Analysis of the Aspects of the Processes of a Business Model - Essay Example

Business model Analysis of the aspects of the processes of a business model Quasi-charitable provision of a service project or business model This section entails an analysis of the aspects of the processes of the business model developed by my group. The model developed by my grouped was based on the hypothesis that it will be possible to offer a limited number of free tickets per every flight in an effort to support low-income earners with an opportunity to fly abroad. This can also be interpreted as a moral responsibility of the company. This new business model was developed through abductive thinking in which our group members first wondered how the challenges in the airline industries can be resolved and what is the future of the airline industry. The airline industry has been affected by emerging technologies as evidenced by the development of larger and more complex aircrafts and is market-driven due to the increasing demand of airline services (Chen, 2009). As a result, my group was determined to develop a business model that would be competitive and innovative enough to solve the underlying challenges. Some of the challenges that inspired the group included the intensity of competition in the airline industry and the changing nature of the industry due to impacts of technology. The group was thus determined to develop a business model that is transformational and has ability to initiate radical changes in the industry. The business model was developed through though an integration of both creativity and innovation skills as shown in the appendix. Each of the group members was required to suggest a noble idea that would help in developing a business model suitable to solve the challenges facing the future development of the company. The ideas were merged to develop the model. The ideas suggested by the members were based on a number of factors. One of the factors is that the suggestions had to be focused towards managing the stability of the airline. Another aspect of the ideas is that they were supposed to conscious of the discontinuity aspect of the overall business strategy of the company. The members were thus supposed to possess personal experience and skills in the business in order to suggest ideas that had the ability to manage strategy discontinuities in the process of implementing the strategy. The ideas were also dependent on the ability to maintain and manage patterns arising in the industry due to technological and market-driven needs (Chen, 2009). This is the final business model was supposed to create an environment that balances several strategies necessary for the growth of the company. The last factor is that the ideas were dependent on the ability to balance changes in the industry facilitate continuity and growth of the business. An effective business model should have the ability to determine when to replace redundant strategies with new strategies in the implementation of the model. The processes involved in the creation of the business model were thus suitable in developing a model that had the abilities to initiate radical changes in the company and promote the future growth of the company (Chesbrough & Rosenbloom, 2002). Evaluation of a business model This section entails an evaluation of the business model including its ability to promote the future growth of the company. The evaluation is based on a comparison between Quasi-charitable provision and E-commerce business models. The evaluation thus involves a comparison between the Quasi-charitable provision of a service project and introduction of e-commerce in the company’s booking system. This is because Quasi-charitable provision of a service project is not viable in the long-run and does not consider the issues of emerging markets (Michael & George, 2006). The analysis will consist of an overview of the SWOT analysis of the two models. Quasi-charitable provision of a service project or business model Overview The model will be effective in addressing the challenges in business growth, which were the main issues of concern by the company the industry. One of the main challenges the company was likely to face in its growth efforts was intensity in competition which could lead to a loss in market share. The introduction of free tickets was an effective way to market the company and assist in increasing and retaining its share of the market. Through this, the company will be able to attract more customers as they seek to get the free rides (Afuah & Tucci, 2003). The business model could however be unviable in the long as the cost of maintaining the free tickets could be too high for the company. The model will be effective in facilitating the promotional objectives of the company. Quasi-charitable provision of a service project or business model Best-in-Class Market driven Emerging technology Needs (NDP) Unearthing Technologies Business issues & unknown Transformation user needs Insight Advantages of the Quasi-charitable provision of a service project Promotional objectives Since every business operates with an objective of increasing profits, achieving the promotional objectives will be an important step towards guaranteeing a success in company growth. The promotional objectives will be achieved through awareness and Trial. Awareness and Trial Offering free tickets to some customers will be the best strategy to create an awareness of the company’s services and creating an opportunity for more clients to try the services. After getting a free ride, a client will definitely use the company’s services in future if a need arises. The free tickets will also offer a “trial’ opportunity for some clients who might be uncertain about the company’s services. These are suitable promotion techniques to market and advertise the company’s services. Overall, the business model will be effective in facilitating the future growth objectives of the company (Kittl et al., 2001). The model will thus implement radical changes in the company. The major challenge in this business model is that it will be expensive to maintain for a long time. Another issue is that it will be difficult to determine the right people to offer the free-ride tickets. Attitude towards the services After using trying the company’s products, the consumers will develop a positive attitude towards the products and the company in general. The Quasi-charitable provision of a service project has an objective of ensuring the company fulfils its ethical obligation to the public. This will further cement the positive image of the company among the clients (Hamel, 2000). Disadvantages of the Quasi-charitable provision of a service project The business model experiences two major drawbacks. One of the issues is that the model might be too expensive