Business Model explained

According to Timmers (1998), “a business model is an architecture for the product, service and information flows, including a description of the various business actors and their roles; and a description of the potential benefits for the various business actors; and a description of the sources of revenues.” Research suggests that new technology innovations influence both the emergence of new business models (Prahalad and Ramaswamy, 2000 and Venkatesh, 1999) and the transformation of existing business models (Chesbrough and Rosenbloom, 2002) often influencing the creation of a new value plane (three-dimensional relationships with technology innovation as the axis - Tovstiga and Fantner, 2000) through the deconstruction of existing value chain relationships. As stated by Evans and Wurster (1997), “existing value chains will fragment into multiple businesses, each of which will have its own sources of competitive advantage.” Operating business models and value chain partnerships undergo changes over time. The revenue generation possibility of a successful model reduces over a period of time, as the value proposition declines and no longer remains distinctive (Westland and Clark, 1999). Hence it is important for businesses to keep a watch on new business opportunities that come along and position themselves to adopt a suitable change model to sustain successful performance for growth (Linder and Cantrell, 2000). The development of strategies for sustainable performance and growth would require the understanding of critical success factors such as the value plane relationships, innovation and knowledge sharing capabilities, customer needs & value offerings, technological roadmap, competitive and cooperative landscape, diffusion characteristics and the alignment of business strategies for the construction of transformed business models.