Good Example Of The Business Model Perspective Case Study
Value Creation of an Internationalizing Entrepreneurial Firm
For responding to call for bigger viewpoint on internationalization of the entrepreneurial firms, here in this study, it is aimed to convey the concept of business model to the framework of IE, with particular prominence on the idea of value formation/creation and value exchange on the company interfaces. This study is cross-case study that is based on the qualitative data from workshops of the business model with main company informers in every case firm. The findings indicates that even though business models of the firms with similar positions may perhaps appears to be similar, however there exists fine-grained differences in both their activities as well as in value formation.
Jones and Coviello (2005) reveals that the Internationalization can implicitly say to be a process of an entrepreneurial behavior that is time-based and considered to be firm-level demonstration of the international entrepreneurship. Throughout the process to get robust into new environment, there is need for adaptation of company’s strategy (Calof and Beamish, 1995; Lam and White, 1999; McDougall and Oviatt, 1996). Research on IE has seen thriving internationalization, be based mainly on controlling, not essentially owning, assets creating value and knowledge that is to be found in diverse parts of globe (Oviatt and McDougall, 1994). Buckley (2009) and Buckley and Ghauri (2004) reveals that following this idea, the value chain idea firmly resides - IE firms shift their assets internationally for staying competitive, disintegrating along with internationally dispersing value chain in the ways attribute of international factory. Therefore it’s rather startling, IE research frequently ignored so far, the perspective of value chain while explaining these firm’s evolution (Axinn and Matthyssens, 2001; Zahra and George, 2002).
IE research is been combined with the arrangements of value chain in order to partially fill gap in the knowledge. Conjunction with Styles and Seymour (2006, p. 134), IE is defined as behavioral processes that is linked with creation and exchange of the value by the recognition and exploitation of prospects/opportunities which cross the national borders. The recognition and exploitation of the opportunities globally and how the value is been created by them in the IE firm and the firms value chain refers to behavioral processes. Behavioral processes as well as the value creation been studied by a framework that is based on construct of business model, predominantly structuring on Zott and Amit (2007, 2008, 2010) works. The current debate around the construct of business model is enlivening the idea of value formation to the center point, and consequently it is attempted to merge two metaphors 1.value chain, 2.Business model, in order to understand the heart of business and value formation in the internationalizing firms.
This study’s contribution to IE is duel. Firstly business model construct is introduced to IE context, predominantly from perspective of IE firm’s value-chain management. Secondly it provide an outline for examining the value creation at IE firms, includes not merely focal firm, however it also includes its most vital interfaces with its value-adding partners.
During the past decades literature on the business models in diverse fields is been developing fields, and this notion has been extensively used in many business journals as well as consulting. Though, usage of the notion is rather varied and no harmony exists on its definition yet. Smith et al. (2010, p. 450) have defined business model to be a design through which organization change prearranged set of the strategic options into the value, and also uses a meticulous organizational architecture to generate and then detain that value. Similarly, Teece (2010) explains business model like an architecture or a design of the value creation, the delivery and the detain mechanisms. It appears that conventional value chain analysis along with the modern developments in the constructs of business model both emphasize the value creation or formation to be as quintessence of what these two metaphors explain. In definitions of the business model, there also exist some differences in its extent. Here the business model definition adopted is of Zott and Amit (2008) that defines it as structural pattern which explains organization, by transactions of focal firm with its entire external elements in both the factor and the product markets. The definition that is chosen in this study spotlight the inter-firm transactions, however construct on resource-based view; therefore, In transactions and the activities the major focus is on value-adding exchange and necessary resources of central firm that are required to facilitate Order #218705020the exchanges. Zott and Amit (2010) suggest the business model to be an activity system that must consist 2 sets of factor 1.design elements that describe system architecture by delineating the content i.e. selection of activities that are performed, structure i.e. how these activities linked together and governance i.e. by who these activities are performed 2. Design themes that describe value creation central drivers, like novelty, customer lock-in, and complementarities/efficiency.
