Building Scalable Business Models

Building Scalable Business Models Description

This is an MIT Sloan Management Review article. Business model innovation has become a hot topic in management circles, and understandably so. No management activity is more important than having clarity about how the organization creates, delivers, and captures value. It requires, among other things, knowing what customers want, how value can be best delivered, and how to enlist strategic partners to achieve maximum benefit. Although the ability to develop strong value propositions can enable companies to "get by, "the authors argue that many of today's most successful businesses are those that can place themselves in the "sweet spot" of business model scalability. If managers are incapable of factoring scalability attributes into their business model design, they risk being left behind, much the way bookstores owned by Borders Group Inc. were eclipsed by Amazon.com Inc. In the course of their research, the authors identified five patterns by which companies can achieve scalability. The first pattern involves adding new distribution channels. The second entails freeing the business from traditional capacity constraints. The third involves outsourcing capital investments to partners that, in effect, became participants in the business model. The fourth is having customers and other partners assume multiple roles in the business model. And the fifth pattern is to establish platform models in which even competitors may become customers. Based on these patterns, the authors developed a framework for identifying potential levers for business model scalability along with a road map that managers can use to improve their business models. Over and above the need to create value propositions that are difficult for competitors to replicate, managers need to develop business models that are capable of achieving positive returns and accelerating returns on the investments made. Merely identifying synergies, the authors note, doesn't necessarily lead to improvements in business model scalability. They write: "To achieve scalability, managers and entrepreneurs need to remove capacity constraints. They have opportunities to do this in a variety of ways: by collaborating with partners; by encouraging partners to play multiple roles in the business model; by creating platforms to attract new partners; or even by working with current competitors."

Case Description Building Scalable Business Models

Strategic Managment Tools Used in Case Study Analysis of Building Scalable Business Models

STEP 1. Problem Identification in Building Scalable Business Models case study

STEP 2. External Environment Analysis - PESTEL / PEST / STEP Analysis of Building Scalable Business Models case study

STEP 3. Industry Specific / Porter Five Forces Analysis of Building Scalable Business Models case study

STEP 4. Evaluating Alternatives / SWOT Analysis of Building Scalable Business Models case study

STEP 5. Porter Value Chain Analysis / VRIO / VRIN Analysis Building Scalable Business Models case study

STEP 6. Recommendations Building Scalable Business Models case study

STEP 7. Basis of Recommendations for Building Scalable Business Models case study

Case Analysis of Building Scalable Business Models

Building Scalable Business Models is a Harvard Business (HBR) Case Study on Leadership & Managing People , Texas Business School provides HBR case study assignment help for just $9. Texas Business School(TBS) case study solution is based on HBR Case Study Method framework, TBS expertise & global insights. Building Scalable Business Models is designed and drafted in a manner to allow the HBR case study reader to analyze a real-world problem by putting reader into the position of the decision maker. Building Scalable Business Models case study will help professionals, MBA, EMBA, and leaders to develop a broad and clear understanding of casecategory challenges. Building Scalable Business Models will also provide insight into areas such as – wordlist , strategy, leadership, sales and marketing, and negotiations.

Case Study Solutions Background Work

Building Scalable Business Models case study solution is focused on solving the strategic and operational challenges the protagonist of the case is facing. The challenges involve – evaluation of strategic options, key role of Leadership & Managing People, leadership qualities of the protagonist, and dynamics of the external environment. The challenge in front of the protagonist, of Building Scalable Business Models, is to not only build a competitive position of the organization but also to sustain it over a period of time.

Strategic Management Tools Used in Case Study Solution

The Building Scalable Business Models case study solution requires the MBA, EMBA, executive, professional to have a deep understanding of various strategic management tools such as SWOT Analysis, PESTEL Analysis / PEST Analysis / STEP Analysis, Porter Five Forces Analysis, Go To Market Strategy, BCG Matrix Analysis, Porter Value Chain Analysis, Ansoff Matrix Analysis, VRIO / VRIN and Marketing Mix Analysis.

Texas Business School Approach to Leadership & Managing People Solutions

In the Texas Business School, Building Scalable Business Models case study solution – following strategic tools are used - SWOT Analysis, PESTEL Analysis / PEST Analysis / STEP Analysis, Porter Five Forces Analysis, Go To Market Strategy, BCG Matrix Analysis, Porter Value Chain Analysis, Ansoff Matrix Analysis, VRIO / VRIN and Marketing Mix Analysis.

We have additionally used the concept of supply chain management and leadership framework to build a comprehensive case study solution for the case – Building Scalable Business Models

Step 1 – Problem Identification of Building Scalable Business Models - Harvard Business School Case Study

The first step to solve HBR Building Scalable Business Models case study solution is to identify the problem present in the case. The problem statement of the case is provided in the beginning of the case where the protagonist is contemplating various options in the face of numerous challenges that Scalability Model is facing right now. Even though the problem statement is essentially – “Leadership & Managing People” challenge but it has impacted by others factors such as communication in the organization, uncertainty in the external environment, leadership in Scalability Model, style of leadership and organization structure, marketing and sales, organizational behavior, strategy, internal politics, stakeholders priorities and more.

Step 2 – External Environment Analysis

Texas Business School approach of case study analysis – Conclusion, Reasons, Evidences - provides a framework to analyze every HBR case study. It requires conducting robust external environmental analysis to decipher evidences for the reasons presented in the Building Scalable Business Models.

The external environment analysis of Building Scalable Business Models will ensure that we are keeping a tab on the macro-environment factors that are directly and indirectly impacting the business of the firm.

