Strategic Business Models - Literature review Example

Business strategy Name Institutional Affiliation Table of Contents Strategic Business Models 3 Abstract 3 1.0. Introduction 4 2.0. Literature Review 5 3.0. Strategy framework proposition in strategy business model 6 4.0. Strategy process model in strategy business models 7 5.0. Conclusion 8 References 10 Strategic Business Models Abstract Research on strategic business models has shown that growing literature on this topic has created little impacts on a business strategy as a whole. The primary reason behind this fact is likely to be due to the intellectual fields of business model constructs that usually considerably overlaps with those of other business strategies (Baden-Fuller and Morgan 2010). Failure to acknowledge this overlap, the scholars, researching on the strategy business models are likely to face the risks of facing a number of questions which had already been tackled by the early literature reviews of this study. This clearly proves that the research on strategic business models can only be useful in case of researchers considerably realize the variations between these models and the business strategy concepts (Casadesus-Masanell and Ricart 2010). Therefore, this literature review paper on strategic business models begin by highlighting some of the major definitions of business models regarding some of the things a business does as well as the way the business usually creates money in doing those things (Betz 2002). The paper then goes ahead to define the four major business models which include brokers, landlords, distributors, and creators. Moreover, sixteen variations among these business models are defined based on the assets involved in a business which includes human, intangible, physical and finances. The results of this literature review indicate that strategic business models are among the best predictors of a business success. Besides, they show the way business models strategy performs better than other business strategies. The paper looks in details what businesses are likely to do to generate novel insights for the business investors, managers and researchers (Chesbrough and Schwartz 2007). 1.0. Introduction Indeed studies on strategic business models seem to be unlimited. This has made a lot of literature on strategic business models to abundantly emerge for the last 50 years. In fact, the use of strategic business models also rapidly emerged in the world because of growth experienced in the fields of e-commerce and internet in the year 1990s. Nevertheless, scholars have differed greatly on the definition of this term since it shows a lot of varying overlaps and their weaknesses. However, despite these varying overlaps, the strategic business models have greatly replaced many traditional strategies in various business activities. This has been disputed by some scholars arguing that application of strategic business models hinder firms to venture the way they are supposed to do it. However, they argue that strategic business models ought to be used jointly with other strategies to realize success in business. Therefore, to keenly understand the relevance and applications of strategic business models, it is very important to consider a number of mostly used definitions and concepts based on their historical developments as well as suggested techniques. With regards to present literature reviews on this topic, the paper conformingly and clearly defines the usefulness of this strategy. The paper discusses the strategic business models based on holistic frameworks of strategy approaches. The paper discusses some of the development frameworks in this topic in details. However, the objective of this literature review is to enable us to understand strategic business models as well as its coherence. 2.0. Literature Review Several ongoing changes in the business environments have put strategy literature in question. These changes include the increasing number of open markets, increasing number of portable labor and rise of online business activities (Doz and Kosonen 2010). These changes have resulted into more tradable platforms which have made businesses' advantages to fall from the market positions. Also, the online-based organizations are the ones which have significantly influence these changes by putting some limits on the RBV and IO perspectives because of being creative and innovative in the business markets (Klein 2008). Consequently, the need to sum up the necessary aspects of businesses into a single descriptive document with the aim of decision making might have also been made and referred to new economy businesses (Magretta 2002). An example of these new economy businesses is when a potential investor strives to achieve the financial objectives and goals of a business. This can perfectly be done through the use of strategic business models with the aim of answering several important questions which are likely to include value proportions, business' customers, assets and the governance structure of the business (McGrath 2010). The strategic business model theory is still playing an essential role as a business tool regardless of being considered to be not having any theoretical grounding with regards to economic and business theory (Osterwalder and Pigneur 2013). However, the business managers need to explore other business strategy theories because strategic business models are argued to be depending entirely on economic theory which normally does not conceive any value capturing as part of this theory. Also, other scholars argue that strategy business models are still greatly being confused and dissatisfied with the traditional strategy approaches, especially with regards to generic strategy deployment, topics of alliances and dynamisms of customer focus (Schweizer 2005). Indeed the term business model was complicated by the introduction of computers as well as spreadsheet software. These factors complicated business models by allowing analytical approaches in the planning of businesses' components regarding statistics and financial numbers (Seelos and Mair 2007). This approach was seen as very necessary part for conveying the information to investors regarding the possible value of their investments since it is able to assist in testing and quantifying every feature of a business. Currently, the connection between business model and the spreadsheet has been found not to be accurate hence has led to widespread use of business models rather than pure numbers (Shafer, Smith & Linder 2005). The term business 22 models appeared a long time ago as far as 1957, however, it only started being in use by around 2000 due to the rise of e-commerce businesses and internet (Smith, Binns & Tushman 2010). 3.0. Strategy framework proposition in strategy business model As mentioned earlier that the field of strategy is not even as well as not clearly defined, the business model literature as needs properly defined components and concepts irrespective of its younger age (Teece 2010). In fact, this confusion surrounding strategy business models expresses a concern of acquiring a more holistic model which is able to entail the advanced aspects of strategy business models and model literature into a comprehensive one. The business strategies and strategy models need to be put into a context of one another in order to build on the literature reviews regarding this topic (Wirtz, Schilke and Ullrich 2010). There is also need to present strategy and strategy business models with regards to simplified frameworks. This approach of building on the proper understanding of strategy business perspectives base on the business model framework and integral strategy helps in operationalizing the definitions of strategy business models thus making it more specific and concrete (Doz and Kosonen 2010). Also, this concept components regarding its framework need to be clearly depicted in a more detailed way for proper understanding and application (Seelos and Mair 2007). 