Introduction
Modeling is the instrument to present something in an understandable and easily visible form, intending to perceive it better, improve, or recreate it; business models, thus, are useful to increase profits and decrease drawbacks. They create a roadmap for the business, showing its connections, internal and external processes, and revealing its business type and perspectives. There are various business models, which may be used separately or together; while the business may be described by several of them, each model fits some types of companies better than others. For example, Uber Eats is a company that uses the platform business model in its enterprise. It serves as the platform, connecting clients who want to eat with supermarkets, where its couriers buy food and transport it to customers. It was designed using the platform business model, and the astonishing success of Uber Eats shows how the usage of modeling helps design viable and robust enterprises. In that way, a concise business modeling is a good action to improve the functionality of the business, scale it, or create new ventures.
Business Model Frameworks Review
Business models are used to describe, classify, and improve business elements. When they first were invented and researched, they were used mostly for a simple listing of various structures present in businesses and the connections between them (Osterwalder et al., 2005). Since that time, the concept has been developed constantly, and now they are used to improve business performance, stimulate innovations, and other purposes connected with the competitive advantage acquiring (Cosenz & Noto, 2018). When one starts a business, it may be designed using one or several business models, which will help it to be more successful. For example, the Uber Eats company was created using the platform business model. Its success is based on being a platform connecting customers with suppliers using couriers, the mobile app, and a lot of data analysis (Hess et al., 2021). Therefore, the modeling increases knowledge about how the business functions, improving all aspects.
Business models should be distinguished from business strategy and process modeling, as those are different instruments. Business models describe and model the business structure, such as its customers, financial flows, partner networks, and value production (Osterwalder et al., 2005). Unlike that, business strategy and processes are more local and specific fields, and their modeling does not include the whole business structure. Strategy is focused on current and future actions, environmental impacts, and business visions and ideas rather than on its structure and interconnections. Business processes are its interactions with other actors, such as suppliers or partners; examples are cashflows and decision-making processes (Osterwalder et al., 2005). All of them are included in the business model, but none is sufficient: the model covers all aspects of the business’s functioning. Unlike other models in the business field, such as strategy or business processes modeling, it covers all aspects of the company’s functioning.
Differences are in terms used to describe it, its focuses, and the general aim of the model. For example, the RTVN model focuses on resources and aims to maximize the created value while minimizing resource usage (Cuofano, 2019). The Barringer & Ireland model aims at the core business strategy and its implementation in each case (Barringer & Ireland, 2018). The business model canvas is used to create a complete picture of its internal organization, such as its key resources, key partners, created value, monetization scheme, and customer communication (Cosenz & Noto, 2018; Li et al., 2019). While it is more complex and needs more time and knowledge to implement, its large advantage is its wholeness, which allows it to be more accurate and useful. Thus, various models may be used to analyze and improve any company; however, particular business models are better compatible with particular companies than others.
The concept is widely discussed, and often researchers and businessmen have various opinions about what this concept means. This is due to the different aims of researchers; each of them makes a different meaning to the term according to these aims (Zott et al., 2011). There is no clear and widely accepted definition: various researchers consider a business model as a description, statement, representation, tool, or template. It means that distinct models have different functionalities: some were designed as instruments to create or manage businesses, while others serve as a concise description, easing the work. However, most of them agree with the main idea: the business should work to create value for customers and take profits from it (Teece, 2010). In that way, the business model is both a tool and description: an instrument designed to analyze how the business is performing those functions and how it can perform them better.
Business Models Overview
Five examples of business models are to be described there, and each of them provides a distinct view of the business structure. The RTVN, lean startup, OBMC, Barringer & Ireland, and platform business model. One or several of them may be used when creating a company. For example, the RTVN model is simplistic and resource-oriented, perfect for the production-oriented business (Cuofano, 2019). The lean startup model is ideal for launching a startup: operating in a completely new market, where a new business process should be designed (Bortolini et al., 2018). The large and complex OBMC is well-suited for large corporations or multi-functional businesses operating in various markets, as it focuses on connections between various operational subdivisions of the business (Li et al., 2019). The Barringer & Ireland business model focuses on the strategy and is good for enterprises with one core idea (Barringer & Ireland, 2018). Lastly, the platform business model is well-suited for so-called platform-based businesses, aimed at connecting suppliers with customers in the best possible way.
- The RTVN (Resources, Transactions, Value, and the Narrative) model is one of the simplest. It divides all business structures into four components: resources, transactions, value, and narrative, and besides, the last one is considered to be the intersection of the three others. This simplistic model allows us to see the most basic elements of the business, not being hindered by large theoretical frameworks. Those are resources needed for production, the value created by the company, transactions, connections with partners, suppliers, and customers, and the core narrative of the company (Cuofano, 2019). Thus, this model is good for companies focusing on production.
- The lean startup model is designed for the new businesses, showing how they may use resources optimally and search for gaps in the market to fill. Unlike other ones, it may be considered the business model to create new business models: it utilizes a build-measure-learn cycle to create a viable structure for the startup (Bortolini et al., 2018). The build stage is the actual creation of the new product and a business model connected with it, and the measurement stage is the testing of all possible functions of the product or service. Then, the obtained data are analyzed via the learning stage, which results in a new idea about how the product and its corresponding model may be improved, returning, in that way, to the build stage. Its name means that it aims to create a learning or tendency which will contribute to the enterprise development. It is best suited for startups operating in new emerging markets.
