The Importance of Realigning Your Business Model

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This post was contributed by Heather Johnson, who writes on the subject of graphic designer. She invites your feedback at heatherjohnson2323 at gmail dot com.

The very reason for the existence of a business is to make money. Even altruistic set ups like non profit organizations have to make enough money to enable them stay alive so that they can continue to satisfy a social need. The germination, growth and sustenance of any company depend on its business model, which is traditionally a strategy that outlines how a company garners revenue. An initial capital not withstanding, any start up must focus on its business model in order to generate enough money to stay in business year after year.

Any model worth its salt must be based on a significant amount of market research and established data. It’s no use investing in building a shopping complex when the whole city is overrun with them. There has to be a need for the service or product you’re hoping to sell; if not, it’s your responsibility to create one. Canny advertising techniques have been known to induce need where there is none – like the campaigns that target children by tempting them with toys and paraphernalia that they have no actual need for. Marketers are wise to the antics of kids – they hold the buying power in their hands and convince (read throw tantrums) their parents to buy stuff for them just because they don’t want to feel left out when among their friends. Peer pressure is indeed a great USP.

Some businesses must rethink their strategies and reorient their business models to suit local trends and tastes or to avoid offending national and religious sentiments. Businesses that are established as franchises in other countries as part of a globalization venture must devote considerable time and effort to determine what will and what won’t sell in those nations.

A good business model ensures that you both fit in with the environment you’re establishing yourself in and stand out by coming up with new and innovative ways of doing business. In today’s world, where one business model finds a large number of takers, it’s important to find out what makes customers happy and what it takes to keep them coming back to you even when the competition is as good or better.

One aspect of business that is a sure winner in terms of continued patronage from customers is customer service; it’s the differentiating factor between a mediocre business and a good one. Given the choice between two organizations that offer products and services of equal quality, customers are more likely to opt for the one with the better customer service department. A good business model must take this fact into consideration when calculating how to rake in the profits.

The advent of the Internet and other new technologies has spawned new genres of business models that offer companies a wide variety of choices and alternatives to make money. While most businesses still choose to go with the conventional models, there are some that take an offbeat path and end up making history. But no matter what the model, the fact remains that organizations must be ready to tweak and fine tune them as and when customer needs and buyer perspectives change.

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  • I would start by developing a framework for comparing business models of different businesses within the industry. Also business models in other industries may provide some ideas. This framework needs to be agreed upon by a cross section team within the organization.

    Once this is done, the next step is to define the current business model according to the framework. From there, business models from industry can be compared and debated. Innovation comes when these models are re-modeled making use of resources or strategies which were left untapped.

    One such framework is provided by the excellent Alex Osterwalder in his blog post at http://business-model-design.blogspot.com/2006/11/business-model-template-designing-your.html.

  • Hi

    Hope you are good there along with your designing assignments.

    What i intially understand from your article / post is that you are emphasizing the changes which the technology has brought and keeps on bringing in any business.

    But on the other side you have mixed up lots of key areas like Customer Service , Demographic Customer Base , Market Segmentation, of course innovation , most talked about “Demand Creation” and its newer shape is “Supply Chain Management, advertising, Corporate Social Responsibility , profitability, and of course sustainability etc.

    Now the main query is ” Profitability every thing” then if not then what else.

    Basically a good entity blends all things well and does take a life cycle to realize where do it ends up, whether under profit, no profit no loss ( break even ) or of course profit but how much.A niche business planning is must for success in today’s business world.

    At the same time they do keep on what i should say experimenting with Technology and Innovation, a recent example in this regard is one of the most renowned brands in textiles is “Polo Ralph Lauren” they have decided to launch ” shop by mobile phone ” so what is it ? simply a really very good business decision.

    Now the next pivotal area is , i would like to simplify that ” what you could control and what is out of your control”. Recently lots of businesses suffered because of Oil Prices , was it in their control , no, what did they did , a few of them have reported lower profits, as few might had to cut some of their operations. So each and every business as per its own level and stage has to react as per the need of the hour.If you can’t cope with it its not your failure.

    One most important factor which you might have forgotten to write about is , gusess what, ” Human Resource” also Called “HR Capital”. Dont you need that. Good businesses do invest in HR.Do praise them.

    One last closing area, Business start ups in IT are different than the start ups in the other fields. so their requirements are different but of same nature most of the times.

    A good CEO is always on the move along with its team fellows.

    Now dont start at the qualities of a good CEO.

  • Thanks for bearing this.
    It was not in the full flow.
    But some thing to be replied, at least from my end.

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