According to accounting concept business model is the plan used in a business to make revenue as well as make turnover from day to day running. The model includes main factors to generate and meaning of the business, same as the revenues it generates and the operating cost the business incurs. Similarly, the business model also refers to how product acquisition generate in revenue thus, how the companies make profit from a steady stream of high margin of the competitors. Different companies have a different type of model regarding on how each perform in the market. Some industries cannot be in a position to operate to one type business model due to their fast changing business. Business model has also a role in entrepreneurship because it draws a mass of business subjects including economics, (Alexander 2013) finance, marketing and strategy. The business model is a significant determinant of profits to be prepared in an innovation. Thus, an innovation with a large business model may perhaps be more profitable comparing to a great innovation with usual business model. Moreover, to dig out a value from an innovation or any firm for that topic needs suitable business model hence; business models translate new technology to economic significance. In innovation not all common models that are applied thus, a new model must be created. Not simply is the business model vital, in some cases the innovation rests not in the manufactured goods or service but in the business model. Particularly the products complexities, marketing setting in which the business functions, very few individual who are familiar with a business model will completely understand the organization’s jobs in the entirety. The business model serves to join the two domains of practical inputs and the financial outputs. According to researchers on entrepreneurship business model has components as following: Value proposition that is a description of the customer crisis, on the product the addressing problem of the product from customer’s perception. Similarly the value chain is another component of business model in entrepreneurship that explain a business situation and activities in the assessment sequence along with how the firm will regard element of value that creates in the chain. On the other hand, of business model components is a market segment which refers to the cluster of customers to aim, recognizing that different market segments which have diverse needs. At times the prospective of an innovation is unlocked only when a unique market segment is targeted. The third component is revenues making and margins thus describing how revenue is generated including leasing, support, sales, contribution and target profit margin In addition to the components of business model in entrepreneurship are a position in a value network which identifies the competitors, and several other network effects that can be used to deliver additional importance to customers. Lastly on the components is competitive strategy referring how the business will attempt to develop a sustainable competitive benefit, for instance by means of a cost, differentiation or niche strategy.(Timothy 2012) In addition, to the component there are others factors of business model which help the business to make profits or losses if considered. They include the technology environment and strategies. Technology environment analyzes how technology plays a significant role in the business and must be tracked closely due the fact that technology can move very rapidly and seriously disrupt this company are not ready. Technology which is disruptive to the business model includes when a new technology creates a totally different approach to do a task that is of a lesser amount, timely efficient or else moderately advantageous and removes existing technology.
The difference between the definitions of Teece 2010 is that business model explains the basis of how organizations create, give back and captures financial, cultural and social value. Business model gives a wider view of informal comparing with formal descriptions to represent significant aspects of the business including the following policies, organizational analysis and more so the idea of definition of the business model in the business. According to Teece definition to business models are used to compare and classify business in entrepreneurial background. However, business models are used by company’s managers to be familiar with company’s internal operations for future progress and purposes of public reporting. In addition to the process of business model regarding to business strategy which interprets implementation of company’s business into managerial structures including human resources being a component of the business workflows. Thus, business modeling refers to business development design at the operational level linking a company at the strategic level. (Thierry 2011) Teece further explained how the brand of company’s products is the consequence of business model and posses a symbiotic relationship with the business model. Since the business model establishes the brand assurance and the brand equity hence, becomes a property of the business model. Consequently, Tierce compared business model and financial reporting of a company having a normative framework regulation. In this case, business has two main purposes; the first is to come up with a homogenous common framework that guarantees the significance, simplicity, consistency and good quality of financial information in the business model. The second is to deliver better financial information to improve the ability in which users try to understand cash flow origins and generation. In this context Teece 2010 definition of business model concept could be considered by regulators’ as a practical way to report on value chain processes a new business. (Thierry 2011) In addition to Teece proposition on financial discloser of business model information of potential interest for financial analysts. Similarly, Teece in his hypothesis explained how financial analysts liken the idea of business model to corporate strategy. Business model have the key information used by financial analyst to assess companies refers to the main components of the business model.
Delta Airlines Business Model
Delta Airlines model is an aim of a strategic framework developed by researchers to guide managers and business e executive in the organization on how to communicate articulate and implement an effective corporate and business strategies engaged with the recent development in economy. In this content of business strategy Delta Airlines business model has integrated the competitive advantages to maximize Delta Airlines revenue thus end up fostering a complete turnover to the corporation profits. Additionally, the model has also integrated the value chain frameworks to spearhead the development in the organization leading to extended revenue to the corporation. (Ashok 2005)Thus, a well extended venture business perspective with a goal increasing the total customer solution so as to increase in marginal returns on sales. In the case of competitive advantage of the business model Delta Airlines organization has focused on low cost framework lead by active business unite to maximize on sales so as to meet the competitive advantage from other organizations. The strategies put in place to increase profit using the business model should not consider any gap for the competitor to develop a niche of market leadership thus deterring new firms. In the context of resource based framework the corporation is intended to have resource to enhance sales capabilities so as the Delta Airline model can have an upper hand due to experience of high profit margin to their rival groups in the market and thus taking a large business scope. In addition to the extended enterprise due to large sales(Mark 2010) Delta Airline should focus on producing the solution to the business customers and furthermore to offer quality products. Regarding to the competitive advantage to Delta Airline business model should adapt new ways and promote an effective and efficient customer targeting solution that is capable of meeting. Hence, Delta Airline framework will be in a position to develop a customer bond if it binds with the considered strategies of improving their profits. Moreover, Delta Airline model strategies help the organization to cope up with current dynamic global markets which waiver revenue intended to be generated thus effective booking of goods and services to their customers. Still in the context of a dynamic world market the emergence of modern technologies which lead to great potential for active communication within the organization so as to refocus in strategic business model that stresses the objectives expressed in the Delta Airline model solution. On the other hand Delta Airline business model has effectively dealing with detrimental in commoditizations that affect sales even after using the significant principles of the organization. Consequently, the fundamental pillars of the Delta Airline business model has helped the organization to increase in profit through de-commoditization due to the fact that commoditization is regarded to come from the organization clients thus known as multi-dimensional. (Almodo 2013) However, the owner can claim his or her commodities cannot be traced, regarding to be organization default leading to reduction in total sales. Despite of Delta Airline challenge that lead to close of the company due to bankruptcy thus come up with decisive business model aimed to increase total revenue that steered transformation in the company hence maximizing on profits. In addition, the transformation plans which focused mainly in the Delta’s Airline open systems of interrelating components. The business model acted as an effective way to control organizational sales behavior in Delta Airline. (Miltiades 2008) Delta Airline mission and vision was turning around by the new business model thus facilitated operation effectiveness, increase in revenue margin through the means of carrying various kinds of people. The upgrading in the Delta Airline Company also has facilitated the plan including investment in terms of shares, promoting good working environment to employees who get remunerative payments, and a well upgraded customer relation. (Alexander 2010) In conclusion Delta Airline business model have promoted conducive working environment, thus maximizing on organization revenue in respect to good customer relation which have been portrayed by good management. Moreover, a clear plan by Delta Airline model has fostered an important role to employees towards achieving the corporation strategies to meet the organization vision and mission including maximizing the total sales. In this context of improvement in the company has laid a solid case for investors due to the devised strategies in the corporation aimed to increase total profit.