What is PESTEL Analysis? Briefly Explained

PESTEL stands for political, economic, social, technological, environmental and legal factors that impact the external environment of firm in Building Scalable Business Models case study. PESTEL analysis of " Building Scalable Business Models" can help us understand why the organization is performing badly, what are the factors in the external environment that are impacting the performance of the organization, and how the organization can either manage or mitigate the impact of these external factors.

How to do PESTEL / PEST / STEP Analysis? What are the components of PESTEL Analysis?

As mentioned above PESTEL Analysis has six elements – political, economic, social, technological, environmental, and legal. All the six elements are explained in context with Building Scalable Business Models macro-environment and how it impacts the businesses of the firm.

How to do PESTEL Analysis for Building Scalable Business Models

To do comprehensive PESTEL analysis of case study – Building Scalable Business Models , we have researched numerous components under the six factors of PESTEL analysis.

Political Factors that Impact Building Scalable Business Models

Political factors impact seven key decision making areas – economic environment, socio-cultural environment, rate of innovation & investment in research & development, environmental laws, legal requirements, and acceptance of new technologies.

Policy Making Impact on Building Scalable Business Models

Government policies have significant impact on the business environment of any country. The firm in “ Building Scalable Business Models ” needs to navigate these policy decisions to create either an edge for itself or reduce the negative impact of the policy as far as possible.

Data safety laws – The countries in which Scalability Model is operating, firms are required to store customer data within the premises of the country. Scalability Model needs to restructure its IT policies to accommodate these changes. In the EU countries, firms are required to make special provision for privacy issues and other laws.

Competition Regulations – Numerous countries have strong competition laws both regarding the monopoly conditions and day to day fair business practices. Building Scalable Business Models has numerous instances where the competition regulations aspects can be scrutinized.

Import restrictions on products – Before entering the new market, Scalability Model in case study Building Scalable Business Models" should look into the import restrictions that may be present in the prospective market.

Export restrictions on products – Apart from direct product export restrictions in field of technology and agriculture, a number of countries also have capital controls. Scalability Model in case study “ Building Scalable Business Models ” should look into these export restrictions policies.

Foreign Direct Investment Policies – Government policies favors local companies over international policies, Scalability Model in case study “ Building Scalable Business Models ” should understand in minute details regarding the Foreign Direct Investment policies of the prospective market.

Taxation & Regulation Impact on Building Scalable Business Models

Corporate Taxes – The rate of taxes is often used by governments to lure foreign direct investments or increase domestic investment in a certain sector. Corporate taxation can be divided into two categories – taxes on profits and taxes on operations. Taxes on profits number is important for companies that already have a sustainable business model, while taxes on operations is far more significant for companies that are looking to set up new plants or operations.

Tariffs – Chekout how much tariffs the firm needs to pay in the “ Building Scalable Business Models ” case study. The level of tariffs will determine the viability of the business model that the firm is contemplating. If the tariffs are high then it will be extremely difficult to compete with the local competitors. But if the tariffs are between 5-10% then Scalability Model can compete against other competitors.

Government Scheme & Subsidies Impact on Building Scalable Business Models

Research and Development Subsidies and Policies – Governments often provide tax breaks and other incentives for companies to innovate in various sectors of priority. Managers at Building Scalable Business Models case study have to assess whether their business can benefit from such government assistance and subsidies.

Consumer protection – Different countries have different consumer protection laws. Managers need to clarify not only the consumer protection laws in advance but also legal implications if the firm fails to meet any of them.

Political System & Stability, and its Impact on Building Scalable Business Models

Political System and Its Implications – Different political systems have different approach to free market and entrepreneurship. Managers need to assess these factors even before entering the market.

Freedom of Press is critical for fair trade and transparency. Countries where freedom of press is not prevalent there are high chances of both political and commercial corruption.

Corruption level – Scalability Model needs to assess the level of corruptions both at the official level and at the market level, even before entering a new market. To tackle the menace of corruption – a firm should have a clear SOP that provides managers at each level what to do when they encounter instances of either systematic corruption or bureaucrats looking to take bribes from the firm.

Independence of judiciary – It is critical for fair business practices. If a country doesn’t have independent judiciary then there is no point entry into such a country for business.

Government attitude towards trade unions – Different political systems and government have different attitude towards trade unions and collective bargaining. The firm needs to assess – its comfort dealing with the unions and regulations regarding unions in a given market or industry. If both are on the same page then it makes sense to enter, otherwise it doesn’t.

Economic Factors that Impact Building Scalable Business Models

Social Factors that Impact Building Scalable Business Models

Technological Factors that Impact Building Scalable Business Models

Environmental Factors that Impact Building Scalable Business Models

Legal Factors that Impact Building Scalable Business Models

Step 3 – Industry Specific Analysis

What is Porter Five Forces Analysis

PESTEL stands for political, economic, social, technological, environmental and legal factors that impact the external environment of firm in Building Scalable Business Models case study. PESTEL analysis of " Building Scalable Business Models" can help us understand why the organization is performing badly, what are the factors in the external environment that are impacting the performance of the organization, and how the organization can either manage or mitigate the impact of these external factors.

Step 4 – SWOT Analysis / Internal Environment Analysis

Step 5 – Porter Value Chain / VRIO / VRIN Analysis

Step 6 – Evaluating Alternatives & Recommendations

Step 7 – Basis for Recommendations

References :: Building Scalable Business Models case study solution