Article Review: Why Business Models Matter

Strategy refers to an organization’s “overall efforts to gain and sustain competitive advantage” (Rothaermel, 2013, p. 9). An organization’s business model, on the other hand, “details the [organization’s] competitive tactics and initiatives”, which includes the steps necessary to put the organization’s strategy into action (Rothaermel, 2013, p. 11). The strategy is the theory of how the organization will make money, while the business model is the action necessary to achieve the theoretical strategy (Rothaermel, 2013).

Strategy is a set of complicated tactics formulated by the executives of a company directed towards the achievement of company’s goal (Salmela, 2002). It is about all the path ways that a company would follow to reach its ultimate goal. It is a company’s strategy which helps to identify what it does better than the other companies in the industries, which may be different from what it does best. For successful strategy formulation and implementation, a company should know the needs of customers and should have knowledge of its competitors. Through a good strategy a company would identify that opportunity which makes it different from the others (Thompson, 2005).

1.1. A strategy is a term used to describe the firm’s “overall efforts to gain and sustain competitive advantage” (Rothaermel, 2013, p. 9). The “translation of the strategy into action takes place in the firm’s business model, which details the firm’s competitive tactics and initiatives” (Rothaermel, p. 11). Basically, a strategy will explain how a firm will make money but the difference between a strategy and the business model is the business model explains how the firm intends to make the money AND puts it into action; the strategy just gives the theory. Business models put strategy into action. A strategy focuses on the company in

According to Slack et al. The corporate strategy or business strategy is the guide lines for the whole corporation’s businesses in relation to its markets, customers, and the competitors (2007). In the same context, the same authors discussed the link between the corporate strategy and

Business models have a huge impact on how an organizations operate. It is crucial that an organization chose a business model before inception in order to succeed. Basically, business models have become the new basis of competition, replacing product features and benefits as the playing field on which companies emerge as dominant or laggards (Plantes, 2013).

For an engineering firm, this may be producing high-quality software efficiently. Key Resources discusses the various physical, intellectual, human, and financial resources an organization requires to sustain its operations. Key Partners outlines a firm’s use of outside resources. In particular, which key resources or key activities is a firm acquiring from its partners? 12 Lastly, Cost Structure lays out the most important costs inherent in a firm’s business model. Which key resources and activities are most expensive, and where is there room for optimization? We applied this structured approach to business model innovation to our project and additionally utilized an online tool, LeanLaunchLab21, to electronically save and update our canvas week to week. Each week consisted of our team “getting out of the building” and talking to real customers to gain real feedback on our business model. We utilized a variety of techniques to obtain enough sources of validation to iterate our business model canvas. At the beginning of the project, we relied more heavily on in-person visits to get a more personal feel for our customers and their pain points and to build up an early adopter user base for our eventual

Trying to anticipate and deduce the opponent’s business strategy is always present in the business field. Three of the most used concepts for understanding and efficiently applying strategies are Prisoner’s Dilemma game, Dominant Strategy and Nash Equilibrium. Where three influences are important in Game Theory. They must have players (Phillips Morris and R.J. Reynolds), strategies (Advertise or Not advertise), and outcomes (High profits or low Profits).

An organisation’s strategy plays an important role of providing direction of where company wants to be and how best to allocate the company’s resources to meet its objectives. The formulation of business strategies has evolved over the years and has been made more difficult in recent by the uncertain operating environments and global financial crises.

A business model is a company’s perception and conception of how the set strategies that a company pursues

Alfred Chandler(1963) defines strategy as ‘ the determination of the long-run goals and objectives of an enterprise and the adoption of courses of action of an enterprise and the adoption of courses of action and the allocation of resources necessary for carrying out these goals’. And Michael porter(1996) sees it as ‘Competitive strategy is about being different. It means deliberately choosing different set of activities to deliver a unique mix of value’.

In the book “Good Strategy and Bad Strategy”, Richard Rumelt illustrates examples of success and failure of business management to explain the true meaning of the strategy, and tells companies how to develop a correct strategy and adhere to core of management strategy. He also emphasizes the central role of strategic management as to remind the readers to understand the huge difference between a good strategy and bad strategy. This book has three sections: good and bad strategy, sources of power, and thinking like a strategist. I will be evaluating strengths and weaknesses under these topics. After finish reading the book, I had gained a better understanding of what a good strategy means to the success of a company. According to Rumelt, a good strategy is coherent, where companies pursue multiple objectives that are connected with each other. Rumelt points out that a good strategy consists of three elements: diagnosis, guiding policy, and coherent action. (71) First, diagnosis means to define the obstacles and challenges that the companies are facing, and guidelines help the people to overcome the obstacles. Lastly, coherent action is the activities or actions that company did to be consistent with its guiding policy. Today, many of us lost the focus of the strategy, which results in the downward of businesses and organizations. Rumelt has defined the strategy as acknowledging the main problems and take coherent action to overcome the problems. Moreover, he illustrates

* Strategy exists in the mind of the leader in the form of a vision of the organization’s future.

Business is an organization or a company that produces goods and services to satisfy the demands of society in order to create wealth and prosperity. In this case, employment opportunities are created in order to enhance the life of society. However, there are some of the businesses are not for profit such as schools, hospitals, charities and so on. Therefore, business can be divided into two categories there are profitable business and non-profit business. There are both risks and benefits involved either in a new business or a stable business. Thus, it is very important for a business to have a strategy if it plans to survive and prosper in long term.

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].

From the above mentioned examples, we can validate that Game-Theoretic modeling plays an invaluable role as a metaphorical approach to strategic management (Saloner, 1991). Game Theory provides measurable simulations of what could happen to enable rationalization of the best course of action without incurring the heavy costs of a true trial and error method. With that said, as noted in our introduction, while game theory