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eBusiness Models Extract from Wikipedia (last visited Sept. 27. 2007) and based on Alexander Osterwalder: THE BUSINESS MODEL ONTOLOGY, Lausanne University (Ph.D. thesis 2004) eBusiness Models Business model describes a broad range of informal and formal models that are used by enterprises to represent various aspects of business, such as operational processes, organizational structures, and financial forecasts. Although the term can be traced to the 1950s, it achieved mainstream usage only in the 1990s. Many different conceptualizations of business models exist The model proposed by Osterwalder (2004) synthesises the different conceptualizations into a single reference model based on the similarities of a large range of models. The author's conceptualization describes a business model as consisting of nine related business model building blocks. Thus, a business model describes a company's business: eBusiness Model (Osterwalder) eBusiness Models Infrastructure • core capabilities: The capabilities and competencies necessary to execute a company's business model. • partner network: The business alliances which complement other aspects of the business model. • value configuration: The rationale which makes a business mutually beneficial for a business and its customers. eBusiness Models Offering value proposition: The products and services a business offers. eBusiness Models Customers • target customer: The target audience for a business' products and services. • distribution channel: The means by which a company delivers products and services to customers. This includes the company's marketing and distribution strategy. • customer relationship: The links a company establishes between itself and its different customer segments. The process of managing customer relationships is referred to as customer relationship management. eBusiness Models Finances • cost structure: The monetary consequences of the means employed in the business model. • revenue: The way a company makes money through a variety of revenue flows. A company's income. eBusiness Models: An overview The term business model or (e-business model) is particularly popular among e- businesses and within research on e- businesses. Cherian (2001) identified 33 different e- business models, Applegate (2001) classified 22 types of e-business models and Timmers (1998) presented eleven generic e-business models. Afuah & Tucci (2001) even claim that a well-formulated business model will render a firm greater profit than its competitors. eBusiness Models: An overview The growing body of e-business model research, empirical or conceptual, can be organized around two streams. The first stream aims to describe and define the components of a business model. The other stream aims to develop descriptions of specific business models. Timmers • an architecture for the flows of products, services and information, including a description of the various business activities and their roles; • a description of the potential benefits for the various business actors; and • a description of the sources of revenue. • a marketing strategy • a marketing mix • a product-market strategy Weill & Vital A description of the roles and relationships among a firm's • Consumers • Customers • Allies • Suppliers that identifies the major flows of products, information and money and the major benefits to participants. Amity & Zott • content: the exchanged goods and information and the resources required to facilitate the exchange; • structure: the linkage between transaction stakeholders • governance of transactions: the control of the flows of goods, infor-mation and resources and the form of legal association Afuah & Tucci • customer value (distinctive offering or low cost); • scope (which customer and what products and services) • the price of the offering • the sources of revenue • connected activities: interdependence between different activities within the business model • implementation: what resources are needed, such as structure, peo-ple and the fit between them • capabilities: what skills are needed • sustainability: what is difficult to imitate in the business model Applegate Applegate (2001) presented an industrial organization- based framework consisting of concept, capabilities and value. • The business concept defines a business market opportunity, the products and services offered, competitive dynamics, the strategy to obtain a dominant position and strategic options for evolving the business. • The capabilities of an organization are built and delivered through its people and partners, organizational structure, culture, operating model, marketing and sales model, management model, develop-ment model and infrastructure model. • Value is how a business model is measured: return to all stakehold-ers, return to the organization, market share, brand and reputation and financial performance. The components are interdependent, and traditional strategic frame-works, such as value chain analysis, can be applied to analyze e-busi-ness models. Rappa E-commerce and e-business will give rise to new kinds of business models. According to Rappa: "In the most basic sense, a busi-ness model is the method of doing business by which a company can sustain itself, that is, generate revenue. The business model spells-out how a company makes money by specifying where it is positioned in the value chain." eBusiness Model (Hedman & Kalling) eBusiness Models eBusiness Models Business Models eBusiness Models Hvad er forskellen? eBusiness Models - Rappa A business model is a method of doing business. All business models specify • what a company does to create value • how it is situated among upstream and downstream partners in the value chain • the type of arrangement it has with its customers to generate revenue eBusiness Models - Rappa In any given industry the methods of doing business may