Social Business Model

6 Nov

A business model can be defined as the method in which an organisation attracts, services and retains customers. The term business model is becoming more prevalent in scholarly reviews more than ever before due to its influence on business.  A business model has been defined in a number of ways by various authors but the main core suggestion is that they are there to create value for customers (Osterwalder & Pigneur, 2010; Teece, 2009; Rappa, 2010). The business model is ‘an architecture of the product, service and information flows, including a description of the various business actors and their roles; a description of the potential benefits for the various business actor; a description of the sources of revenues’ (Timmers 1998). A business model can be defined as ‘the rationale of how an organisation creates, delivers and captures value’ (Osterwalder & Piguer 2010). ). Business models are the focal point of innovation in creating value (Amit and Zott 2001). Creating an innovative business model is essential to gaining competitive advantage which can be gained from the business model alone (Amit and Zott 2006). There are new business models evolving every day and mainly caused by the rise of the internet. Different business models are applied to different organisations depending what market they are in or which market they wish to enter. Bricks and clicks business models apply to a chain of stores allows the user to order products online, but lets them pick up their order at a local store, while a direct sales business model applies to marketing and selling products to consumers directly, away from a fixed retail location. Dot.com business models are the latest business models to evolve which are applied to businesses that generally do business through online sales and services.

Organisations that have adopted the social business model to utilize social media tools and social networking behavioral standards across functional areas for communicating and engaging with external audiences, including customers, prospective customers, prospective employees, suppliers, and partners. When an organisation implements a social business model it uses social media for marketing, customer support, recruiting, sales etc. The internet has caused a a massive surge in organisations adopting social media into their business models and creating social media business models. (en.wikipedia.org/wiki/Social_business_model)

References:

Osterwalder, A. & Pigneur, Y., 2010. Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers, Hoboken, NJ: Wiley.

Teece, D., Pisano, G., Shuen, A., 1997. “Dynamic Capabilities and Strategic Management”. Strategic Management Journal. 18, 509–533.

Rappa, M., 2000. Business Models on the Web. Available at http://ecommerce.ncsu/models/models_text.html.

Timmers, P. (1998) “Business Models for Electronic Markets”, Electronic Markets 8

Amit, R. And Zott, C. (2006) “Exploring the Fit between Business Strategy and Business Model: Implications for Firm Performance”. Wharton-INSEAD Alliance Centre for Global Research & Development

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One Response to “Social Business Model”

  1. tingting457 November 26, 2012 at 5:27 pm #

    Your blog is very helpful for me to understand the business model. Social media is another channel composed of various social sites such as Twitter and Facebook. These channels have their own processes, guidelines, governance and forms of accountability.

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