Blog Entry - October 24 Session

The class began with a reiteration of the Egg Model that was tackled in the previous session explaining the outer (government policies) and inner (capabilities, partner's assets) components of the "egg". One of the prime learnings from last week's class was from a single slide that focused on the eight aspects that make up an effective business model. We learnt that a business model should be simply to comprehend, effective in satisfying the user's needs and consequently fill a market segment. Also, it should be possible to run the business smoothly based on the model that has been come up with.

 

Now, on to that single slide. Eight aspects of an effective business model were suggested. These were:

 

1. Value Proposition: A company's value proposition forms the core of its business model. Understanding a firm's value proposition involves understanding the customer's reasons for choosing the company suggesting the business model over any of its competitors. Value propositions are thus frequently developed by reflecting upon current market trends.

 

2. Revenue Model: The revenue or financial model of a firm describes how the firm plans to make money from the business model laid out. While profit generation is the primary objective, a firm must be able to generate far more greater and at times intangible long term returns on its investments apart from profit.

 

3. Market Opportunity: The market opportunity describes the market space that the company intends to target with its business model. The revenue potential in each of these markets allows for an assessment of how realistic and viable the market opportunity is.

 

4. Competitive Environment: Rival companies offering similar services or selling similar products are what comprise of the firm's competitive environment. The frequency of the competitor's operations, their profitability and market share as well as their pricing strategies are some factors that influence a company's competitive environment.

 

5. Competitive Advantage: A competitive advantage is identified as the "something different" that a firm brings to the table with its product or service offerings that can sway the customer's choice in the company's favor making it choose the company offering this product over other rivals in the market. Competitive advantage can either be generated on a cost basis (Walmart) or by offering differentiated products or services (Apple).

 

6. Market Strategy: Marketing strategy forms the execution portion of a company's business model. A company's market strategy determines how far out the business idea will reach and thus ultimately becomes the deciding factor in an offering's success or failure. There are numerous examples of superior products that have failed only because they were not marketed appropriately.

 

7. Organizational Development: Companies coming up with business model can grow into multi billion dollar ventures. Management of such companies in such situations must be taken into account. This is not much of an issue with organizations that are already large enough but is more of a concern with smaller startups with promising ideas that have the potential to expand into much larger business ventures.

 

8. Management Team: The team behind the idea eventually drives the idea to its final realization. A strong team may not be able to salvage a weak business model but it can definitely be able to change the model and redefine the business according to the evolving market trends as and when it becomes necessary.

Apart from the above points on a business model, Social Media Marketing was also discussed at length including discussions on such issues as the need for Social Media Marketing in today's digital age, its presence in India and future prospects for this field both in India and abroad.

 

 

Thanks & Regards,

Divij Sonak

12IT-006

Section B