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Problem

Gary Hamel, a leading strategy consultant, contends that managers as well as Wall Street analysts like to talk about business models, but few of them could define “what a business model or business concept really is.” Describe the major components of a business model and discuss how these components are linked to the benefits a firm provides to customers.

Step-by-step solution

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Step 1/1

In an organization, a strategy can be successful only when there is proper understanding of the business concept. The business model comprises of four components, the customer interface, core strategy, strategic resources and the value network. These components are joined with the bridge elements like the customer benefits, configuration and the company boundaries

1. Customer interface – This component explains how the customer relationship strategies are designed. Customer interface provides ways in connecting to the customers. Customer interface comprises fulfilment and support, information and insight, relationship dynamics and pricing strategy.

2. Core strategy – This strategy explains how the firm decides to compete. There are three elements in core strategy, the business mission, the product or the market scope and the basis for differentiation. The products provided to customers must be innovative and of good quality. The cost factor should not be too high for the customer when compared to other competitors.

3. Strategic resources – This strategy gives an idea about the firm’s assets, the work of the employees and also the knowledge within the firm. The firm’s strategic resources include core competencies, strategic assets and the core processes.

4. Value network- This is the last component which gives a better idea about the firm’s research base. Suppliers, alliance partners are all include in this group. These partners enable better strengthening of resources within the firm