INTRODUCTION
Facebook is an American company based in Menlo Park, California that provides an online social networking service (SNS) for over 1.3 billion users worldwide (Newsroom.fb.com, 2004). A social networking service (SNS) is defined as a platform to build social networks or social relations for people with real-life connection or who share common interests. A social network service consists of a representation of each user (often a profile), his or her social links, and a variety of additional services. Social network sites are web-based services that allow individuals to create a public profile, to create a list of users with whom to share connections, and view and cross the connections within the system (Freebase.com, 2015).
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Many people think of a revenue model or operating model when they think of business model but a business model is much more than either of those concepts.
A business model describes the rational of how an organization creates, delivers and captures value. A business model dictates the long term and short term strategies for competitive advantage which in turn get translated to an Operating model (Business Process, Technology, People, Ownership and Metrics) for execution (Converge Consulting, 2012).
Facebook is a “Multi-sided Platform”. The platform’s value for a particular user group depends substantially on the number of users on the platform’s “other sides”. Facebook attracts users and advertisers because of the number of users on the platform. If the users went elsewhere, which is what happened to MySpace, advertisers would take their dollars and invest elsewhere. On use it. This also applies to the developers who develop apps for Facebook. They depend on large amounts of users to use their apps (Converge Consulting, 2012).
From a strategic perspective, one way multi-sided platforms solve this problem is by subsidizing a customer segment. Though a platform operator incurs costs by serving all customer groups, it often decides to lure one segment to the platform with an inexpensive value proposition in order to subsequently attract users of the platforms “other side”
A operating model is the operational design that makes it conceivable to convey the business methodology. Operational design takes after technique, however the relationship additionally lives up to expectations the other path around, which implies that thoughts for operating model enhancements can prompt changes in business strategy. Operating models usually exist which work with differing degrees of success. The aim is to amend and align existing models to the critical success factors and in simplest form, a Operating Model defines how the critical work of a company is carried
The word model is defined as “a standard or example for imitation or comparison” (Dictionary.com, 2017). Correspondingly, a business model is a standard or example for a business to follow in order to execute their strategic plan. It provides the directions for the delivery of a product or service that fills a consumer need and creates value. As learned in Rothaermel (2017) a business organization’s structure must follow its strategy to be successful. A business model describes the format a company will use for its structure, the systems it has in place, as well as the processes it will use, to implement its strategy (Osterwalder & Pigneur, 2010).
A business model design and innovation is the value a company brings to the market. Osterwalder, & Pigneur (2010) mentions four mapping four primary areas of environment, market forces, industry forces, key trends, and macroeconomics forces (p. 200). Each one of these four factors are important to a business model. The innovation that is required to make each mapping to become a success is much needed.
By definition a business model is the way in which a company generates revenue and makes a profit from company operations.For this to happen a business needs to create a plan to attract the publc. Two ways to attract the public are to have higher qualities products than the competitors and to create a vision that empowers the public to come back for their services.
A business model is merely a description of how a company is to be structured and what would be its ways of maximizing profits and inflow of cash. Its stands completely independent of competitors and is not affected by it. What differentiates the business from its competition is the strategy. The strategy states and covers
Organisations are commonly known as open system which operates under the conditions of substantial risk, uncertainty and turbulence. The organisations are seeking to balance coherence and stability with well flexibility and balance stability and varying of higher level of efficacy. And Organisations survive, prosper and exists on the basic value of proposition, where it means creating a thing not for profits and not destroy the values. Business model in the organisation helps to capture, redistribute and unlock in an efficient manner. Business Model Innovation in organisations are the concept based on doing the innovative by depending on their resources and internal
A business model is defined as a process of an organisation to create, deliver and capture value. In any context, a business model is interrelated to a business strategy [8].
4) A business model describes how a company produces, delivers, and sells a product or service to create wealth.
Osterwalder (2010) once said that a business model would explain the roots of how an organization works in order to create, deliver, and preserve its value. Referred from a definition in dictionaries, the term “business model” can be under stood as “the plan implemented by a company to generate revenue and make a profit from operations. The model includes the components and functions of the business, as well as the revenue it generates and the expenses it incurs.” (Investopedia, 2013) or the simplest of definitions — “All it really meant was how you planned to make money” (Ovans, 2015)
Business model refers to the basic logic of enterprise value creation, that we called how customers provide products and services, when the enterprise in the value chain or value network and obtain profits. In popular explanation, it is about how the enterprises make money.
A business model innovation is the development of new ideas and concepts that support the value and mission of an organization or products; thereby assisting in attaining the company’s goals and objectives and realization of profits. The business innovation model also analyses and creates new methods of relationship with customers and how products and services are delivered to customers.
Business models can be used by management to get a sense of how the organization/company/startup is creating, capturing and delivering value to its customers. Management can seek to optimize the business by
A Business Model is an overall plan in which a company implements towards their overall objective in which they are hoping to achieve. The main purpose of a business model is to provide a diagram in which shows how the company will be able to achieve their objective of increasing revenue and profit. Companies/businesses used business models because they include all of the activates and helps firms to participate within their marketplace. Although Business Model may sound simple enough, business models have a wide variety of imitations in which helps achieves different businesses objectives. When doing any of the many different types of business model the many questions that must be answers is “how are you as
For Lewis (2001), a business model means “all it really meant was how you planned to make money” (Lewis, 2001, p. 254). This definition reiterates in simple words the previous “theory of business” by Peter Drucker (1994) who described the term business model as a set of suppositions about what a business will and will not do to get paid for. These suppositions are about the market and external environment, customers, competitors, technology and the company’s strengths and weaknesses (Drucker, 1994). These explanations are very close to the famous definition of strategy by Michael Porter which is the formation of a unique and valuable position by linking different set of the company’s activities (Porter, 1996; Ovans, 2015). In online business, the business
Customer segment: They target to mostly everyone, it is a mass market, multi sided platforms.