Sustainable business models Flashcards
Define a business model
a model that describes the design or architecture of the value creation, delivery, and capture mechanisms it employs
= describes what the business does, and how the business makes money doing these things
What are the elements of a business model? (3 elements)
- Value proposition: the product or service offering to generate economic return
- Value Creation: at the heart of the business model, capture value by seizing new opportunities, new markets and new revenue streams.
- Value Capture: this focuses on how to earn revenues from the provision of good, services or information to users and customers
Explain business models (8 things)
- attract customer attention, makes them pay for value, and convert payments to profit (implicitly or explicitly developed)
- development based on what org thinks customer wants, how they want it and how org can be organised to best meet those needs, get paid and make profit.
- Presents the logic of the way an organisation operates
- Mainly driven by the internet and e-commerce, sharing economy and tech innovations
- continuous task to keep model up to date
- good model yields value propositions attractive to customers, achieve profitability and capture value in offerings
- choice of business model defines the architecture or logic of the business network and activities. growth and expansion path develop from there. difficult to change once established
Why is it vital to design a business strategy when creating a business model? what barriers can prevent imitation? (3 barriers)
- the elements of business models are often quite transparent so can easily be imitated.
- a business model is more generic and must therefore be integrated with a business strategy, which can protect competitive advantage when creating the new business model.
1. System requirements: implementing model may require systems, processes and assets that are difficult to replicate
2. Level of Opacity: difficult to understand how a business model is implemented
3. Cannibalisation anxieties: reluctance to change existing strategies or upsetting current important business relationships
What is the business case for sustainability?
a situation where economic success is increase while performing in environmental and social issues
- emphasises the links between voluntary environmental and social activities and corp economic success can be managed, advanced or innovated in order to improve economic success
- can be addressed by achieving business case drivers
What are the drivers for the business case for sustainability? (6 drivers)
- the activities designed to create value to the environment should support at least one of these drivers, to capture value.
1. Cost and Cost reduction
2. Sale and profit margin
3 Risk and risk reduction
4. Reputation and brand value
5. Employer attractiveness
6. Innovative capabilities
What are the required steps in creating a business case for sustainability?
- Identify activities that contribute to the solution of societal or environmental problems
- Activity must contribute economically to corporate success
- clear argument must exist that activity has led or will lead to intended societal/environmental effects and the economic effect.
What is a sustainable business model?
One that is designed to create, deliver and capture value for various stakeholders across the TBL.
-built upon the creation of a reinforcing feedback loop between the traditional business model and the value to the Triple Bottom Line (Economic, Social and Environmental Systems).
distinguish between the traditionalist and revisionist perspective of business model for sustainability?
TRADITIONAL:
- relationship between sustainability effort and firs financial performance is negative.
- high environmental performance leads to low economic performance and vice versa.
REVISIONIST:
- Relationship between environmental and economic performance is u-shaped.
- Voluntary environmental activities increase the firms financial performance until a particular optimum after which profitability starts to decline with additional environmental activity
Define Business model Innovation for Sustainability
Innovations that create significant positive and or significantly reduced negative impacts for the environment and or society, through changes in the way the organisation and its value-network, create, deliver value and capture value.
- changing the way you do business rather than what you do
What are the degrees of business model innovation? (4 different types)
- Business model adjustment: changes of only one business model elements, excluding value proposition
- Business model adoption: changes that mainly focus on matching competitors value propositions
- Business model improvement: when most business model elements are changed
- Business model redesign: when an improvement leads to a completely new value proposition
What are the business model archetypes? (3 types)
- Organisational: those resulting from org and cultural changes in business practices and attitudes who integrate sustainability aspirations
- Social: deals with social value creation which are orientated towards social purposes and missions
- Technological: BM with a dominant technical innovation component
Models based on these archetypes must generate:
- value proposition
- value creation and delivery
- value capture
