Management of Art Galleries – Business Models - Universität St.Gallen

Conceptual Basis 35 / 225Third, the key advantage of the business model concept derives from its practical application as atool for company analysis. In other words, the business model concept is a tool that managerscan apply to analyse their business or that of their competitors. Boehnke (2007) identified fourkey application areas: analysis, communication, decision-making and planning. According toBoehnke (2007), the model provides a snapshot of the company, including the strategic choicesmade. Osterwalder et al. (2005) emphasises that this enables managers to understand thebusiness logic. Furthermore, managers can compare their business to others and find relevanttriggers for success or identify core competencies (Linder & Cantrell, 2000; Morris et al., 2005;Timmers, 2000). The model’s ability to simplify a complex business helps greatly in supportingthe communication of the model. Managers can use the visualisation of the company to present itto employees, colleagues or partners (Möller & Rolf, 2003; Stähler, 2002). Another applicationis the model’s ability to serve as a decision-making tool. Since the model reduces complexityand maps the business and its environment, it assists in and speeds up the decision-makingprocess. Moreover, as Boehnke (2007) argues, the model can also provide the foundation forscenario analysis and strategy formulation. Finally, as a result of its holistic approach, thebusiness model is useful for detecting strategic issues in advance. This helps managers to testtheir strategic approaches and predict their impact or consequences (Chesbrough, 2010; Hayes &Finnegan, 2005).The above list summarises three advantages of the business model concept. However, theconcept also has limitations.First, the model cannot replace a strategic plan (Magretta, 2002; Stähler, 2002). As stated above,the model contains strategic elements and detects strategic choices. However according toChesbrough & Rosenbloom (2002), Morris et al. (2005), Osterwalder et al. (2005), these shouldnot be regarded as sophisticated strategic plan but more as evidence of strategic choices.Second, an advantage presented above can also represent a limitation – the scope. On the onehand it helps to simplify the business model. On the other, when comparing companies fromdifferent industries, the analysis might be biased. Because the business model concept analysesthe environment only in broad terms, any comparison of companies from different industriesmust be informed by a detailed investigation of the environmental setting (Zott & Amit, 2004).Third, another restriction of the concept lies in its static nature. Osterwalder et al. (2005) notethat the snapshot is not dynamic and does not take into account a dynamic and changingenvironment.Fourth, key dangers lie in its application, or possible misapplication. Boehnke (2007) identifiespotential flaws in the application of the model: confusion of terminology, wrong assumptionsabout the future, failure to adapt to new conditions and neglect of contextual factors. Mostpractitioners speak of business models when they mean only one particular part, leaving outvarious other aspects (Linder & Cantrell, 2003; Rentmeister & Klein, 2003). This leads tomisjudgement and biases the analysis of the business. Similarly, wrong assumptions about the