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A business case method for business models

Starreveld, Eelco (2012) A business case method for business models.

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Abstract:With the emergence of the dot.com era in the late 1990’s, the first e-business models were introduced. After a rapid growth in research towards this phenomenon in the fifteen years after its introduction, the concept is nowadays better established and defined. Business models, as the concept is named since the last decade, represents and describes the rationale of how an organization makes, delivers, and captures value (Osterwalder & Pigneur, 2004). Due to shortening product lives, intense global competition, a disruptive and agile environment, business models need to be renewed more rapidly and more frequently. In addition, the chosen course of action is of great importance for the future performance of organizations. Based on the two stage framework of Casadesus-Masanell & Ricart (2010), in this research the relation between strategy, business models, and tactics is defined. Together with research towards the concept of innovation, three main causes of business model innovation are identified. The first one is strategically innovation. If an organization changes its strategy, this will influence and change the business model. The next one is business model innovation. In this case, the business model itself is innovated, and thus will lead to a renewed business model. Finally, in some cases where process and product innovation exceed the limits of the tactical set enabled by the business model, it influences and changes the organizations business model. When a business model is renewed, in most cases, multiple alternative business models can be generated. Because of the importance of a business model to an organization, the choice of which of the alternative business models is chosen to be implemented, is of great importance to the organizations performance. Therefore, in this research a business case method is developed, to compare the business model alternatives, in terms of effects, risks, and costs, as objectively as possible. In order to be able to choose the best course of action. The developed business case method for business models, consists of the following eight steps: 1. Business driver – the cause, problem or opportunity that need to be addressed 2. Business objectives – the objectives that are aimed for and their stakeholders 3. Alternatives – representing the options there are to reach the objectives 4. Effects – positive and negative effects caused by the pursued alternative attached to an effect owner 5. Risks – risks that come with the pursued alternative 6. Costs – costs that come with the pursued alternative 7. Alternative selection – based on the gathered data the best alternative is chosen 8. Implementation plan – plan which explains when and how the alternative is implemented The method is demonstrated in a case study. This showed that the method worked, but that it is also very hard to keep the business case objective, for many choices depend on the subjective judgment of the business case maker and other stakeholders. A solution to decrease this subjectivity, is to outsource the task to make the business case, to an independent party.
Item Type:Essay (Master)
Clients:
Logica
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Industrial Engineering and Management MSc (60029)
Link to this item:http://purl.utwente.nl/essays/62154
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