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Sustainable business models (What is a business model? , is a set of…
Sustainable business models
What is a business model?
, is a set of business activities which describes the design or architecture of the value creation, delivery and capture mechanisms it employs. It essentially shows what the business does and how they make money.
Consists of three main elements
Value creation
, Heart of any business model. Businesses typically capture value by seizing new business opportunities, new markets and new revenue streams
Value capture
, Focuses on how to earn revenues from the provision of goods, services or information to users and customers
Value Proposition
, This is the product or service offering to generate an economic return
Its development is based on the organisations own assumptions about what they think customers want, how they want it, and how the organisation can organize to best meet those needs and make a profit.
Architecture
(Business ethics), network of relationships businesses have with different stakeholders
Successful business models don't necessarily yield competitive advantage, This is because some elements of the business model are quite transparent so competitors can copy or imitate it
However there are ways that provide barriers to imitation
System requirements
, If a model has particular processes or technology specifically for that model to make it work effectively then it wont be easily copied by oters
Business case for sustainability
, emphasizes how the links between voluntary, environmental and social activities and corporate economic success can be managed, advanced, or innovated in order to improve economic success
Requirements for business case for sustainability
The activity must create measurable positive business effects or positive economic contributions to business success
Management activity must lead to positive environmental, social and economic effects
Identify activities with the intention of it contributing to environmental and social problems
Drivers, (1) Innovative capabilities , (2) Cost and cost reduction, (3) Sales and profit margin, (4) Risk and risk reduction, (5) Reputation and brand value, (6) Employer attractiveness
Sustainable business models
, is one that is designed to create, deliver and capture value for various stakeholders across the TBL
Elements
, the traditional elements (Proposition, creation and capture) all need to be integrated into the TBL
The revisionist perspective
, the relationship between environmental and economic performance is represented as an inverted U-shaped curve, Whereby voluntary environmental activities increase the firms financial performance only until a particular optimum after which profitability starts to decline with every additional environmental activity
The traditionalist perspective
, the relationship between sustainability efforts and a firms financial performance is usually negative,
high environmental performance leads to low economic performance
Business model Innovation for Sustainability
, innovations that create significant positive and/or significantly impacts for the environment and/or society, through changes in the way the organisation and its value-network, create, deliver and capture value
Degrees of business model innovation
Adoption
, changes that mainly focuses on matching competitor value propositions
Improvement
, when most of business model elements are changed
Business model Adjustment
, Changes only one business model element
Redesign
, When improvement leads to a completely new value proposition
Business model Archetypes
, Are classified based on the main or dominant type of business model innovation
Social
, Deals with social value creation which are orientated towards social purposes and missions
Technological
, BM with a dominant technical innovation component
Organisational
,Those resulting from organizational and cultural changes in business practices and attitudes which also integrate sustainability aspirations (e.g. cleaning the responsibility of the firm)