V11 Business Models
Key concepts: - Business Models - General Purpose technology markets - Logic of accumulaiton Abilities: - Critical assessment of different business models embedded in diverse ecosystems, and the relationsship with other TIM topics - Critical assessment of broader implications of new business models and organizational forms
Key concepts: - Business Models - General Purpose technology markets - Logic of accumulaiton Abilities: - Critical assessment of different business models embedded in diverse ecosystems, and the relationsship with other TIM topics - Critical assessment of broader implications of new business models and organizational forms
Set of flashcards Details
| Flashcards | 18 |
|---|---|
| Language | Deutsch |
| Category | Micro-Economics |
| Level | University |
| Created / Updated | 06.01.2020 / 13.01.2020 |
| Weblink |
https://card2brain.ch/box/20200106_v11_business_models
|
| Embed |
<iframe src="https://card2brain.ch/box/20200106_v11_business_models/embed" width="780" height="150" scrolling="no" frameborder="0"></iframe>
|
Name the four categories of businessmodels incl. examples.
Define a Business Model, Strategy and Tactics. Give an Example with the car industry.
(Ricart Casadesus-Masanell - How to Design a Winning Business Model)
Business Model: (Selling Cars)
Refers to the logic of the company - how it operates and creates and captures value for stakeholders in a competitive market place.
Business Strategy: (How to design the Car)
Plan to create a unique and valuable position involving distinctive set of activities.
Business Tactics: (How to drive the car?)
Residual choices open to a company by virtue of the business model that it employs.
Every Company has a business model but not nessesarily a strategy!
Define business model innovation.
Buisness models, which include the comercialization of new technologies (novel approach) and its underlying assets.
According to this paper there are 3 types of choises which has to be made when creating business models. Name & explain them.
(Ricart Casadesus-Masanell - How to Design a Winning Business Model)
Policy choices:
determine the actions an organization takes across all its operations (such as using nonunion workers,
locating plants in rural areas, or encouraging employees to fly coach class)
Asset choices:
pertain to the tangible resources a company deploys (manufacturing facilities or satellite communication
systems, for instance)
Governance choices:
refer to how a company arranges decision-making rights over the other two (should we own or lease machinery?)
Name 2 reasons why business models are undergoing a radical transformation worldwide.
(Ricart Casadesus-Masanell - How to Design a Winning Business Model)
- economic slowdown
- rise of new-technology based and low cost rivals
- digitalisation?
What are the effects of licensing technology (for example by buing a start-up)?
- Increase of downstream-product competition (instead of upstream, where the innovation takes place)
- Markets for intellectual property (patents) reduces the compitive advances (by publishing).
- Markets for technology may prompt additional business model innovation in complementay market.
The choises made when creating a business model can cause 2 different types of consequences. Name them, explain and make an example.
(Ricart Casadesus-Masanell - How to Design a Winning Business Model)
Flexible Consequence:
A flexible consequence is one that responds quickly when the underlying choice changes.
Choosing to increase prices will immediately result in lower volumes.
Rigid Consequences:
A rigid consequence is one of which the respond takes more time and are therefore difficult to imitate because companies need time to build.
Policies that oblige employees to fly economy class, share hotel rooms, and work out of Spartan offices—is unlikely to disappear immediately even when those choices change.
Name 3 characteristics of a good business model according to this paper. Explain.
(Ricart Casadesus-Masanell - How to Design a Winning Business Model)
1. Align with company goals
The choices made while designing a business model should deliver consequences that enable an
organization to achieve its goals. (Negative Example Xerox PARC)
2. Self reinforcing
The choices that executives make while creating a business model should
complement one another.
3. Robust:
Should be able to sustain its effectiveness over time by fending off four threats, identified by Pankaj Ghemawat. They are imitation (can competitors replicate your business model?); holdup (can customers, suppliers, or other players capture the value you create by flexing their bargaining power?); slack (organizational complacency); and substitution (can new products decrease the value customers
perceive in your products or services?).
Define the business model innovation "specializing in generality" and name examples.
Definition:
- Move upstream: Becoming a supplier to many downstream integrators
- Using Technology Markets rather than product markets
- Making a General Purpose Technology by focusing on R&D
- Standardize technology and make it compatible with downstream applications
- License to as many companies as possible
Examples:
- Software
- Bio/nanotech
- Product development processes
- Industrial robots?
- AI?
According to this paper, good business models generate virtuous cycles. Define this term and explain with the example of Rynair what a virtuous cycle is and name some key characteristic of a virtuous cycle.
(Ricart Casadesus-Masanell - How to Design a Winning Business Model)
Virtuous cycles are feedback-loops which are self-inforcing the chosen business model.
Example Ryan Air:
Low fares -> high volumes -> greater bargaining power with suppliers -> lower fixed costs -> even lower fares
Low fares -> high volumes -> high aircraft utilisation -> low fixed costs per customer -> even lower fares
Characteristics of Virtuous cycles:
- They dont go on forever
- They increase the competitiveness for companies
- allows expansion of value creation and capture
What is the general purpose, threats and dependencies of technology markets?
- Purpose: Dividing the exploration-exploitation problem across the value chain
- Threats:
- Downstream: lose innovation as a valuable resource
- Upstream: less control over the success of your solution
- Dependencies
- Modularity (of the downstream organization/product)
- Size of the market
- Appropriability
- Patents
- Unique value added
There are 3 ways how companies can compete through business models. Name them.
(Ricart Casadesus-Masanell - How to Design a Winning Business Model)
- Strengthen own virtuous cycle
- Weaken or destroy the cycles of rivals
- Turn competitors into complements
What might be the next major breakthrough in business modell innovation?
Faster and more effective application developmen for technologies. Today, technological solutions are seeking commercial opportunities (not anymore the other way around).
According to this paper what drives the most platform firms? What are Sirnicek's concerns?
What does the industrial landscape of the future look like?
(Srnicek 2017 - challenges of platform capitalism)
Big platform firms are driven by data collection (is the new oil!)
Concerns:
- Privacy concerns
- Because those multisided-platforms have network-effect it moving towards a winner-takes-it-all market.
- Gaining more and more exonomic and also political power (privacy regulations?!)
- In future we will see little islands of monopolies or one big convergent industry with all platforms competing
What is the logic of accumulation?
(Zuboff (2015) - Big Other.pdf)
- The logic that follows the accumulation (of data in this example)
- Who has access?
- Who participates?
- Who learns?
- Who decides?
What does Srnicek say about the sustainability of sharing economies?
(Srnicek 2017 - challenges of platform capitalism)
They are only sustainable because they:
- They stay ahead of regulations
- They oursourcing as much of their costs as possible (assurance, fuel usw)
- Are fueled by venture capital (not profitable)
He predicts, that most of these firms will go bankrupt or turn into luxury services for the rich or tansform themselves into a different type of business model altogether (e.g. Uber: self-driving automobiles).
What is surveillance captialism? Is it driven by technology? What does it imply?
(Zuboff (2015) - Big Other.pdf)
- Definition: Capitalizing data generates value, and improved performance is achieved by accumulating more data.
- Driving factor: Technology is only enabling surveillance capitalism. Society is driving it and government defines its rules.
- Implies: Accumulation of decision power and rights with platforms (important functions and decisions about e.g. privacy, information flow and access, are taken over by companies)
What is big other?
(Zuboff (2015) - Big Other.pdf)
A state, where all potential sources of data are mined, there is no way for individuals to opt out of behavior being recorded (and modified!)
