Business Modeling Quarter

Business Modeling Quarter (hereinafter, the Quarter) is the first of four lectures of Operations Quadrivium (hereinafter, the Quadrivium):

• The Quarter is designed to introduce its learners to enterprise discovery, or, in other words, to concepts related to obtaining data needed to administer the enterprise effort; and
• The Quadrivium examines concepts of administering various types of enterprises known as enterprise administration as a whole.

The Quadrivium is the first of seven modules of Septem Artes Administrativi, which is a course designed to introduce its learners to general concepts in business administration, management, and organizational behavior.

Outline

The predecessor lecture is Feasibility Study Quarter.

Recitals

Strategy design is the enterprise effort undertaken in order to design the strategy out of the concepts analyzed during strategy analysis. The design can be divided in four batches:

1. To discover most feasible concepts analyzed during strategy analysis;
2. To analyze which of most feasible concepts and how can be arranged in a new strategy;
3. To approve the new strategy or, at least, its layout and key points;
4. To formulate the approved strategy for their further implementation or, in other words, as the input for strategy implementation.

Concepts

1. Commerce transaction.
   • Business-to-consumer.
   • Business-to-business.
   • Business-to-government.
   • Business-to-employee.
2. Enterprise. (a) An endeavor undertaken in order to create something or develop somebody, or (b) an undertaking that includes several endeavors and may or may not represent an entire business or organization. The enterprise assumes some level of enterprise effort.
   • Business. Either an individual's regular occupation, profession, or trade, or the practice of making one's profit by engaging in commerce.
   • Departmentalization. The basis by which jobs in an enterprise are grouped together.
3. Segmentation.
4. Competitive strategy. A formulated strategy for how a strategic business unit is going to compete. This formulation usually states which one of four types of competitive strategies the strategic business unit is going to pursue, what it considers as its competitive advantage or advantages, defines its business model, and may or may not include (a) what products, (c) resulted from what production, (d) at what price, (e) using what presentation and promotion, (f) on what market or markets with regard to the region or regions and/or segment or segments of customers, (g) with what front-end office personnel, (h) with what level of enterprise's support this enterprise is going to offer, as well as (i) what financial results and/or competitors' actions would trigger what changes in those decisions. Rarely, a mature enterprise formulates just one competitive strategy; usually, there are several competitive strategies in the enterprise portfolio since different strategic business units are supposed to have their own competitive strategies.
   • Cost leadership strategy.
     1. Mass production. The production of items in large batches.
     2. Mass customization. Providing customers with a product when, where, and how they want it.
     3. Exporting. Making products domestically and selling them abroad.
     4. Importing. Acquiring products made abroad and selling them domestically.
   • Differentiation strategy.
     1. First mover. An enterprise that's first to bring a product innovation to the market or to use a new process innovation.
     2. Innovation. Taking change ideas and turning them into new products, product features, production methods, pricing strategies, and ways of enterprise administration.
     3. Sustaining innovation. Small and incremental changes in established products rather than dramatic breakthroughs.
     4. Disruptive innovation. Innovations in products, services, or processes that radically change an industry's rules of the game.
   • Focus strategies.
   • Competitive advantage. What sets an enterprise apart; its distinctive edge.
5. Value chain. The entire series of organizational work activities that add value to each step from raw materials to finished product.
   • Value. The performance characteristics, features, and attributes, and any other aspects of goods and services for which customers are willing to give up resources.
   • Value. The benefit enjoyed by the stakeholders of the system when the system is in operation.
   • Service profit chain. The service sequence from employees to customers to profit.
   • Technology. The way in which an organization transfers its inputs into outputs.
   • Cloud computing. Refers to storing and accessing data on the Internet rather than a computer's hard drive or a company's network.
   • Internet of things. Allows everyday "things" to generate and store and share data across the Internet.
   • Sharing economy. Business arrangements that are based on people sharing something they own or providing a service for a fee.
6. Business strategy. A strategy that determines the behavior of the enterprise on a particular segment of its market.
   • Growth strategy. A business strategy that's used when the enterprise wants to expand the number of markets served or products offered, either through its current business(es) or through new business(es).
   • Innovation strategy. A business strategy that emphasizes the introduction of major new products and services.
   • Stability strategy. A business strategy in which an enterprise continues to do what it is currently doing.
   • Cost-minimization strategy. A business strategy that emphasizes tight cost controls, avoidance of unnecessary innovation or marketing expenses, and price cutting.
   • Imitation strategy. A business strategy that seeks to move into new products or new markets only after their viability has already been proven usually by competitors.
   • Exit strategy. A business strategy that seeks to withdraw an enterprise out of a particular business at the lowest cost and biggest gain.
   • Harvesting. Exiting a venture when an entrepreneur hopes to capitalize financially on the investment in the future.
7. Optimization. The process of choosing the best alternative that will satisfy the needs of the stakeholders under the constraints given (e.g. cost, schedule and available technology).

Methods

1. Action design. A change process based on systematic collection of data and then selection of a change action based on what the analyzed data indicate.
2. AIDA technique.
3. User feedback loop. Ideas are put in front of users, who provide their feedback, which is used to refine the design, and then the process repeats.

Instruments

1. Business Model Canvas.
2. Orientation mix.
   • Product orientation.
   • Production orientation.
   • Sales orientation.
   • Customer orientation.
   • Society orientation.
3. Marketing mix.
   • Core product.
   • Price.
   • Delivery.
   • Presentation.
   • Promotion.
   • Personnel.
   • Packaging.
   • Branding.
   • Financing.
4. Promotional mix.
   • Personal sales.
   • Sales promotion.
   • Public relations.
   • Advertising.
   • Channel partnership.

Results

1. Business model. The core part of the strategic plan that suggests how an enterprise is going to make money in its business. The business model usually answers two key questions: how the enterprise is going to earn and how it is going to spend in a particular business or a group of them. Its competitive strategy may answer the question about its earning. Its business strategy may answer the question about its spending. Because an enterprise can be involved in several businesses, it can have several business models.
   • Model. An abstraction of reality, a simplified representation of some real-world phenomenon.
     1. Model(s). A representation and simplification of reality developed to convey information to a specific audience to support analysis, communication and understanding.
   • Business domain model. A conceptual view of all or part of an enterprise focusing on products, deliverables and events that are important to the mission of the organization. The domain model is useful to validate the solution scope with the business and technical stakeholders. See also model.
2. Business architecture. A subset of the enterprise architecture that defines a business' current and future state, including its strategy, its goals and objectives, the internal environment through a process or functional view, the external environment in which the business operates, and the stakeholders affected by the business' activities.

Practices

The successor lecture is Chief Execution Quarter.