This only needs to be 1 to 1.5 pages
As you compare and contrast the business models listed in this week’s reading, my question for you is to state whether you agree or disagree and why?
A business model defines how an enterprise interacts with its environment to define a unique strategy, attract resources, build the capabilities to execute it, and create value for all stakeholders. A well-aligned model promotes innovation, productivity, and increasing returns. A poorly aligned business model can cause a business to spin out of control and destroy value.
The most common types of business models are:
- Subscription model – Customers pay a periodic fee for access to a specified good, service, or experience. Examples of this model might include book clubs or cable providers.
- Razor- and- blades model – Customers repeat purchases for a relatively small price, producing significant income for the company for many years. Examples of this model might include video games or ink cartridges.
- Broker, advertising, and community – These companies bring buyers and sellers together to facilitate exchanges. Examples could include PayPal or eBay.
- First mover – These companies reap the benefits of early entry into an emerging market. IKEA is an example.
- Second mover – These companies improve on the business models of first movers, while avoiding the dead ends they encountered. An example of a second mover would be Xbox, which was a latecomer to the video game market.
- Reinventor – These companies provide an offering that is so attractive it not only captures a current market, it generates a new market. Examples include the iPhone or iPod.
These models each have their own unique characteristics and are used in several of today’s markets.
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