Conceptualization of Various Types of Business Models - Toyota - Case Study Example

Business Models Introduction A business model explains how the company can create value for its s and how this value is captured by the company’s stakeholders. It acts as a blueprint for the organization’s future business plans (Baden-Fuller and Morgan, 2010). It helps to understand that whether the future business plans of the organization would prove to be beneficial only to the organization or it will have an impact on various sectors (Baden-Fuller and Morgan, 2010). A business model also serves with relevant answers to certain questions about the target customers and their needs and the strategies applied by the organization and fulfil the customers’ needs (Casadesus-Masanell and Ricart, 2010). A business model also gives an idea about the challenges that the organization may face during the business process and the way company would react to such challenges (Casadesus-Masanell and Ricart, 2010). A business model can be conceptualised in various ways. The company should choose its model rationally because the model would decide the company’s future growth prospect. Every company has got its most important objective to meet the customer demands and also to meet the desires of the stakeholders. A business model is a tool that is even useful for the investors who would make their investment decisions based on the model specifications (Casadesus-Masanell and Ricart, 2010). Hence, the main objective to carry out this research work is to determine the probable cause for so many business models and the way modern innovation has been exploited in the last five years using any of the business models. Through this research, it gives an opportunity to the researcher to understand the different business models and their valuations and how far they have contributed to the organization’s growth prospect. Conceptualization of various types of business models The research on business models is important to understand different types of models used by various companies. However, in this paper the researcher discusses three types of business models. The Advertising Model Advisements play a very significant role in creating awareness about a particular product that has been newly launched by the company. Advertising model became popular as a business initiative for most of the organizations with the invention of Radio and Television (Chesbrough and Schwartz, 2007). Through media, the company prefers to channelize the information regarding the launch of a new product that the company is planning to launch shortly (Chesbrough and Schwartz, 2007). The model has helped the TV and the radio stations to earn revenue from the company who wish to promote their new products. The internet businesses find it to be highly profitable to earn revenue from these companies who hire them as the advertisers for the company’s products (Chesbrough, 2010). Although this model helps a great deal for company’s business perspective, it proves to be extremely competitive and the advertisers are confused about the strategy to be chosen to promote the product (Chesbrough, 2010). Building brand awareness about a particular product and attracting the target customers becomes extremely challenging. The company’s objective to drive the attention of the target customers also depends on how well they promote their product. Advertising can help to reach a wide range of customers and encourage them to purchase the company’s products (Gordijn and Akkermans, 2001). Internet advertising is the most appropriate tactics for those who would like to attract the target customers from both the national and international markets. This model proves to be the most cost efficient method for advertising the launch of a company’s new product because it can capture large number of consumers from all over the world (Gordijn and Akkermans, 2001). Although media advertising is more preferable to avoid such situations because copying the images electronically through media is not possible. Further, internet advertising has a probability of receiving junk mails and the consumers are often cheated by the hackers (Gordijn and Akkermans, 2001). Hence, many companies prefer to use traditional media compared to internet for promoting their brands. Gamehouse Partners is a mobile App developing country that uses the advertising model to create awareness among the customers about the new Mobile App that the company has launched. Its aim is to create brand awareness and provide useful Apps to its customers and gain brand loyalty. E-Business Model The researcher has considered another type of business model that is the e-business model which is used by most of the companies in this new generation. E-business refers to doing a business through an electronic media (Lee, 2001). It comprises of an internet based business commonly known as E-commerce or e-business where the companies offer to sell their brands online. It helps in creating value through the swift decline in computing and communication cost and enables the customers to purchase their products online without visiting the shops personally (Lee, 2001). Also, the customers find it easy to choose from a wide variety of local and international brands. These developments have enabled firm to set up their business in a new perspective in order to gain brand loyalty and a huge customer base. The e-business model allows its customers to choose from a wide variety and also within a very short span of time without causing much inconvenience to the customers (Markides and Charitou, 2004; McGrath, 2010). Further, another problem that arises in case of the E-commerce businesses is that, although the customer