Key Elements of a Business Model
Table of Contents
TOC o 1-3 h z u Introduction PAGEREF _Toc4595998 h 3Key elements business model PAGEREF _Toc4595999 h 3Comparison of business model best practices with industry standard PAGEREF _Toc4596000 h 4Setting the team expectation PAGEREF _Toc4596001 h 4Having a clear process PAGEREF _Toc4596002 h 4Keep 3P in the mind PAGEREF _Toc4596003 h 4Create a solid foundation PAGEREF _Toc4596004 h 4Providing excellent customer service PAGEREF _Toc4596005 h 5Benefits PAGEREF _Toc4596006 h 5Pros and cons of e-commerce business model PAGEREF _Toc4596007 h 5Pros PAGEREF _Toc4596008 h 5Cons PAGEREF _Toc4596009 h 6Business procedure PAGEREF _Toc4596010 h 6Benchmark PAGEREF _Toc4596011 h 6Types of benchmarking PAGEREF _Toc4596012 h 6Benchmarking as a tool PAGEREF _Toc4596013 h 7References PAGEREF _Toc4596014 h 8
IntroductionA business model is an arrangement that supports the capability of the product or organization and describes how an organization operates its operation. All the business procedure and policies that organization implement and follows are the part of the business model. The use of business model came into existence with the arrival of personal computers which help people to test the model with a variable component of the business. There are various kinds of the business model manufacturer, distributor, retailer, e-commerce etc. The selected business is an online shopping store for this business the required business model is an E-commerce model. The online shopping store deal in the clothing range of men and women (Zott amp Amit, 2017).This report will compare and contrast the business model with the industry. And also determine the advantages and disadvantages of the business model.
Key elements business modelThe key elements of the business model need to consider developing the online shopping business. The required key elements of e-commerce business model are mention below
Value Proposition It will define how business products fulfil the need of the customer. It will include the price discovery cost of the product. It reduces the product search.
Revenue Model This model will define how the organization will generate revenue or profit and accept the return on the invested capital (Kajanus et al., 2019). The online shopping store business will consider the sales revenue model.
Market Opportunity It refers to the organizations intended market space and financial opportunities. The online shopping store business captures the online market.
Competitive Environment The competitive environment means selling a similar product in the same market. The online shopping store will sell all kind of clothes through online mode in the e-commerce industry. There are much online shopping websites already exists in the market so the competition is high. The price of the product will be reasonable and affordable to the customer.
Competitive Advantages Competitive advantages are achieved when the organization produce an excellent product at an affordable price.
The online shopping business provides a quality product with an affordable price to the customer (Kajanus et al., 2019).Market Strategy It is plain that how the company will enter the new market. The online shopping store will do the segmentation, targeting and positioning of the product before entering into the market.
Organizational Development organizational development indicates how the company will establish the work that required to be achieved.
Management Team The employees of the organization are accountable to make the business model successful.
Comparison of business model best practices with industry standardSetting the team expectationTo make the business model successful to set the team expectation and responsibility is most essential in the business. The team expectation will include the achievements and challenges of the team which will follow by the feedback (Annarelli, Battistella amp Nonino, 2017). In an e-commerce business, it is important to set the team expected to bring out the best results.
Having a clear processThe team should understand the business process. They should clear with the idea when a task needs to be completed and the process need be followed. It will increase efficiency and reduces the chance of flaws.
Keep 3P in the mindWhen developing the e-commerce business the business operation needs to consider the 4ps in the mind. The 3p are a process, product, people which help to build the operation of the business. Firstly the organization needs to identify process, product and people for the business.
Create a solid foundationThe company needs to start the business with a solid base which helps to achieve success. The organization need to share the objective of the business with the team.
Providing excellent customer serviceThe first aim of the e-commerce business is to provide excellent customer service. The better customer service generates customer satisfaction and trust which help to build the company solid reputation.
BenefitsThe benefits of a business model are as follow
Competitive Advantages The business model gives a competitive edge to the business in the industry. By applying the unique business model make a solid reputation in the market and among the consumers.
Plan for growth The strong business model constantly brings profit into the company (Jahan, Rahman amp Islam, 2018).The constant growth help to develop cash reserve which can be used for further investment.
Financial Stability financial stability is the major advantage of the business model. It maintains business sustainability and able to stand in the economic storm.
