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Business Models Report

Research · May 2016

DOI: 10.13140/RG.2.1.2512.4724

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E15

POG280
E-Commerce and Marketing
BSc in Business Management (Oil and Gas)
Level 5
University of Plymouth
Ogacheko Omale
31955
Due 28/04/16
Table of Contents
Abstract ............................................................................................................................................................................. 3
Introduction .................................................................................................................................................................. 3
Main body, findings and analysis .............................................................................................................................. 4
References ........................................................................................................................................................................ 9
Abstract
The aim of this report is to analyse theories and concepts relating to business models and to provide review the
eight elements of business models in relation to E-businesses, E-commerce and also the general issues relating to
trust between the businesses and the consumers involved.
Business models in terms of E-commerce has been sparsely written about. Most of the theories on this topic are
generally based on what, how and where models.

Introduction
Whenever a business entity is created, it is necessary for the business to directly or indirectly have a model that
describes the design of the value it seeks to create, the delivery and the methods which the business seeks to
employ to capture that value. (Afuah & Tucci, 2003)
Theoretically, there are several approaches to business models as it relates to E-commerce:

A. The technologically oriented approach, which includes and refers to e-business and business coding.

B. The strategy oriented approach, this includes the logics of creating value, innovation in business activities
and the fundamental competition within the specific industry.

C. The organisation oriented approach which includes theories on the structure of the core business and the
various components of the structure of such business.

(Miles , Snow, Meyer, & Coleman, 1978), (Narver & Slater, 2003), (Baden-Fuller & Mangematin, 2015)

A business model, reveals the combination of production factors which is used to implement the organisational
strategy and the functions of the overall business entity as it seeks to market and capture value from customers
through the marketing and sale of products, information and the services it has created
The report, will provide an insight into resources are transformed into profit for organisation and value for the
general public.
(Magretta, 2002), (Zott, Amit, & Massa, 2010)
Main body, findings and analysis
Buyitdirect, is a specialist consumer technology e-tailer. Buyitdirect started trading in 1999 as an online retailer of
notebook and laptop computers on a site registered as [Link]. The focus of the business then was to
provide an online alternate for students and professionals that wanted bargain laptop and notebook computers
without a compromise on the quality of the items. (Buyitdirect, N/A)

This was only possible because of the model of the business. This was a no bricks and mortar approach with a
greater focus on its internet presence and the delivery of such products as were offered on its webpage.

Subsequently, the business has expanded with its experience in this form of business to offer technological products
as wide ranging as Televisions, kitchen appliances, Cctv equipment’s, drones, servers and furniture’s which are
appropriate for the devices that are sold. As the provides which they sold changed, the company made new websites
for each sector all of which have a similar setup to their first port of call. Some of their websites include,
[Link], [Link], [Link], [Link], [Link] and
[Link].(The Business Desk, 2012) (Ginns, 2014)

Value proposition

Creation and delivery of consistent value is a core factor for organisational success. As a concept, definitions for the
sub-topic are inconsistent.
Businesses are responsible for creating, setting and communicating what the values of the organisation are. The
proposition of the values of a business to its customers are interlinked with the marketing process as it is through
the marketing process that an organisation communicates its value proposition to its customers if it already has a
customer base and also if the company is seeking to gain customers and/or expand to a new market.
This process is delicate, as it inadvertently leads to the success or failure of the organisation.
(Tallon, Kraemaer, & Gurbaxani, 2001), (Prosser, 2011)

Value can be created through pricing and quality of products and services.
Marketing of it, must be aligned with the overall strategies of the company to deliver value to customers.
Organisations communicate varying elements of value whilst some focus marketing strategy based on one element
of the value proposition. (Hassan, 2012), (Osterwalder, Pigneur, & Tucci, 2005)

Value proposition for Buyitdirect

The value proposition for Buy it direct as a service is through its expertise in various departments within the
company. Products offered on the website are varied in the products it markets and various websites.
Websites such as drones direct, laptops direct, direct TVs, appliances direct, servers direct and furniture 123.

Revenue model

This is a plan for assuring revenue generation for any particular business. The revenue model questions where, who,
when how value is created and paid for through the services and products it retails.
Market drivers, scope of market, pricing of products and services, implementation of connected activities are
theories connected to the revenue model. The capability of consumers to pay for value created and are essential for
the sustainability of the company in the market.(Zott & Amit, 2003) (Porter, 1998)

Buy it direct as an e-tailer, accepts payments from e-transaction mediums like Visa, MasterCard, Maestro and
American express. Option for payments through PayPal services is accepted medium. This are practices which are
common for most e-retailer companies.
Buyitdirect provides insurance for products in collaboration with major insurance brokers. This generates funds for
Buyitdirect along with the revenue generated from the sale of products offered.
Market opportunity

Constant innovations in the markets make the market place dynamic. Companies should not maintain static
processes and strategies. Approaches to market products and services, must fit the firms original strategy and
outlook plus its capabilities to deliver such strategies without alienating an existing customer base.

There are few models for understanding the market opportunity, some are:

A. The classical model

this is also known as the capabilities constrain model. The model, presumes the existence of a set of customer
needs as the basis for the selection of the approach:

B. Analytical hierarchy process

this method aide’s decision making. It is proposed as an emerging approach to multifaceted real time decision
marking processes within a companies. The method integrates expert opinions and market evaluations from
consultants and statistics.

C. Cost benefit analysis and Multiple criteria analysis

in this method, potential profits and losses are calculated and compared on the basis of the decision making

Market.

