Business Model and Innovation Proposal

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Business Model and Innovation Proposal Introduction to Business Model and Innovation First I will give a definition of a business model. A business model defines “how an organisation earns money”. Therefore you could also define a business model as the “architecture of revenue”. How an organisation earns its money depends upon the followings:

  1. The customer value proposition – the market segment and market position, with other words: a. who are its customers b. what does it offer to these customers c. how it distinguishes itself from its competitors.
  2. The revenue model
  3. Its own value chain – indicating how the cost structure is arranged.
  4. Its core competencies and key assets on which the value proposition is based and upon which the sustainability of its competitive advantage is based. In addition to this, the business model must also include how it increases these competences and assets and how they are protected against imitation.
  5. The place in the supply value chain and role in the business ecosystem. This includes how to co-operate with which partners.

In short, the business model encompasses the essentials of the entire market approach. Research has indicated that the business model determines whether one will earn money with an invention. The relation between a new technology and business model can be best expressed as follows. A technology per se does not have any value. It only gets value when it is translated into a customer value proposition. Only part of this created value for the customer can be appropriated by the organisation. The business model determines how much economic value is created and appropriated by the company (Henry Chessbrough, Open Business Models, 2006). In fact the business model contains all the elements that transform an invention into an innovation. Business Model Innovation can therefore take place on all 5 aspects of a business model as explained above. However, it is often when one changes one part of the business model one also has to change other parts to make it coherent. For example changing the revenue model has its effect on the customer value proposition and an effect on the relationships with partners and therefore on the role and position in the business ecosystem. The Company – uFlavors The company I will be analyse on is uFlavor. uFlavor is an US beverage company founded on the idea that every person is unique, that every individual has different tastes and different needs. Where other beverage companies make drinks aimed at satisfying the largest number of customers across the broadest demographics, uFlavor only makes drinks for one person (this is the business model).

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