Pros and cons of e-commerce business modelProsThis business model has the potential to upgrade the financial status.
An e-commerce business can manage low inventories.
The business does not require the physical stores, just need to handle the website.
E-commerce business requires less staff because most of the process takes place with automation. The staff can be used for high-level operations (Patel, Goyal amp Agarwal, 2018).
This business model opens up a wider opportunity with the bigger market.
The organization can capture visitor information for a future purpose.
With the help of correct e-commerce SEO, the search engine performs as a great source.
ConsIn e-commerce business consumer are unable to touch, feel or smell the product before they buy. So, it leads to customer dissatisfaction and produces the trust issue.
E-commerce website requires the internet access device like a smartphone or computer. But everyone does not use the internet access enabled device.
In the e-commerce business the competition is high. The business needs to stand out and hold a strong position in the market (Patel, Goyal amp Agarwal, 2018).
In this business, it is harder to build trust and awareness because the website is a faceless entity on the internet. So, it has to develop a strong relationship and work on great consumer services.
Business procedureThe business process structures the task of the business that generates a particular service or product for the customers. There three major business processes which are as follow
Management Process It controls the operation of the business. This process involves strategic management.
Operational Process This process contributes to the core business and develops the value stream. It involves purchasing, marketing, manufacturing and sales.
Supporting process This process support operational process which includes accounting, technical support and recruitment ( Rosemann amp vom Brocke, 2015).
Benchmark
Benchmarking is the analytic and strategic procedure to constantly measure the companys product and practices. It helps to improve the companys performance. The benchmarking helps to accelerate the process development and forecast the industry trend. It enhances the goal setting of the organization.
Types of benchmarkingThere are four types of benchmarking which is mention below
Internal benchmarking
The internal benchmarking is an evaluation of the business process to the same process inside the company. The internal benchmarking is cost effective and relatively easy. It helps to gain a better understanding of the business process.
Competitive benchmarking
The competitive benchmarking is a straight competitor to competitor comparison of service, product or process. It gives a better understanding to know about the organization and the competitor (Uhl amp Gollenia, 2016). This benchmarking is used for setting goals and useful planning.
Functional benchmarking
Functional benchmarking is a comparison of same or ideal process within a similar function outside the industry. It identifies the process which is superior in the functional area. It gives industry trend information.
Generic Benchmarking
Generic benchmarking give the concept of the distinct business function that can be performed in the same way irrespective of industry. It is a pure form of benchmarking. It focuses on innovative work rather than the business practices of a particular industry. It generates a high potential for discovery and innovation.
Benchmarking as a toolBenchmarking is the method for gaining a measure- a benchmark. The benchmarking is not a quick or easy process tool. Before using the benchmarking it is important to understand the organizations guidelines. The benchmarking analyze and compare their own organization with the competitors process (Uhl amp Gollenia, 2016). It set the organization business against a similar business in the variety of sector. It evaluates business performance and potential.
ReferencesZott, C., amp Amit, R. (2017). Business model innovation How to create value in a digital world.GfK Marketing Intelligence Review,9(1), 18-23.
Kajanus, M., Leban, V., Glavonji, P., Kr, J., Nedeljkovi, J., Noni, D., ... amp Wilhelmsson, E. (2019). What can we learn from business models in the European forest sector Exploring the key elements of new business model designsForest Policy and Economics,99, 145-156.
Annarelli, A., Battistella, C., amp Nonino, F. (2017, June). Open Innovation practices for Product Service System as a business model innovation. InISPIM Innovation Symposium(p. 1). The International Society for Professional Innovation Management (ISPIM).
Jahan, S. M., Rahman, G. M., amp Islam, R. (2018). RMG Industry in Bangladesh In search of Strategies for Creating and Sustaining Competitive Advantages Using Business Model Canvas.International Journal of Scientific Research and Management,6(02).
Patel, D., Goyal, S., amp Agarwal, R. (2018). E-Commerce Business Model. InImproving E-Commerce Web Applications Through Business Intelligence Techniques(pp. 110-129). IGI Global.
Rosemann, M., amp vom Brocke, J. (2015). The six core elements of business process management. InHandbook on business process management 1(pp. 105-122). Springer, Berlin, Heidelberg.
Uhl, A., amp Gollenia, L. A. (Eds.). (2016).A handbook of business transformation management methodology. Routledge.
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