has a wide range of options to choose from yet the customers sometimes gets confused regarding the shape, size and colour of the items. Since they are unable to view these items personally, they have the only option to choose these items from online E-commerce websites which proves to be challenging at times (Qizhi Dai, 2002). However, e-business proves to be a faster mode for interacting with the customers as they often wish for a fast and better service. On the contrary, the E-commerce businesses often face security threats from the hackers and the company loses data and valuable information and also the customers. The main disadvantage in this field is a time-consuming process to learn about the appropriate security measures along with the digital signatures and encryption (Qizhi Dai, 2002). The E-commerce company Flipkart follows the E-business model to promote the various brands and attract the customers to purchase from their favourite brands online. The company offers online payment services as well as cash on delivery services such that it does not cause inconvenience to the customers to walks to the shops several times to purchase their desired brands. Green Business Model There are various debates on how the company conducts its green business and the reason for the company to be called as a green company. It depends on the product that the company produces using renewable energy such as the wind and solar power, energy efficient pumps and also those companies which offers environmental services are to be taken into consideration (Shafer,Smith and Linder, 2005; Teece, 2010). The other companies which manufacture their products following the strategies that are environment friendly and the companies that follow the corporate social responsibilities can be considered as green companies. In case of a green business model, the greater part of the model must consider a green effect that is environment friendly. The model may not result into a one-time change in the business perspectives of the companies, but also may result in a long term process leading to a pollution free society. Some special type of industries known as the eco-industries are there whose main objective is to protect the environment (Weill and Vitale, 2002). These industries involve themselves in the provision of renewable energy, ecological landscape protection and waste recycling. Similarly, eco-innovation refers to the new product or process innovation of a company and new marketing style which proves to be environment friendly (Weill and Vitale, 2002). Eco-innovation has the main aim to decrease the negative impact of an innovation on the environment. It offers to help the companies understand the importance of resource efficiency and green economic growth through their innovations (Wirtz, Schilke and Ullrich, 2010). Green businesses can be obtained if the business relate to producing products that are eco-friendly or that process used to manufacture the products do not cause any harm to the society on a whole. The industries can follow the green business models by not letting out the waste materials into the rivers and the air pipes of the industries producing toxic gases should not create air pollution within the city (Wirtz, Schilke and Ullrich, 2010). The industrial labour force must be efficient enough to use raw materials rationally such that the industry does not contain much harm to the society. These green business models are becoming widely accepted by most of the business practices since it does not have any significant negative consequence on the society. However, the green business models have some disadvantages that results due to high economic growth and increasing demand for the natural resources. On using the natural resources as raw materials, the availability of the natural resources is decreasing day by day. According to the researcher, over the year the prices of energy and other agricultural products have doubled (Weinhardt, et al., 2009). However, the increasing demand for natural resources is likely to continue over a longer period of time and it would be difficult to predict the rise in prices of these natural resources. Hence, the researcher expects that the companies which have the potential to overcome these challenges related to the scarcity of the natural resources can survive in the growing economy and peacefully follow the green business model (Weinhardt, et al., 2009). Comparison among three models There are various business models to be followed by the companies. It depends on the company who would choose its own model for running its business successfully. On looking into the business model followed by the company, the investor decides whether it would be profitable to invest in the business or the company would run at a loss (Weinhardt, et al., 2009). Hence, the business model acts as a base for initiating any kind of business and hence the companies are highly recommended to efficiently choose their business models. The three models have been thoroughly studied by the researcher and the only similarity that the researcher finds in the three models is that the companies following these models proves to be valuable for its customers (Weinhardt, et al., 2009). In case of companies following the advertising model, the company attracts its customers through the advertisements of different brands. Further, following the e-business model, the E-commerce companies allow the customers to purchase online, and following the green business model the companies launch new products for the customers that are eco-friendly and do not cause any harm to the society (Weinhardt, et al., 2009). Among these three business models, the researcher finds the green