- OBMC (Osterwalder’s Business Model Canvas) is based on the research of Alexander Osterwalder and consists of nine key components in four categories. Those categories are infrastructure, product supply, customer, and finance. The infrastructure and customer are connected via the product supply, while the finance category is the basic and crucial for the others (Li et al., 2019). Infrastructure is connected with the company’s cost structure, while the customer segment generates revenue streams. Crucial parts of the infrastructure are key partners, activities, and resources, while crucial parts of the customer segment are relationships with customers, the target audience, and channels where customers may be found.
- The Barringer & Ireland business model provides a template with four subdivisions: core strategy, resources, financials, and operations. The core strategy is the company’s main focus: its mission, product and value, principles of differentiation, and the target market (Barringer & Ireland, 2018). Resources are divided into competencies, such as recipes and knowledge, and assets, such as material products or data arrays. The financials subdivision is a set of all company cash flows: there are sources of revenue, funding, and the list of financial relationships with partners, suppliers, and customers. Operations represent lists of the company’s products, services, client channels, and key partners. This model is focused on the strategy of value creation and profit-making, and it fits best small enterprises, which have one clear core strategy and operates based primarily on it.
- The platform business model sees the business as a platform that connects suppliers and customers, analyzing all available information about them. All businesses may be modeled in this way, as each inherently has contacts with suppliers to buy resources and customers to sell goods. Nevertheless, the platform business model is mostly used for the so-called platform-based businesses, which are designed to be a platform to connect suppliers with their clients using data-driven decisions (Rahman & Thelen, 2019). Examples are Uber Eats, which connects food suppliers with those who need to eat, Airbnb, connecting hostels with tourists; and Upwork, connecting freelancers and their customers; they all use mobile apps and data analyzing tools.
Key Components to Consider
While various business models have different views about the business organization and use different terms, all of them have key elements connected with the mentioned business’s main aim: to generate value and make profits. Those elements are resources, competencies, costs, proposed value, customer service, partners, and stakeholders. For the RTVN model, for example, the crucial element is recourses, while for the Barringer & Ireland one, it is the core strategy and core competencies connected with them. The OBMC and platform models are not focused on any of those components, aiming to create a broader and unbiased picture instead. The OBMC provides a large and complex canvas describing how the business works, while the platform model gives a simple platform that connects suppliers and customers by analyzing their information.
Connected, Synergistic, and Parallel Models
While one may use one business model for one business, in some cases, several models may be connected for better effect. For example, the platform business model may be connected with Osterwalder’s business model canvas, getting the platform business model canvas (Eisape, 2019). There may be connected, synergistic, and parallel models, defining different levels of connection between different models.
- The connected business model is a combination of several models, resulting in one complex operating scheme. This is a typical case for large companies, which work in various markets and use different operating patterns. To model a company, one may combine several models to show it from various sides and make conclusions about how to develop and optimize it (Cuofano, 2019). Such an approach is very useful in launching new ventures: for example, one may connect the OBMC with the RTVN approach to see how key resources may be used most efficiently.
- The synergistic model is similar to the connected one, but in this case, two or several models are not simply connected but merged together, resulting in a new model. A mentioned example of the platform business model canvas is the synergistic one: it merges the platform and OBMC models into one, using the benefits of both (Eisape, 2019). This is the most efficient example, as it leads to creating a whole new model, which will be more effective in the particular case than any other.
- Parallel models represent a situation when a business utilizes two different models simultaneously, without any connection. It is a much rarer case than the two others; it may be used, for example, when a new startup is created using the lean startup model while the company is aiming to use the platform model. This approach is less effective, as all models are used separately, and their results may be contradictory without the adjustment.
Business Models Application
Uber Eats is a platform-based business that serves as the food delivery system, where everyone may buy food from a restaurant or supermarket with an available price and home delivery. It is an example of a delivery company, which is highly demanded in urbanized populous areas; other examples are Glovo or Deliveroo (Hess et al., 2021). The aim of business models’ creation is their application to both existing and non-existing businesses. The main aim of any business to be successful and useful is the value creation for its customers, payments attraction, and making profits (Teece, 2010). Uber Eats is the company that precisely represents the platform business model: it realizes the mentioned aim by being a platform connecting the food suppliers and customers who want to buy it but do not want to leave their houses.
Platform Business Model
Uber Eats was designed using the platform business model: it operates as a platform connecting customers with food suppliers, such as restaurants and supermarkets, using its couriers to deliver food at home. This model works perfectly for data-driven companies whose assets are web applications for data analysis. Such a model has become increasingly popular with the development of information technologies (Rahman & Thelen, 2019). Such businesses do not need any office or resources other than computer hardware; they hire couriers to realize the delivery from the supplier to the customer. Their value is information: the best possible route to satisfy both supplier and customer. None of them will be waiting longer than necessary, and the customer will obtain the food as quickly as possible. The platform business model, thus, is concentrated on information processing and models the best ways to do it; its main strength is its robustness without complications.
Other Business Models
While the business is successfully operating as the platform-based, its main weakness is the limitations of the overly simple platform model. To improve it, Osterwalder’s business model canvas may be utilized along with the platform model, resulting in the platform canvas, which describes the company much more accurately and thoroughly than a simple platform (Eisape, 2019). The platform canvas is a platform where key components, such as relations with customers, partners, competencies, and assets, are clearly stated and analyzed in the same way as in the OBMC model. Such a synergistic model may improve the quality of Uber Eats’ data analysis, increasing its performance, customer satisfaction, and delivery speed.
Conclusion
One may see that business modeling is good for improving the firm’s performance. It is not limited by the process or strategy modeling and includes all aspects of business functioning. The platform business model, for example, represents businesses operating at a principle of connecting customers and suppliers by analyzing their data, and Uber Eats is a good example of such a company. Thus, it would be reasonable to use business modeling to improve the firm’s performance and update its structure.
References
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