Business Model

This discussion post analyzes Ovans (2015) and Osterwalder (2013) and their perspectives on the business model. Further, we will introduce and fuse the concept of Porter’s five forces with the business model concept.

Ovans (2015) recognized that a business model is an intricate and important aspect of any business, but a hard concept to explain. In attempting to describe it, he mentioned that it is how businesses make money, or what companies are paid for. It is the sum total of assumptions, dos and don’ts of a business. It identifies the customer and what the customer values. A business model was found to have two sides, one that concerns production, and the other selling. A business model is a competitive strategy. Osterwalder (2013) matches Ovans (2015) on the business model when it comes to the concept of strategy. He (Osterwalder, 2013) explains that with the business model, it is easy to formulate a method to grow an existing business or start-up a new one.

Porter’s five forces model is linked to the success or failure of a company’s business model. Porter’s five forces model has two forces, which are related directly to the value proposition in the business model canvas. The forces include the threat of new entrants and threat of substitutes (Grundy, 2006). When a customer is faced with a new provider who can deliver the same value or a new substitute, then it means that another business suffers a loss. Customers and their bargaining power is a considerable business factor both in Porter’s five forces and in the business model canvas. In this case, customers are an integral part of the business and the way they feel about a business is important to the progress of the business.

In conclusion, it is clear that a business model outlines the basic lines of thought that a business executive should focus on to ensure that he/she emerges victorious. To ensure that all aspects of operations are covered, Porter’s five Forces need to be evaluated at the same breadth.

References

Grundy, T. (2006). Rethinking and reinventing Michael Porter’s five forces model. Strategic Change, 15(5), 213-229.

Osterwalder, A. (2013). A better way to think about your business model. Harvard Business Review, 6. Retrieved from https://hbr.org/2013/05/a-better-way-to-think-about-yo

Ovans, A. (2015). What is a business model? Harvard Business Review. Retrieved https://hbr.org/2015/01/what-is-a-business-model.