Business Model Case Analysis

Professor Edmund Clark

Managing Operations in a Tech Startup Firm SEC 01

1 January 2016

Business model, one of the ubiquitous terms from the Internet boom of the late 1990’s is making a resurgent comeback in the world of business analysis. “A business model describes the rationale of how an organization creates, delivers, and captures value” (Osterwilder 14). While a buzzword whose popularity in today’s startup culture stems from its lack of use in many businesses, it remains a powerful tool for businesses of all sizes to analyze operations and to constantly improve. The main focus of a business model is on the company’s value proposition. Looking at a business from the perspective of where and how value is created, gives businesses the ability to innovate on the processes that create the most value to the firm.

While possible to run a business without the formalization of a business model, the benefits of a clear model easily exceeds the cost of making one. The business model starts with the value proposition, or the company’s value given to their customers. This clearly answers the most important part of any business activity, “Why do our customers need us?” If this question goes unanswered, the business faces a serious risk of not having a proper product-market mix and loosing the ability to connect with their target market.

The model takes the value that is created for the customer, and determines logistically how that value is delivered to that customer. There are countless ways in which that value is transferred from the company to the customers. The business model takes the ambiguous nature of this offering and designs a complete process to ensure that the value exchange is accomplished without wasting resources. A great example of the complexities of delivering value is Amazon. Amazon delivers its value created (low priced products in a short timeframe) to their customers through distribution centers that are extremely efficient and...