(Zott & Amit , Business Model Design and the Performance of Entrepeural Firms, 2013), (Gustafsson & Schwarz,
2013) (Seelos & Mair , 2007)

Opportunities for Buyitdirect, as a firm has a target market which is it has segmented and uses its available resources
to market products and services. The resourcefully maintains loyalty of customers by providing products which good
quality, reasonable priced, delivered on time.
Customer needs like warranties and guarantees as an assurance of quality in the services the customers require.

Competitive environment

In terms of business marketing, competition is a struggle for customers between businesses in a market segment.
Competitive environment could be analysed as “any substitute means of obtaining a product or service with similar
qualities and benefits”

The competitive environment is dynamic and requires businesses to focus intellectual resources to maintain either a
comprehensive view of their competitive environment. Otherwise, issues like diverging core competences leading to
poor market results.
(Grant, 1996)

Competitive advantage

Search for competitive advantage is led by technological innovations and the changes in products, processes and
consumer spending habits.
Competitive advantage through innovative positions sustain, obtain and consolidate advantage over other
businesses in the marketplace.
Michael E Porter in his book “competitive advantage: creating and sustaining superior performance” he states, “The
main goal of all businesses is getting a competitive advantage in relation with competitors on the market.

There are two strategies for gaining competitive advantage. These are:

A. The low cost strategy

this strategy aims to maintain low production costs, resulting in low product cost.
The two segments of the strategy are low costs verses optimal costs.
The first involves maintaining the lowest possible cost in relation to the products and in optimal costs, the
low cost of products is relative to the quality and margins of the products.
 B. The products differentiation strategy
this strategy is effective in market segments where consumer needs are not satisfied, where competition is
ubiquitous and prices are not the main feature of consumer needs.
The differentiation of service and products is essential for maintaining advantage.
Sustainability, durability, transparency, transferability, replicability, apropiability will reflect a company’s
performance and financial standing in its market segment as this is the ultimate result of competitive
advantage.
(Barney, 1991), (Wirtz , 2013), (Baden-Fuller & Mangematin, 2015)

Buyitdirect as a company provides credible advice on products, products are of the best possible quality, it markets
these products to its customers directly. The pricing of products are competitive and for the discerning customer,
the combination of these is a necessity in making a purchase.

Market strategy

Implementation of strategies and process should complement the organisations ideals and outline of strategies to
achieve the goals. In particular, market strategy theories suggest that, to enable successful implementation of
marketing strategies and the achievement of superior performance managers should organise marketing activities to
suit their business strategy.
Market strategy theories are:

A. The configuration theory

this theory relates a dimensional field of strategic business characteristics. Ideal business features exists and
will yield superior performances. These configurations are ideal because they represent complex “gestalts of
multiple, interdependent and mutually reinforcing business characteristics that enable businesses to achieve
their strategic goals.

Terms like match, alignment, complementary and congruence denotes the holistic relationships between
marketing organisation and business strategy.

B. Global marketing strategy(GMS)

The strategy has three perspectives. Standardisation, configuration-coordination and integration

perspective.
The logics of (GMS) are scale of economy, low cost, simplification, comparative advantage, specialization,
subsidization. It improves efficiency, consistency and synergy to gain competitive advantage in the market.
(Slater & Narver, 1993), (Grant, 1996) (Zott, Amit, & Massa, The Business Model: Theoretical roots, Recent
Developments and Future Reseach, 2010)

Organisational development (OD)

There are many triggers that necessitate development in organisations. Some are goals, people, evolution and
conflict. (OD) theories assume that changes within the organisation depends on agreement between individual and
organisational six dimensions are suggested as the similarities and differences between organisational change
theories:
Metaphor of organisation
Analytical framework
Trigger for change
the change process
the role of leadership
resistance to change
Organisational development is episodic (not frequent and intentional), cumulative (evolving and continuous) and is
a discrete period of planned changes in an organisation through the application of behavioural sciences, it
emphasises human process in an organisation.
(Jerry & Peter robertson, 1992) (Osterwalder, Pigneur, & Tucci, 2005)

Management team
Principle of team composition are a major part of management teams. It is suggested that without a dominant
individual and without the principle leader such a director of operations or a director can succeed in tasks and reach
goals by the principle goals of the organisation and within the operational capacities of the organisation.
Organisations with expert talent can perform indifferently without the need of a designated principle leader of the
team such as director for the team. (Hamel & Breen Bill, 2007)
Some company structures allow for positions set within structures and layers of management teams that have
differing objectives within the company structure.
Objectives are time constrained and achieving these objectives within set time framed leads to successful
completion of task and the continuity required for continual of business activities.
(Newton, 2013), (Belbin, 2012),
Conclusion

E-retailers such as Amazon, Buy it direct and other ecommerce companies need to build and maintain trust in
customers involved in transaction.

Breaches of trust in big companies and government departments has led to varying degrees of consumer weariness
towards engaging in internet based transaction where the exchange of financial and personal details are necessary.
Companies build and maintain trust through security features.
Such features are provided by Financial and standard organisations that regulate the market through constant
observation of both business activities and customer trends which helps to promote a safer environment for
transactions made through the internet.
Accepted payment mediums like Visa, MasterCard and PayPal communicate trust in transactions because they offer
consumers security.
This enables the market place to thrive as competition grows and leads to innovation the way peoples and
organisations approach business.
References
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Baden-Fuller, C., & Mangematin, V. (2015). Business Models and Modelling Business Models. Cass Business School,
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Ginns, B. (2014, 12 15). Buy it Rirect Smashed £1m Sales Record on Black Friday. (December 2014). Yorkshire, West
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