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Business Model Generation - Literature review Example

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This paper focuses on the business model generation, its coherence, integration, feasibility. It also presents the resistance of the business model to environmental changes in its sustainability and appraisal. From an objective point of view, the business model presented is quite detailed…
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Business Model Generation
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Download file to see previous pages Elements unique to a business model add to the complexity of how the framework should be examined in the context of its feasibility. The most important criterion, however, is economic viability. This should be made a crucial precondition, because, without it, there is no reason for existence, as the project being undertaken cannot be supported by the market. The project, as defined by the business model, should be profitable. What this means is that rewards must either equal or surpass the expectations of diversified investors on a risk-adjusted basis from investments made and resources consumed. (Johnson, 2007: 42). Currently, the business model lacks value-added development and thus misses out on the profits available.
Another important aspect in a business model is the way it creates value or shared value among business partners. According to Vermeulen and Cotula (2010: 35), there are four criteria that should be used to determine how a business model shares value. All of these variables are related to each other. One may be linked or is responsible for the existence of another. Nonetheless, these elements collectively bring about the value and, hence, must be present in a business model. Taking this into consideration, it appears that the business model at hand is deficient in several aspects. For example, how will key partners contribute in the decision- making the process, or how will they share the burden of risks and rewards? It is easy to explain joint ventures in figures, but to effectively and clearly represent them, equity is critical. This may appear to be a problem related to issues about coherence and integration. Nonetheless, it represents an inadequacy that must be addressed.
The trends in the current business climate are individualization and market segmentation. The services and products that are offered are highly tailored according to the demands and circumstances of clients. The business model is silent in this area and may appear to be rigid in character. To demonstrate this, the case of the Chameleon Model (see Fig. 1) will be cited. This framework was developed by Jansen, Steenbakkers, and Jaegers (2007: 46), and is likened to that of a chameleon, which is known for its ability to adapt to its environment. According to these authors, organizations, especially those in the hospitality industry, as evidenced by the initiatives undertaken by the Hilton Hotel chain, cannot change at its core and should adapt its appearance in response to customer demands. This business model was not able to provide a dimension to the framework that demonstrates a capability for flexibility and efficiency in combating opportunities and risks; it provides the core services to be offered, but unfortunately did not include the components that will represent mechanisms of flexibility. This will define the hotel’s capability to navigate changes, risks, and opportunities. As an example, there is no reference to the integration of e-commerce or penetration of the Internet. Projections show that online travelers will become an important tool for the hospitality market, and the business model did not identify a concrete plan to employ and take advantage of this channel. The model did not include what Holloway (2008: 25) called “the systems that will enable the organization to configure resources internally and externally to adapt to a highly fluid market.” ...Download file to see next pagesRead More
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