This research incorporated dynamic capability view into the field of business model and proposed an analytical archetype consisting of five interlocking propositions that helps executives as well as researchers gain new insights into the realm of business model competitiveness. The constructs of BMW is at the forefront of current business strategy thinking and managers need more advanced models for understanding the relationships between dynamic capabilities they have in hand or must have and business model they work with or should develop.
This short essay addressed this need and provided an easy-to-understand approach for dismantling barriers in this context. The study was concluded by stating the managerial implications of the proposed analytical archetype in order to illustrate directions for further conceptual investigation and empirical scrutiny’s topic is all about how the concepts of business models and how organizations build their business models.
The two concepts of business model have been undeniably brought to the forefront of business research and the significance of these two are increasingly acknowledged due to the importance of business oodles in formation and growth of the firms and in competitiveness of today’s enterprises. Hence, understanding the dynamics of business model innovation and rendering easy to implement dynamic approaches for making business models easy is now a top priority in executives’ agenda and also a fruitful field of research.
Therefore, from a strategic perspective it is assumed that, dynamic capabilities are theoretically highly applicable in business model innovation at least for two interrelated reasons. Firstly dynamic capabilities and business model are conceptually knitted to each other and technically business model is a micro- inundation of firm’s dynamic capabilities and Secondly business model is a strategic process based on the firm’s higher order capabilities in face of forces coming from a changing and evolving business landscape in which dynamic capabilities have been a key factor of survival and competitiveness.
LITERATURE REVIEW Understanding the dynamics of business model and rendering easy to- implement dynamic approaches for making business models agile is now a top priority in executives’ agenda and also a fruitful field of research.
Therefore, from a strategic perspective it is assumed that, dynamic capabilities (Dos) are theoretically giggly applicable in business model innovation at least for two interrelated reasons: firstly dynamic capabilities and business model are conceptually knitted to each other (Tech 2010) and technically business model is a micro-foundation of firm’s dynamic capabilities and secondly business model innovation (IBM) is a strategic process based on the firm’s higher order capabilities (Winter 2003) in face of forces coming from a changing and evolving business landscape in which dynamic capabilities have been a key factor of survival and competitiveness (Eisenhower and Martin, 2000; Tech, Passion and Sheen, 1997). However, despite these logical arguments these two constructs are both sophisticated and their relationship has remained a challenging issue in the current wave of strategy research.
Having considered these notes, this article is aimed to develop an analytical archetype for approaching IBM dynamically. What are the implications and limitations of this archetype? It must be noted that, in addressing these questions this study adopts a systematic literature analysis approach (Traveled et al. 2003) in which a protocol for literature review is developed in order to sifting through conceptual findings and rowing the analysis to reach the appropriate theoretical base for stating and classifying evidence. A CASE STUDY OF NESTLE The historic success of Nestle was built on deep agricultural supply chains, strong local teams and strategic acquisitions.
The history of the company dates back in 1867 whereby a pharmacist Henry Nestle from the small lake town of Peeve, Switzerland made a nutritious infant formula from the milk of a cow, wheat flour and a sugar to which he replied a unique drying process that retained most of the mixtures nutrients. It was created for mothers and babies who were not able to breast breastfeed. Some of the strategic definitions came forth with the era of Barrack who became a CEO in 1997. His goal was attaining a worldwide sustainable competitiveness through four strategic pillars. These pillars included firstly low costs with operations that are highly efficient; secondly renovation and innovation of nestle product line; thirdly universal availability and fourthly communication with consumers that was improved through better branding.
As one the pillars were to enable achievement of the Nestle Model a term that was used for describing the long term objectives of the company of the organic growth ranging from 5% and 6% annually; the continual annual improvement in earnings before interest and tax margin and improvement in the management of capital. Nestle describes itself as a company of food, nutrition and wellness. The company has created Nestle nutrition that is a global business organization designed for strengthening the focus on their core business of nutrition. The company believes that to strengthen their leadership in the market is the main element of their corporate strategy.
This market is characterized as one in which the primary motivation of the consumers in purchasing are the claims which are made by the product in relation to the content f the nutrition. So as to reinforce their competitive advantage in the area, nestle created nestle nutrition as an autonomous global business unit within the organization and it was charged with the responsibility of operation, profits and loss tort the claim that was based on business tot intent nutrition, healthcare nutrition and nutrition of performance. The aim of the unit is delivering business performance that is superior by providing consumers with trusted and science based nutrition products as well as services.
