BUSM448 Business Model Assignment
In the following scope, the analytical appreciation of the contexts of a business model and disruption is attempted along with applying the business model of Osterwalder and Pigneur. The overall discussion has been taken place based on Sweden based eminent heavy manufacturing company the Volvo Group and the central point of the overall discussion has been to gain an effective perception of the effect of the existing business model on operational performance of Volvo Group, along with considering the effect of disruption on this specific business model.
With respect to the present attempt, a literature review has been conducted for having a better perception of the significance of the terms of Business Model and Disruption and influence of these concepts on the overall business operations of Volvo Group, Sweden. In this connection, the threats and opportunities of smart-connected-products on the business model of Osterwalder and Pigneur has also been considered, followed by expansion of the analysis with the help of other two business models.
The term Business Model refers to the specific model reflecting the plans and strategies of the company regarding revenue generation and profiting. An overall perspective of the business is achieved from a business model. In the words of Baldassarre et al., (2017), a business model frames a )step-by-step action plan for the strategic operation of the business in a specific market. This is the reason why business models are different for different kinds of industries. As opined by Christensen et al., (2015) value proposition is an inseparable part of business model, which also includes the projected start-up cost as well as financing sources, strategic competition and target market of the business. According to Christensen et al., (2016), a successful business model includes any possible strategic plans for developing a partnership with another existing business or a number of businesses. Therefore, it is the essentiality of a business model that it provides rationality behind the service creation, delivery and value capturing of an organization. Hence, as opined byKhanagha et al., (2014), construction of business model is essential part of business strategy. From economic perspectives, business model describes the core organizational strategies for economic value generation in form of revenue along providing a basic template on the firm’s strategies of making money. As an inseparable part of strategic business, the term disruption refers to introducing radical changes in business strategies, which specifically involves the introduction of new products and services creating a new, innovative business market. According to the opinion ofOsiyevskyy& Dewald (2015), rapid technological advances along with globalization are the major causes of business disruption. Disruptive innovation has been an integral part of strategic business model, which is aimed at creation of new value network and markets and thereby disrupting the existing markets by displacing the existing business aspects of the market.
By using the business model framework of Osterwalder and Pigneur, the logic of the ways of business by the company Volvo Group can be determined. By making effective application of this specific business model, important information are achieved regarding the various key business composites of Sweden based leading manufacturing company Volvo Group. In determining the key objectives of the company this business model has been highly helpful, which by employing the detailed analysis of the core model segments, provides valuable insights about the overall business operational efficiency of Volvo Group. As a leading heavy equipment manufacturing company, operating in international level, Volvo Group has been widely successful in creation of strong value proposition. This is reflected from wide ranges of products offered by them, which are smart-connected-products, meeting the tests and requirements of their valuable customers worldwide. Volvo Group is successfully maintaining its process of customer relationship throughout the world. According to Soto (2015), Volvo Group maintains an effective business model which provides them with huge market opportunity in case of acquiring larger market share. Numerous openings for the manufacturing business of the company have been provided by proper following of the Osterwalder and Pigneur model. The company Volvo Group has created a huge operational channel spread worldwide through which they effectively maintain strong communicative perspectives with all their key business partners and members of the supply chain. One of the most effective business strategies of the company has been their excellent processing capacity of providing high quality products and services to their valuable consumer groups. As can effectively be identified by applying the Osterwalder and Pigneur business model, by successfully merging with some of the most effective strategic partners like Mitsubishi Motors, General Motors and Renault, the Volvo Group has effectively maintained strategic partnership with the core business partners and mergers. Therefore, according to the opinion ofOsiyevskyy& Dewald (2015), effective maintenance of all these strategic business pillars have left significant influence on the overall cost structure of the company. Thus, a wide range of the smart-connected-products in global market has helped it in successful innovative operational maintenance of the overall business aspects of them. However, emerging global market of smart-connected-products are posing a serious challenge before Volvo Group as these products are disrupting their value chains along with forcing Volvo Group in rethinking and reorganizing the core business strategies and tools of the company. Therefore, emerging trends of smart-connected-products have toughened the competition of Volvo Group, which has become new threats to them. Ass opined byVeit et al., (2014), smart-connected-products are actually increasing the IT-driven business competition in a rapid pace, which has compelled Volvo Group in rethinking and revising their strategic operational implications. Therefore, Volvo Group has faced both of opportunities and threats by advancement in smart-connected –products to their existing business model.
With respect to the upper discussion, the entire prospective can also be judged from the viewpoints of two other business model perspectives, namely, model of value proposition and model of set of resources and capabilities. As new emerging market of wide ranges of smart-connected-products is posing a considerable threat to the existing business model of Osterwalder and Pigneur for Volvo Group, they have to take care of the aspects of value proposition and capabilities and resources for the company for better mitigating with the emerging challenges of smart-connected-products. As opined by Christensen et al., (2015),by considering the effectiveness of entire business performance as well as values of the Volvo Group, it can easily be opined that overall functionality of the company is in line with strategic maintenance of core objectives of value proposition and capabilities and resources. The company has been adequately successful in development of its business plans in specific ways, which are in close compliance with the business model of value proposition and resources and capabilities. On considering wide ranges of products manufactured by Volvo Group involving buses, trucks, construction equipment varied types of marine and industrial engines along with related financial services, it is seen that all these products are aimed at satisfying the tastes and requirements of the customers. Thus, Volvo Group is completely concentrated on maintenance of the aspects of value proposition and related requirements of resources and capabilities. However, as opined byLoebbecke& Picot (2015), these value propositions accompanied by resources and capabilities of Volvo Group,is required being oriented towards meeting the challenges of disruption by the company due to emerging presence of smart-connected-products in market. This will help the heavy manufacturing company in maintaining a balanced approach of business value proposition and the capabilities for successfully mitigating the disruption related threats of smart-connected-products.
From the perspectives of an overall view, the business model of Osterwalder and Pigneur has larger importance for the functionality and operational performance efficiency of the Volvo Group. The specific business model is highly relevant in case of influencing the relevant business factors of the company for overall effective development of its business operations. The business model of Osterwalder and Pigneur, in case of Sweden based leading manufacturing company of Volvo Group, has helped it developing its overall operational efficiency in all respects, which involves the areas of strategic business partners, key resources and activities, effective relationship with customers and suppliers, operational channels, customer segments and revenue generation. Apart from the Osterwalder and Pigneur business model, other two models also reflect the similar developments of the company by successfully adopting and implementing the value proposition strategy of the business. These are the wide ranges of opportunities of the business of Volvo Group in terms of emerging importance of smart-connected-products. However, rapid advances in smart-connected-products have posed a serious threat of business disruption by presenting increasing rivalry in case of IT-driven competition in the business market in the global level. The rapid emergences of the smart-connected-products are forcing the Volvo Group in embracing radical changes in its business strategies. This disruptive business model will leave a serious impact on the existing business market of Volvo Group and its wide network of values and propositions.
Hence, it can be concluded based on the upper discussion that the leading heavy manufacturing company Volvo Group has been highly successful in case of following and maintenance of the core elements and business factors according to the Osterwalder and Pigneur business model, 2010. As the company of Volvo group is being operated based on this specific business model, there are considerable impacts of the various opportunities and threats of advances of the smart-connected-products on this business model. It is important for the company to keep a watchful eye on the effects of disruptive implications on its overall business operations.
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