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BUSI 690-D06: Business Model Generation Exercise 11Business Model Generation Exercise 1Malik ArnoldLiberty University, Professor GeraldBUSI 690 - D0604/11/2015
BUSI 690-D06: Business Model Generation Exercise 1What Is A Business Model?According to Osterwalder & Pigneur, a business model describes the rationale of how an organization creates, delivers, and captures value (pg. 4, 2013). It is the basis for explaining how a business or organization is functioning within their operating system, articulating the logic and providing data and evidence to the researcher. A business model outlines the architectural texture of revenues, costs and profits associated with the design and structure of the organization (Osterwalder & Pigneur, 2010). For example, IBM implemented an electronic customer support strategy that was first originated in 1980. This strategy connected all of IBM’s customers to the company’s Internet network system, thus increasing the communication capabilities amongst IBM and the consumer. Business models also describe the way in which companies make money and do business with the consumer. To profit from innovation, business pioneers need to excel not only at product innovation but also at business model design, understanding business design choices as well as customer needs and technological trajectories (Cavalcante, 2011). This is essential in developing a successful business model as competition is always evolving their products and services to be better than the leading brand. If the model is sufficiently differentiated in its innovation and impact on the organization, the competitive advantage is strengthened over companies that pose a threat to sale profit and revenue.