TEchNOLOGy TRaNSFER MODEL - Javna agencija

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BUSINESS MODELS
„A business model describes the structure of product, service and information flows and the roles of the
participating parties. This includes potential benefits and sources of revenue to each of the parties. “
Exploring Corporate Strategy, G. Johnson, K. Scholes, R. Whittington, 8th edition, FT Prentice Hall, Pearson Education, 2008
2.3.2 Why we need business models:
It is widely accepted that a strong business model can produce above average economic returns for the business owners. Welldesigned
business models also foster technology innovation and help small businesses to be successful making a new technology
commercially viable.
When done right, business models provide transparency and contribute to a better understanding of how the pieces of a business
link together. They also provide a basis for scenario simulation and effective strategy development which is a key factor when thinking
about business model innovation.
Business model innovation is extremely valuable when done right, creating new markets or transforming existing ones and generating
billions of dollars of market value. Knowing a company’s business model provides more than insight into metrics and management
levers. It can help illuminate an important, underutilized form of innovation that goes beyond product or process innovation.
2.3.3 Changing business models:
A brief history of the development of business models might run as follows. The most known and most basic business model is the
shopkeeper model. This involves setting up a store in a location where potential customers are likely to be and displaying a product
or service.
Over the years, business models have become much more sophisticated. The bait and hook business model (also referred to as the
»razor and blades business model« or the »tied products business model«) was introduced in the early 20th century. This involves
offering a basic product at a very low cost, often at a loss (the »bait«), and then charging compensatory recurring amounts for refills
or associated products or services (the »hook«). Examples include: razor (bait) and blades (hook); cell phones (bait) and air time
(hook); computer printers (bait) and ink cartridge refills (hook); and cameras (bait) and prints (hook). An interesting variant of this
model is a software developer that gives away its word processor reader free of charge but charges several hundred dollars for its
word processor writer.
Today, the type of business models might depend on how technology is used. For example, entrepreneurs on the internet have also
created entirely new models that depend entirely on existing or emergent technology. Using technology, businesses can reach a large
number of customers with minimal costs.
2.4 The 7-C Model to describe business models
2.4.1 Description of the model
Business models can be developed and analyzed via the use of the 7-C model which was developed by the consulting company
Horvath & Partners. The 7-C model describes business models via seven components, namely; the strategic core, customer perception,
customer interface, value chain, co-operations, concepts for the future and human capital & corporate culture.
Each component comprises several questions, which should be answered carefully when dealing with the concept of business
models. In the following sub-chapters you’ll find a list of these questions for each component including some examples on how they
can be answered.
Customer Perception
Human Capital & Corporate
Culture
Customer Interface
Strategic Core
Concepts for the future
Value Chain
Co-Operations
Graph 1: The 7-C Model to describe business models
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