Guide To Business Models For Strategic Planning
This article will discuss as to how the management people should create a business model for strategic planning. Each model created calls in for an analysis of resources separately. It is another important thing to consider that the combination of models. A host of other issues arise during strategic planning which are important to be considered. These include the revenue models, models for marketing, financial models and project planning.
A business model is used by the consultants, professionals and the people having academic background for the purpose of strategic planning. The other terms associated with the planning are the architectures, blueprints or they are even simply called as the plan. It grew immensely in the Internet and the e-Commerce era and might be having a possession of some of the distinctive features.
There is something about business model that has been introduced newly. So what is this business model as a concept and how is it related to the strategic planning in your business? If there is any relation between the business model and the strategic planning, then there is a need to develop the concept of business model and use it appropriately. We are yet to discover as to what is new in a business model. It is perceived as a unique way that a business is being conducted. Such is the view of the people belonging to the academics, consultants and the business professionals. The difference and the importance are felt by the key persons in the field of business. Some of them are the business partners, the potential buyers, the revenues those are generated and the logistics of the business organization. The models those are being used these days significantly differ from the traditional methods of governing the business and achieving the goals.
The business models have been used on a large scale by the aspiring entrepreneurs so that they can put forward their ideas in front of the venture capitalists. They are also in a modest way to describe, the fair expression of the ideas in a business.
The top level positions in a strategy are taken by the mission and the other statements that are strategic. They provide for the direction in which the organization to proceed, but at the same time, there is an absence of a planning document. If we have a diagrammatic view of the enterprise, it simply means that there is a relationship of how the firm relates to the stakeholders who are the primary owners of the business. They provide them with a holistic view of the various shareholders which also includes the customers, the suppliers and the distributors, the partners in the firm and also the competitors who exist in a market who are always aspiring to ruin your business.
Then there also these sub models. The sub models that I am talking about here are like the revenue models which contain perhaps one core importance that is how to derive the revenue from the venture that is going to happen. An important aspect of the business is the profitability model, as far as top level management people are concerned. Then there are marketing models which has to techniques that will be used by a business to attract and retain the customers. This gives the firm with a scope of getting new customers as well as has the old ones. Thus the number of customers of the firm become more and more each day. It can just be a design of a new web page, and the other strategies that cause tempting offers to the customers, so that they cannot refuse and ultimately have to stick to the company for being in business. A prototype of the web site shall be built and then inaugurated. Marketing is considered as an activity that is downstream and also believed to have some deployment issues in the business. Many companies that are on the verge of start-up have prospects for an IPO for moving the firm to a whole new level.
Models, strategies and the strategic planning
We are going to talk about initiatives in the large firm as well as start-ups. When you start a new business, it is called an entrepreneurship while when a new sector to be launched by your business, it is called as intrapreneurship. In the business model, the points to be kept in mind and designed are the goal for the initiative, the impacts that it causes financially on the business, the schematic of how the resources are affected etc. Managers who propose have internal matters to get a decision of acceptance and rejection from. It may not been success to create a replica that is exactly same as the original. But the top level management managers will expect answers pertaining to it before any initiative is taken.
It is obvious that the business models are not only restricted to a firm which is large in terms of revenue and employee strength, but in fact, business models are also applicable when there is business to be conducted by small companies as well. In fact business models are also applicable to firms that have just started doing the business and have least of the experiences in the market. The model of a new start-up firm would however differ from those of a big and the more experienced firm. The difference would be in terms of the decision procedures for the investment purposes. This is because there is a difference on how capital is raised for these firms from the market or any other funding.
The thing is if a firm is old and financially strong, they can easily get money to be raised from the market. This is due to the reputation of the firm being strong hold in the market for that category of businesses to be undertaken. Hence the investment decision procedures would differ for these two kinds of firm. The capital of well established companies is raised from the outside. There is an added risk of not knowing the players in the market, who might turn your business out of market. The threats like these are feared by the top level management people like the vice presidents and the angel investors who invest money and their resources in these companies. Hence they are bound to demand a higher burden of proof.
Thus, we can see that a business model is a tool that the management people of the company use for making wise and sane marketing decisions. They come up with better marketing strategies so as to capture the market with a larger proportion. The firm will make a huge investment in the projects. The investments like these are very much a matter of concern. Hence a procedure with set pieces which are reasoned will ensure that the processes involved are more organized and that too in a systematic manner, and the only thing we can hope for is that the risk that the investment is subject to is lesser compared to what is anticipated.
Types of a business model
As more as eight types of business models are known to exist which are accepted as ?atomic? in nature. There are different types of business models that the managers can wish to choose from and combine with each other into different strategies? implementations. So why is it called as ?atomic?? For explaining this, we have to understand a bit of inorganic chemistry. Just like the atoms are built together to form molecules, and molecules bond with each other to form substances or rather compounds in the real world. For e.g. water is composed of Hydrogen and Oxygen. These elements combine in the ratio 2 to 1 to form H20. Most businesses will end up having business models those will be in the compounded form of two or more atomic models those are combined in a certain ratio with each other. It is true that even if one of the business models, though a part of the business model of the companies in the combination, it would not be that accurate to define the business of the firm as if it were only a single business model. This is because the properties of an individual business model are lost when it combines this two or more business models to define a strategy accordingly.
Given below are the eight models and their short description:
1. Content provider-Provides information that is required 2. Direct to customer- Provides goods and services to the customers directly. During this process, the intermediate channel players are bypassed.
3. Full service provider- provides full range services
4. Intermediary ? Brings buyers and sellers together
5. Shared infrastructure- brings competitors together to share
6. Value net integrator- coordinates value net by gathering info
7. Virtual community- Creates loyalty to an online community
8. Single point of contact- Consolidated all the services
Thus, in the above article we have learnt about various business models and their importance and formation of strategic planning with respect to businesses in the corporations.
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