DYNAMIC CAPABILITIES Dynamic capability can be define as the firm’s ability to integrate, build, and configure internal and external competences to address rapidly changing environments. It can also be define as the firm’s potential to systematically solve problems, formed by its propensity to sense opportunities and threats, to make timely and market-oriented decisions, and to change its resource base. BUSINESS MODEL According to Taken et al. 2005, Business model is simply the business logic of the firm. We can also say that business model represents the strategic positioning of the firm in a market and defines how a firm creates and captures value for its stakeholders.
Doze and Sooner (2010) define BMW differently from two views, objectively as a sets of structured and interdependent operational relationships between a firm and its customers, suppliers, complementary, partners and other stakeholders, and among its internal units and departments and subjectively as a representation of these mechanisms, delineating how it believes and shows the firm relates to its environment. Creators: These are people who design what they sell Distributors: These are people who buy something from a creator and then sell it Landlords: These are people who sell the right to use, but not own some asset Brokers: they match potential sellers and buyers WHAT IS A PATTERN? A Pattern is a model that is sufficiently general, adaptable, and worthy of imitation that it can be reused. The exact nature of the pattern will vary, depending on the type of business under consideration and the intended function of the software package.
This designation for the development of these basic rules began to take place in the last years of the 20th century as companies began to make use of desktop computing as the meaner of accomplishing a number of tasks that were once handled manually. WHY BUSINESSES FOLLOW PATTERNS At the most abstract level all businesses follow the same pattern and they also share common external influences, especially those in the same industry. Some resistance to using patterns arises from the need for a business to differentiate itself from competitors, but few companies have the market dominance or true innovations to divert from patterns in significant ways.
In addition to improving designs patterns promote reuse, reuse has the immediate benefit of reduced implementation and maintenance costs. Reuse has the longer term benefit of encouraging and reinforcing consistency and standardization. Once patterns are identified they assist in analysis by simplifying structures and processes as they replace low-level specific descriptions with more abstract ones reuse at more abstract levels enables interoperability between systems that follow patterns that differ at more concrete level. BUSINESS ORGANIZATION PATTERN Business organization pattern is created to ensure that all participants, stakeholders, software providers, standards developers, etc. Eave a common understanding of the enterprise and business domain, to understand the enterprise independent of its current or future technology, to identify and understand: Gaps – hinges we should be doing but aren’t Inefficiencies – things we should be doing but are doing badly Overlaps – things we should be doing but are doing redundantly Opportunities – things we might want to do PATTERNS AND REUSE In addition to improving designs (by replacing an ad hoc approach with A successful one) – patterns promote reuse. Reuse has the immediate benefit of reduced implementation and maintenance costs; Reuse has the longer term benefit of encouraging and reinforcing consistency and standardization.
Once patterns are identified they assist in analysis by simplifying structures and processes as they place low-level specific descriptions with more abstract ones Reuse at more abstract levels enables interoperability between systems that follow patterns that differ at more concrete levels. PROPOSING AN ANALYTICAL ARCHETYPE Dynamic capabilities are first and foremost learning-based procedures which demonstrate the role of knowledge development and utilization activities involved in and associated with them. So, to develop and deploy a dynamic capability, managers must establish a strategic learning system through which needs and directions for necessary changes are clearly clarified and systematically pursued.
Since a business model is the organizing framework of vale chain design and management and Innovation is essentially a learning-based strategic action dynamic model of IBM accordingly requires a full understanding of firm’s current resource stock and capability repertoire as well as a purposeful learning plan aimed at diagnosing status quo and findings critical changes. This argument gives rise to the first and second proposition of this study stated as follows: Propositions : business model innovation is a dynamic learning-driven process in which first and foremost reminisces of the existing business model are challenged based on the utilization of the current set of knowledge and accordingly BMW innovation areas and directions are recognized to be pursued.
Propositions: full understanding of the firm’s resources and capabilities, their value appropriately and value chain engagement is a prerequisite of business model innovation because it effectuate dynamic model of resource analysis and configuration towards a new combination tot assets tort innovating new value systems. Propositions: dynamic process of IBM is planned on a strategic objective developed y top managers and disseminated throughout the organization in order to align, ordinate and combine different capabilities towards a whole system for administrating IBM. Proposition 4: dynamic business model innovation tackles endogenous shocks by reconfiguring business model structure and copes with exogenous shocks by developing contingency plans and simultaneously balances these sets of shocks through a dynamic process of capability development and competence utilization.
Propositions: dynamic business model innovation is carried out through a purposeful radical re-vision and re-arrangement of inter and intra organizational relationships wrought dynamic relational capabilities. These five propositions Jointly form the analytical archetype of business model innovation from dynamic capabilities perspective which can be syntactically illustrated.