to support in the long-run and the second one is that it will be difficult to determine the customers to give the free-rides (Chermack, 2011). The failure of the model in the long-run might give the competitors an opportunity to cancel-out the effects of the model. The E-commerce business model will be viable and effective both in the short-run as well as in the long-run. This makes it a better model compared to Quasi-charitable provision. E-commerce business model Overview This is business model in which the company will introduce e-booking system in its operations. This is a form of Business-To-Consumer e-consumer in which the company will process customer tickets through internet technologies. Because of disruptive innovations such as introduction of e-commerce in the airline industry, new developments that will affect the operations in the airline industry will emerge. The new developments might be prove challenging to the future growth of the airline company (Bilton & Cummings, 2010). Quasi-charitable provision of a service project alone will not be effective in resolving all the challenges facing the future growth of the company. As a result, the company is forced to integrate a number of business models or introduce a new model such as e-commerce project into its operations. Demand-pull and technological push might also lead to creation of new markets which will be a significant development in the industry. The E-commerce business model is flexible and will reconcile and balance any change occurring in the airline industry. Benefits of the e-commerce model This model has numerous advantages which are lacking in the Quasi-charitable provision of a service project. The model addresses any emerging market failure in the implementation of other strategies and reduces the transaction costs for both the client and the airline company. The company will for instance be able to maintain an on-line booking system in which the customers will book flights at their places of convenience (McGee, 2005). The processing and recording of tickets will become easier while the clients will be able to get instant feedbacks of their bookings. This will reduce paperwork and facilitate the keeping of records. The customers on the side will benefit because they will no longer need to travel to the airports to book their flights. They will also be relieved of having to wait and time when the offices are opened in order to book flights. They will be able to access the web and book flights at any time of their convenience while comparing pricing by different companies in the Internet. Competitors’ reactions After the introduction of either of the two business models, the competitors will respond in different versions in order to match the progress in the industry. Trade has become global in the modern world and is increasingly intensifying the levels due to technological factors and other issues. The competitors will use many techniques including similar business models to influence and draw consumers into their services. Some of the techniques that the competitors will employ include: Price promotion After implementing the Quasi-charitable provision business model, the competitors will use price promotions to induce consumers into purchasing their services. The competitors can for instance lower the prices of their flights temporarily in order to counter the effects of the free-tickets in the short-run. Although this will lead to reduction in earnings, the competitors will be aiming to benefit in the long-run when the model becomes unviable (Ceci, 2009). Sponsorships The competitors can also decide to use the sponsorship strategy in which people in the low-earning class are given free rides. This strategy will be different from the Quasi-charitable provision business model in that the sponsorship are random and prearranged unlike the model which will have free-tickets for every flight (Chesborough, 2006). Similar models The competitors can use similar models to woe consumers into purchasing their products. The other airlines can introduce free tickets in every flight and introduce e-commerce strategies in their operations. This will ensure that they remain competitive in the market and retain their much-valued customers. Strategies to main competence Although the competitors will respond in different ways after the implementation of the two models by the airline firm, the firm can deploy various strategies to enhance the effectiveness of the models. Some of the strategies include capitalizing of First Mover Advantage, increasing network dominance value and strategic allowance (Barney & Hesterly, 2010). First Mover Advantage The company will have an advantage of being the first to implement the business models and will thus benefit most from the models and command the largest share of the market. The company can increase its share of the market to an extent such that some of the competitors drop-off the market (Barney & Hesterly, 2010). Increasing network dominance value The company will benefit from the models before the competitors learn and gain enough experience to benefit from the strategies. The company can also incorporate the strategy of “run” in which it innovates faster than the rivals (Barney & Hesterly, 2010). This will be achieved through enhancement of capabilities and creation of competencies to facilitate the growth of the company. This is achieved after assessing the strengths and weaknesses of both the business model and the company. Strategic Alliance The company can collaborate with other firms which are not direct competitors in areas of research and development to determine the best techniques to increase competence. The companies will at the end minimize research and development expenses and share ideas towards the implementation of business models (Barney & Hesterly, 2010). References Afuah, A. & Tucci, C. 2003. 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International Conference on Electronic Commerce Linder, J. & Cantrell, S. 2000, Changing Business Models: Surveying the Landscape, London: Accenture Institute for Strategic Change McGee, J., Thomas, H. & Wilson, D., (2005), Strategy: Analysis & Practice, London, McGraw Hill Michael A. Belch George E. Belch. 2006. Advertising and Promotion: An Integrated Marketing Communications Perspective, 7/e., McGraw-Hill/Irwin, 2006 Osterwalder, A. & Yves, P. 2002. "An e-Business Model Ontology for Modeling e-Business". 15th Bled Electronic Commerce Conference (17-19): 1–12 Special Issue on Business Models" that includes 19 pieces by leading scholars on the nature of business models Long Range Planning, vol 43 April 2010 Appendix Design-driven innovation of the Quasi-charitable provision of the business model Radical change Technology Incremental change Incremental change Meaning radical change Read More