vary, but there are limits imposed by • technological factors • competitive dynamic among companies • Competitive dynamic between companies and their channel partners • customer expectations and preferences • other things. eBusiness Models The Internet opened the door to new business opportunities, but many Internet-based enterprises failed because they had not clearly thought through their model—particularly, how money would be made. Nonetheless, given the rapid adoption of the Internet, it may no longer be possible to discuss business models without taking it fully into account. eBusiness Models One approach to the classification of e-business models is a comprehensive taxonomy using the customer relationship as the primary dimension for defining categories. Although by no means the only approach, this has proven to be a useful framework because it builds upon a common parlance already used in many industries to describe methods of business. Other approaches may be more suitable for other purposes, but it is unreasonable to expect that any single taxonomy can account for the vast diversity of business models found in practice without becoming unwieldy. eBusiness Models Nine major categories are used to classify a number of different types of business models that have been identified in practice among Web- based enterprises Brokerage model Brokers are market makers: they bring buyers and sellers together and facilitate transactions. Brokers play a frequent role in business-tobusiness (B2B), business-to-consumer (B2C), or consumer- to-consumer (C2C) markets. Usually, a broker charges a fee or commission for each transaction it enables. The formula for fees can vary. Brokerage models include exchanges, demand collection systems, and auction brokerages. Advertising model The advertising model on the Web is an extension of the traditional media broadcast model. The broadcaster, in this case a Web site, provides content (usually, but not necessarily, for free) and services (like e-mail, chat, forums) mixed with advertising messages in the form of banner ads. The banner ads may be the major or sole source of revenue for the broadcaster. The broadcaster may be a content creator or a distributor of content created elsewhere. Advertising models include portals, query-based paid placement, contextual advertising, and content-targeted advertising. Information-intermediary model Data about consumers and their consumption habits are valuable, especially when that information is carefully analyzed and used to target marketing campaigns. Independently collected data about producers and their products are useful to consumers who are considering a purchase. Some firms function as “infomediaries” (information intermediaries) assisting buyers and/or sellers to understand a given market. Merchant model Merchants are wholesalers and retailers of goods and services. Sales may be made based on list prices or through auctioning. Merchant models include virtual merchants or “e-tailers”, mailorder businesses with a Web-based catalog, and traditional brick- and-mortar retail establishments with Web storefronts. Manufacturer Direct model The maker of a product or service may sell (by purchase, lease, or license) directly to the consumer. The manufacturer or direct model is based on the power of the Web to allow a manufacturer to reach buyers directly and thereby compress the distribution channel. The manufacturer model may be chosen for its efficiency, improved customer service, or due to a better understanding of customer preferences. Affiliate model The affiliate model provides purchase opportunities wherever people may be surfing the Web. Financial incentives (in the form of a percentage of revenue) are offered to affiliated partner sites. The affiliates provide purchase-point click-through (i.e. direct linking) from their Web sites to the merchant’s Web site. It is a pay-for-performance model if an affiliate does not generate sales, no cost to the merchant is incurred. Variations of this model include banner exchange, pay-per-click, and revenue sharing programs. Community model The community model is based on user loyalty. Loyal users invest both their time and emotions in a business. Revenue can be generated based on the sale of ancillary products and services or voluntary contributions. The best known example of a community model is that of “open source” computing. The model is based on the creation of a community of interested users who support the site through voluntary donations. Subscription model It is not uncommon for sites to combine free content with “premium” (i.e., subscriber only or member only) content. Users are charged a periodic daily, monthly, or annual fee to subscribe to a service. Subscription fees are incurred regardless of actual usage rates. Subscription and advertising models are frequently combined. Utility and hybrid models The utility model is based on metering usage and constitutes a “pay as you go” approach. Unlike subscription services, metered services are based on actual usage rates. An interesting hybrid model on the Web, the metered subscription, allows subscribers to purchase access to content in metered portions, such as the number of pages viewed. Hedman & Kalling: Conclusion • So, does the Internet, dot-com and the networked economy require new business models? • No. Every firm, wherever they compete (the Internet or the real world), needs a market with customers and has to offer ser-vices and/products at a certain price at a certain cost. • The offering has to be developed and produced through activities and an organization that use resources to convert production inputs into offers. • However, the so-called old business model might be greatly affected by e-business models. • Thus, nothing has changed except alterations of the causality between the components of the business model.
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