It is very useful for a new venture to look at itself in a holistic manner and understand that it must construct an effective “business model” to be successful. Everyone that does business with a firm, from its customers to its partners, does so on a voluntary basis. As a result, a firm must motivate its customers and its partners to play along. The objectives of this chapter are as below:
1. Describe a business model.
2. Explain business model innovation.
3. Discuss the importance of having a clearly articulated business model.
4. Discuss the concept of the value chain.
5. Identify a business model’s two potential fatal flaws.
6. Identify a business model’s four major components.
7. Explain the meaning of the term business concept blind spot.
8. Define the term core competency and describe its importance.
9. Explain the concept of supply chain management.
10. Explain the concept of fulfillment and support.
BUSINESS MODEL
A firm’s business model is its plan or diagram for how it competes, uses its resources, structures its relationships, interfaces with customers, and creates value to sustain itself on the basis of the profits it generates. The term “business model” is used to include all the activities that define how a firm competes in the marketplace. It’s important to understand that a firm’s business model takes it beyond its own boundaries. In Dell’s case, it needs the cooperation of its suppliers, customers, and many others to make its business model possible.
IMPORTANCE OF BUSINESS MODEL
The importance of business model is it will focuses attention on how all the elements of a business fit together and constitute a working whole. There are always opportunities for business model innovation. Netflix is an example of a business model innovator. Four Components of a Business Model consist of:
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