4.0. Strategy process model in strategy business models Based on the above literature, there is need to unify framework with regards to strategy, business model and strategy making processes. The strategy business first model demonstrates the combination of business models and strategy in a simple manner (Casadesus-Masanell and Ricart 2010). The model shows how to explain a number of phases regarding the 31 strategy making as well as to clearly explain a link between the business model concept and strategy theory. Moreover, the second model talks about strategy creation based on the business level analysis. Levels of analysis are very necessary for visualizing the organization structures with regards to strategy business analysis (Doz and Kosonen 2010). Besides, the fundamental framework for strategy making process can also be used to explain detailed processes regarding the strategy creation process which as well illustrates the causal links and propositions if entailed strategy techniques with the process. This framework can finally be supplemented by the use of comprehensive visualization regarding strategy business model facets where the primary and secondary aspects and their relationships are illustrated as 2-6-1. Strategy process model has established that strategic thinking has not been a key management tool being used in different companies (Magretta 2002). This concept establishes that even there are no clear frameworks and concepts of strategic thinking in these companies. However, the most important thing to note is that proper management and strategic orientation directions are very necessary for a company to succeed. It is always necessary to come up with a general strategy business model regarding strategy processes with regards to the cognitive approaches and also characterized by specific strategies. Such approaches are considered very controllable, purposeful and sequentially strategic (Chesbrough and Schwartz 2007). Moreover, the strategy creation phase model is comprised of four stages which include analysis of the existing situation as the first step and comprised of a number of layers as well as areas of analysis (Teece 2010). The analysis is based on the ways the strategy should get positioned; compete in the marketplace, building competitive advantage and proper decision making. This strategy is then supplemented by the use of conceptual techniques which comprise of a number of business models (Doz and Kosonen 2010). The analysis face aims primarily at the firm though across a network which it is used to test, evaluate and illustrate regarding the organizational strategy business models. A proper implementation of this strategy in the business shall significantly help in the complementary business model thus adjusting to the dynamisms that exist in the business environments and changing in the business demands (Seelos and Mair 2007). 5.0. Conclusion It is being argued that business model which is a detailed description of the way organizations ought to operate is just an approach aiming at achieving business strategy. To progressively make a proper theoretical strategy business model front, it is advisable to either change the views and definitions regarding the concept. A number scholar has made a suggestion that it is certain the rational territory of this concept overlaps considerably with the ones of strategy as well as focusing the managers' attention regarding the differences amid them. Therefore, the literature review ascertains that every business whether an implicit or explicit needs to considerably apply a specific business model to make the business success. This model clearly illustrates the architecture and design regarding the creation, capture and delivery mechanisms which need to be employed in the business. Strategy business models aim at crystallizes the strengths, customer needs as well as defining the way the business should respond to the customers' complaints. It also outlines the approaches aiming at enticing customers in order to pay for value and also how those payments ought to be converted into profit by the use of a proper technique regarding the operations elements in the value chain of the business. In summary, a strategy business model reflects on the hypotheses of business which include the customers' needs, the way they want these needs and the way they can pay for them. The models show the way the enterprises ought to organize in order to suitably meet the needs of their customers and be rewarded abundantly in doing it. Therefore, the primary goal of this literature review has been to enhance the understanding of the importance of strategy business models as well as to explore the link between strategy business models and other business strategies. References Baden-Fuller, C., & Morgan, M. S. (2010). Business models as models. Long range planning, 43(2), 156-171. Betz, F. (2002). Strategic business models. Engineering management journal, 14(1), 21-28. Casadesus-Masanell, R., & Ricart, J. E. (2010). From strategy to business models and onto tactics. Long range planning, 43(2), 195-215. Chesbrough, H., & Schwartz, K. (2007). Innovating business models with co-development partnerships. Research-Technology Management, 50(1), 55-59. Doz, Y. L., & Kosonen, M. (2010). Embedding strategic agility: A leadership agenda for accelerating business model renewal. Long range planning, 43(2), 370-382. Klein, M. (2008). Poverty Alleviation through sustainable strategic business models: essays on poverty alleviation as a business strategy (No. EPS-2008-135-STR). Magretta, J. (2002). Why business models matter. Harv Bus Rev. 80(5):86-92, 133 McGrath, R. G. (2010). Business models: A discovery driven approach. Long range planning, 43(2), 247-261. Osterwalder, A., & Pigneur, Y. (2013). Designing business models and similar strategic objects: the contribution of IS. Journal of the Association for information systems, 14(5), 237. Schweizer, L. (2005). Concept and evolution of business models. Journal of General Management, 31(2), 37-56. Seelos, C., & Mair, J. (2007). Profitable business models and market creation in the context of deep poverty: A strategic view. The academy of management perspectives, 21(4), 49-63. Shafer, S. M., Smith, H. J., & Linder, J. C. (2005). The power of business models. Business horizons, 48(3), 199-207. Smith, W. K., Binns, A., & Tushman, M. L. (2010). Complex business models: Managing strategic paradoxes simultaneously. Long range planning, 43(2), 448-461. Teece, D. J. (2010). Business models, business strategy and innovation. Long range planning, 43(2), 172-194. Wirtz, B. W., Schilke, O., & Ullrich, S. (2010). Strategic development of business models: implications of the Web 2.0 for creating value on the internet. Long range planning, 43(2), 272-290. Read More