business model to be the most efficient and the best model that the companies can undertake for their business practices. The Green Business Model proves to be useful from the society’s point of view as well because this model indicates that the company is willing to run an eco-friendly business in the society (Weinhardt, et al., 2009). The researcher has chosen the Green Business Model to explain Toyota’s innovation because Toyota believes in inventing products that are environment friendly for the society. The company is highly concerned about the customers’ demand for eco-friendly vehicles. Green Innovation by Toyota Toyota’s engineering and research sector is headquartered in Ann Arbor Michigan. The design and research sector of Toyota is engaged in evaluation of the vehicular parts and materials, emission certification and other technical research (North American Environmental Report, 2012). The company experiences from the previous projects that it has handled and tries to incorporate new techniques for their innovation. The main objective of the company is to design vehicles that can travel longer distances with less fuel emission and the company tries to minimize the use of harmful chemicals in the vehicular parts. The company uses its principles to check the weight, aerodynamics and other design factors of the newly built vehicles and determines the strategies to produce fuel efficient vehicles (North American Environmental Report, 2012). Climate change and the fuel efficiency are the two main segments that plays a key role in the plans that the company implements. However, Toyota faces challenges in order to meet the customer demands as well as drive down the fuel consumption in order to make the vehicles more eco-friendly. The company believes that the evaluation should involve the long-term standing practice of checking the vehicular fuel efficiency since higher octane and reduced sulphur contributes to the reduced emission of green-house gases and thus saves fuel. On the other hand, bio fuels have the potentiality to reduce the carbon content of the fuel. Toyota has maintained its brand loyalty all over the world. For example, in the US it contributes to the most fuel efficient fleet of vehicles and in Canada it has maintained the passenger car fleet which is highly eco-friendly. Toyota acts in accordance with the states of US, California and Canada federal vehicular emission programs and the company has successfully met the demands of the customers for new innovative models of vehicles that are environment friendly (North American Environmental Report, 2012). The company uses the International Material Data System (IMDS) as a specific tool for tracking the chemical composition of the vehicles. The use of IMDS becomes important for the company to comply with international recyclability and chemical management laws in various countries like Korea, US, Japan and China (North American Environmental Report, 2012). The use of this specific tool by Toyota leads to an efficient management of all types of chemicals that are not restricted under the chemical management laws of different countries. Thus, the company follows a green business model in order to make their innovations eco-friendly as well as meet the rising demands and customer requirements. Toyota has invented a new technology known as the ‘hybrid technology’ to minimize the harmful impacts of gasoline emission through vehicles (North American Environmental Report, 2012). Thus the company is working efficiently in setting up its business by following the green innovation model. Due to its eco-friendly innovation, the company is attracting a huge customer base that has helped the company to gain reputation in the market. The total sales of the company are rising to a greater extent (North American Environmental Report, 2012). Since the company considers hydrogen as a renewable fuel, it is planning to launch a Fuel Cell Hybrid Vehicle by 2015 (North American Environmental Report, 2012). The engineers of Toyota are working in this field by testing around 100 vehicles powered by hydrogen fuel (North American Environmental Report, 2012). The company has a team of efficient engineers who are able to work in this field and determine new strategies to invent the new vehicle (North American Environmental Report, 2012). The company always aims to fulfil the demands of the customers and gains some brand loyalty. Conclusion The research enables the researcher to gain a lot of information regarding the various business models used by different companies. As the research suggests that the advertising model is useful for a company to create brand awareness among the target customers, it has many disadvantages as well. Advertising through internet can lead to other companies copying the logos and the images of the advertising company. Further, there may be various reasons due to which the advertisements may not reach the target customers and the customers may not be able to obtain the relevant information about the launch of the new product. On the contrary, e-business models are mostly used by the newly emerging E-commerce business which allows the customer to choose and purchase their products online. However, the companies using these models also face certain threats from the hackers who tend to hack the databases of various companies and the company loses its valuable data. The third model has been highly preferred by the researcher because the companies using this model creates value for its customers as well as maintains an eco-friendly environment. The companies can launch new products without causing much harm to the society by following this model. 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