Business Model and Disruption

Question: Discuss about the Business Model and Disruption. Answer: Business Model Business Model is the graphical or textual representation of the core activities of an organization. Business model describes the financial, co-operational arrangements, resources that it uses, organizations customer interfaces, unique value proposition as well as the core product or services that it offers which is essential to meet organizational goals and objectives. (Barringer Ireland, 2015) Business Model disruption The process of shaking up an industry where the incumbents stumble is the vague description for business model disruption. The business model disruption occurs when the new entrants enter the market which was previously overlooked by the incumbents. After the entrants successfully performs in its existing market, it then moves upward which is targeted by the incumbents. When the mainstream customers of the incumbents then start purchasing or using the product of entrants, then the disruption occurs. (Christensen, et al., 2015) Disruptive innovation is the one that creates new market and value network and disrupts the existing network and value network. Disruptive innovation also replaces the established market leading firms and also their products. Few examples pertaining to Business Model Disruption which is based on technological changes: Educational Institutions vs. Educational Publishers: Increasing use of technology has changed how people learn. Online classrooms that connect learners and professionals are rampantly increasing. Today many digital classroom, library, video content and interactive info graphics have replaced the traditional way to go to institutions and learn. The world is digitized. All the information needed for a person to learn is available in global marketplace. The ubiquity of knowledge in the global marketplace has made it easier for the passionate learners to see and discuss every educational matter (teacher, tutoring etc) very easily for global marketplace. Large economies like Europe, U.S.A have almost replaced their traditional educational institutions using educational publishers. Largely, the development depends on how the knowledge is acquired and shared. This is why these large economies have been able to compete with emerging economies like South America, Asia and Africa. Examples: iB ooks, TED Ed, etc. Media and entertainment companies: Media and entertainment companies act as the source of interaction, communication, information and participation. As technology has been growing rampantly, consumers are embracing online and mobile functionalities. Those businesses that are able to provide customers with added value ecosystems are able to sustain in the marketplace whereas others are slowly getting out of business environment and have started becoming obsolete. (Laudon, n.d.) Examples: Spotify, Netflix etc. Banking and insurance companies: Mobile and online technologies are becoming dominant part of human life. These technologies have been making human life easier. Due to its increasing importance, customers expect insurance and banking companies to make online services available which makes saves customers time and make them easier to do their work. Because of this innovation, offices and agents become more and more obsolete in todays business environment. Driven by lower cost, increased trust and transparency, customer find is much easier to complete their day to day transaction online. Due to this innovation, customers are able to manage their account online and pay online.(Laudon, n.d.) Example: Bitcoin, Google wallet etc. Conventional business model has been continuously replaced by contemporary technological business model. Let us now examine how one example of each of the categories: educational publishers, banking insurance services and media and entertainment sources has replaced the conventional business model of educational institutions, traditional banking services and traditional media and entertainment sources. TED Ed is TEDs Education initiative. The tagline that TED Ed uses Lessons worth sharing is an extension of TEDs mission of spreading great ideas. It is one of the newest initiatives of TED. This aims at supporting the teachers and raises the curiosity of learners around the world. With the use of videos, TED is capable of introducing and sharing new topics to the curious learners round the world. The TED-Ed allows users to take any TED Talk, TED-Ed Lesson or educational video. TED Ed also creates an environment where learners can easily create customized questions and discussions around the video. Learners and users are then capable of sharing and distributing their lessons and ideas privately and publicly around the world. (Anon., n.d.) This collaborative learning environment provides free videos to the passionate and curious learners. It provides an environment where learners can explore and extract knowledge from various professionals. These educational videos can be shared throughout the world. It is also a platform that provides an opportunity to create questions and where discussion takes place through which answer is revealed. This platform is capable of replacing traditional educational institutions where students visited institutions to gather knowledge, create discussion and share ideas with their colleagues as well as teachers. This new model of creating and capturing knowledge has created a platform where students can save their time and acquire knowledge staying at their home or from anywhere. Spotify: It is the music, podcast and video streaming service that protects the usage of copyrighted works and proprietary hardware from record labels and media companies. There are two versions of Spotify: the premium monthly subscription service and a free service which is supported by advertising. (Anon., n.d.) Spotify replaces the traditional entertainment services provided by radio and television. Using Spotify, users can select the songs of their choice that they want to listen and whenever they want to listen. Whereas in the case of radio and television the audiences are incapable of choosing the song that they want to listen. The audiences must listen to the songs whatever is played on the television and the radio broadcast. Spotify also provides an opportunity to share the music with their friends. Google Wallet: Google wallet has become one of the easiest ways to transfer money from person to person. The sender enters the email id or the phone number of the recipient. The recipient must then link the phone number or email id to their bank account so that they can have access to that fund. Google Wallet makes it easier for people to pay money to any person staying in any part of the world and having access to any of their bank account. It has replaced the traditional way of paying the money where people pay directly on meeting each other or through the use of cheque. This traditional way of paying the money is quite cumbersome since the people have to meet each other to pay and receive the money or the recipient has to take the cheque himself and deposit in their own bank account or withdraw the amount written in the cheque. The Future of Business Models New business models are taking place which continuously makes the older models disruptive. Seeing the trends in the business model, there are few critical points that can be examined to determine what the future of the business model looks like. These are amongst the few points that I want to point out to conclude the significance of my findings for the future of the business model. Instead of looking for the additional outlet of existing offering carefully search for the needs that have not been met. (Eyring, et al., 2011) Blue print the model from the viewpoint of your targeted customers and your company goals. Doing so might help you to continually reinvent the model on the basis of the companys resources, capabilities and customer demands. (Blank, 2013) Carefully examine the price that the customers are willing to pay for the product. Focus on the key things such as affordability and accessibility of the companys offerings. Increasing customization and personalization of the offerings. (Laudon, n.d.) Increasing use of Information Technology to increase customer intimacy, value chain coordinators that match supply and demand. (Mendelson, 2015) Continuously thrive and look for the changes in the industry in which you are participating and market that you are targeting. (Drucker, n.d.) References Anon., n.d. Spotify. [Online] Available at: https://www.spotify.com/int/why-not-available/ Anon., n.d. TED Ed. [Online] Available at: https://www.ted.com/about/programs-initiatives/ted-ed Arts, O., 2013. 10 disrutive business model. [Online] Available at: https://www.slideshare.net/featured/category/business [Accessed 16 August 2016]. Barringer, B. R. Ireland, R. D., 2015. Entrepreneurship. In: Entrepreneurship. Sector 62- Noida: Pearson, p. 549. Blank, S., 2013. Why the Lean Start-Up Changes Everything, May.p. 9. Christensen, C., Raynor, M. E. McDonald, R., 2015. What id Disruptive Innovation. December. Drucker, P. F., n.d. Harvard Business Review. The Discipline of Innovation, p. 11. Eyring, M., Johnson, M. W. Nair, H., 2011. New Business Models in Emerging Markets. Laudon, K., n.d. E-commerce. In: Management Information System. s.l.:Pearson. Laudon, K., n.d. Management Information System. In: Management Information System. s.l.:Pearson. Mendelson, H., 2015. Business Model, Information Technology and the Company of the Future. [Online] Available at: https://www.bbvaopenmind.com/en/article/business-models-information-technology-and-the-company-of-the-future/ [Accessed 16 August 2016]. Owyang, J., 2013. in Slide Share. [Online] Available at: https://www.slideshare.net/jeremiah_owyang/the-future-of-business-models/34-Real_time_Delivery_Fdom_local [Accessed 16 August 2016].