful (Bjorkdahl & Holme, 2013).
Refernces:
Bjorkdahl,J.,&Holmen,M.(2013).Editorial:Businessmodelinnovation-thechallengesahead.
InternationalJournalofProductDevelopment,18(3/4),213-225.
Nivens,S.(2015,March27).Businessmodeldesignprocess.RetrievedFebruary19,2017,from Cleverism:
https://www.cleverism.com/guide-to-business-model-design-process/
Osterwalder,A.,&Pigneur,Y.(2010).Businessmodelgeneration:Ahandbookforvisionaries,game changers,
and challengers. Hoboken, New Jersey: John Wiley and Sons, Inc.
Porter,M.E.(1979,March).Howcompetitiveforcesshapestrategy.HarvardBusinessReview.