Doz and Kosonen (2010) reveals business models to be the cognitive structures that provide theory, how to put the firm boundaries, create/form value and systematize firm internal structure and its governance. Though business model is normally explained from point of view of individual firm, this notion is not limited inside company’s boundaries; on opposing to this, it explains how organization is associated to its external stakeholders, as well as how the firm harmonizes and manages the economic exchanges with their stakeholders in order to create value to the customers and partners (Zott and Amit, 2007; Teece, 2010). Therefore organization’s focus has moved from managerial structure to harmonization of the exchanges with it’s the external stakeholders and value formation/creation (Zott and Amit, 2008). As a result, it would be served like ideal framework for examining globally entrepreneurial firms, which are usually explained as using fusion organizational structures in processes (Oviatt and McDougall, 1994). Another view in errand of bringing idea of business model to context of IE is the likelihood it offers that is designed for studying actions of such firms from standpoint of opportunities. The recognition, assessment and use of the opportunities has been renowned as an rising theme in literature of IE (Dimitratos and Jones, 2005), The conception of business model, allow us to examine not merely the opportunities that had identified inside the company, but also that are rising at interfaces of value chain. This appears to be very sound suited to examine global entrepreneurial behavior that is frequently explained as cyclic process that is consisting of positive as well as negative development alternating periods (see e.g. Nummela et al., 2009). Therefore, the concept is escorted with the litheness that is needed for examining such a nimble target. As a result, it is concluded that the business model concept would serve up as workable framework in accepting how exploitation of worldwide opportunities and value creation athwart companies be able to systematize in practice.
Value comes out in collaboration with partners, both upstream along with downstream in company’s value chain. These inter-organizational associations in IE creates an imperative basis of competitive advantage (Keupp and Gassmann, 2009; Rialp et al., 2005), and for the entrepreneurs, their administration is most important challenge. From the point of view of management, the main question is that to recognize where the value is been created and how it is formed (see Zahra, 2005). From the viewpoint of IE firm, it is necessary to describe fundamental resources and competences that facilitate transaction that takes place by upstream as well as the downstream partners, and enticements for these transactions that create firm an attractive purchaser or supplier from partner’s standpoint. For analyzing the value creation that takes place in IE firms, a framework of business model has been build, which is based on 3 sets of factors/parameters. First parameter following the concepts of Zott and Amit’s (2010) here it is tried to recognize the central drivers of value creation i.e. novelty, efficiency, complementarity, or customer lock-in. Then second parameter, design elements of business model is been investigated i.e. structure content, and governance. Lastly projected third parameter adding to the conceptualization of Zott and Amit’s examines value exchange at 3 major interfaces, that is, upstream sellers, downstream partners in sales and the customers.
Alpha Ltd case company founded in 1996, provider of multifaceted ICT systems for primarily public sector associations, presently holds 85% of market share in its residence market by its major product. The company is having less than forty employees. Beta Ltd case company was established in 2002, currently having around twenty employees. It presents solutions for getting the content of media into the mobile browsers. Gamma Ltd also provides of ICT systems majorly to the organizations of public sector. It was established in 2001, currently having around 100 employees and its main focus is on the niche markets. All of these 3 firms tender systems that coalesce both the hardware, software along with services.
This study complements the prior researches on IE and also provides a valuable addition to literature by giving an outline on role of business model that is clearly-framed in IE behavior. The newness of this approach lies particularly in the verity that both internationalization processes inward as well as outward (see e.g. Korhonen et al., 1996) are concurrently scrutinized by the upstream and the downstream interfaces, hence giving holistic approach importance to internationalization (suggested i.e. by Fletcher, 2001) and also assessing the internationalization pattern from a novel perspective (Knudsen and Servais, 2007). From managerial viewpoint, the construct of business model presents a substitute viewpoint for operating internationalizing business enterprise that focuses on key procedure of value creation rather than managing incongruent international actions and functions.
Although significance of business models for value creation of an organization has been strained, the precise link to the cross-border activities and actions related with the suppliers, the customers as well as the competitors remained unhurt field of academic inquest. Since customer value is more and more created by association with the partners along with the suppliers, hence there is emergent need for amalgamation between units that are accountable for these grave cross-boundary relations, and for organizing the value processes (Piercy, 2009). In place of just giving descriptive short examples of the general business models, this study also adds to the earlier literature of business model by unfolding in facet the architecture and the design of value creation of 3 IE companies and their associated upstream and the downstream interfaces. The progress of this value-based construct of business model in IE proposes a need for interdisciplinary approach: for example, scholars of IE must scrutinize the inducements for the international upstream sellers further closely by structuring on literature of supply management. As managerial inference, it is argue in this study that global entrepreneurs as well as the managers trying to build up effectual business models must analyze equally value creation in the upstream as well as in downstream associate interfaces. Very often firm focuses merely on receiving value from partner, and ignoring clear recognition and announcement of the incentives towards the partners in order to get better the relationship.