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Business models - Essay Example

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Business models

For this purpose, different research articles and publications have been used. While designing or redesigning the business model it is important to keep in consideration several points like the needs of the customers, what activities will fulfil or satisfy those needs, how the activities will be linked, who will perform those activities, how the value be created for different stakeholders, and what revenue models will be integrated. Hence, it can be said that ultimately the business activities and model should be designed in such a way that there is high value creation for all stakeholders along with delivering high financial performance. Stakeholders’ credibility and financial viability tend to bring in or combine both; financial and social constraints while formulating and designing the overall business model. The business model has two broad factors: on the one hand it keeps in consideration the financial factors and characteristics of the organisation including the methods of revenues, the overall structure of cost, the balance sheet, income statement etc, in order to make sure that all these financial factors are associated with the opportunities and limitations associated with the overall activities and actions of management in order to cut down the costs, increase the revenues, improve the balance sheet and income statement etc. However it is important to understand here that the business model is not only formulated for fulfilling the financial objectives and achieving certain financial

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returns like specific profit level, return on capital, or other financial goals which reflect overall financial viability. So, on the other hand, business model should also keep in consideration the role of different stakeholders in the overall process of opportunity definition, option generation, and success evaluation, and for this reason business model should be designed to make sure that the political, social, and financial expectations of different stakeholders are satisfied and fulfilled. This strategy of devising business model results in providing the management with analytical tool that contributes towards overall understanding of the situation and scenarios rather than providing them will only strategic device that provides templates to the management. The business models devised keeping in view the stakeholders’ credibility along with the financial viability provides the managers with the basic understanding needed in order to analyse the external and internal environment and come up with the best possible business strategy considering the external and internal constraints and situations. However one important point which should be considered at this point is that every organisation or company has different stakeholders and it is not possible for the organisation to satisfy each and every stakeholder and they give preference to one or more stakeholders while formulating business models. This in turn creates hindrance in the process of overall organisational growth. This is the main reason for changes in the activities and business models of different companies or organisations. Several organisations have changed overall business model in order to respond to the changing

Summary

ORGANISATION’S BUSINESS MODEL: STAKEHOLDER CREDIBILITY ALONG WITH FINANCIAL VIABILITY With consensus on the fact that CEO must be well informed of the company’s business model, there is little agreement on the operating definition of business model. With all innovations, the ground concept of business model remains as Peter Drucker defined that business model shall address the clear customer identification; valued factors by business’ customer and ways to manage to meet customer value demand in cost efficient or profitable way…
Author : moenmittie
Business models essay example
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