| A business model (also called a business design) is the | | | | have to be efficient or innovative to compete in the |
| mechanism by which a business intends to generate | | | | marketplace. Regulations and creating business |
| revenue and profits. It is a summary of how a | | | | focus of the company may have limited |
| company plans to serve its customers. It involves | | | | instrumentality in arresting such situation. |
| both strategy and implementation. It is the totality of: | | | | · Razor and blades business model or |
| · How it will select its customers | | | | "tied products model" works by selling a "master" |
| · How it defines and differentiates its | | | | product at a subsidized price, and making the profit |
| product offerings | | | | on high margin Service/ "consumables" / Spares etc. |
| · How it creates utility for its customers | | | | that are essential to the use of the master product. |
| · How it acquires and keeps customers | | | | Indian PSUs has got the scope to use this business |
| · How it goes to the market (promotion | | | | model where it has to compete with International |
| strategy and distribution strategy) | | | | players. |
| · How it defines the tasks to be | | | | · The loyalty business model is a |
| performed | | | | business model used in strategic management in |
| · How it configures its resources | | | | which company resources are employed so as to |
| · How it captures profit | | | | increase the loyalty of customers in the expectation |
| Business models converts new technology into | | | | that corporate objectives will be met or surpassed. |
| economic value. A business model draws on a | | | | All encompassing support to the customers are |
| multitude of business subjects, including economics, | | | | primary requirement for such model. Indian PSUs are |
| entrepreneurship, finance, marketing operations and | | | | better poised in terms of Infra Structure to use such |
| strategy. | | | | model. |
| The main components of Business Model are | | | | · Service Quality Model . In it, customer |
| · Value proposition | | | | satisfaction is first based on a recent experience of |
| · Market Segment | | | | the product or service. This assessment depends on |
| · Value Chain Structure | | | | prior expectations of overall quality compared to the |
| · Revenue Generation ad margin | | | | actual performance received. If the recent |
| · Position in value network | | | | experience exceeds prior expectations, customer |
| · Competitive strategy | | | | satisfaction will likely to be high. Customer satisfaction |
| Types of Business Model: | | | | can also be high even with mediocre performance |
| · The subscription business model | | | | quality if the customer's expectations are low, or if |
| · The razor and blades business model | | | | the performance provides value (that is, it is priced |
| (bait and hook) | | | | low to reflect the mediocre quality). Likewise, a |
| · The pyramid scheme business model | | | | customer can be dissatisfied with the service |
| · The multi-level marketing business | | | | encounter and still perceive the overall quality to be |
| model | | | | good. This occurs when a quality service is priced |
| · The network effects business model | | | | very high and the transaction provides little value. A |
| · The monopolistic business model | | | | an appropriate model for Indian PSUss. |
| · The cutting out the middleman model | | | | · Outsourcing Considerations:- Looking |
| · The auction business model | | | | fact that 73% of top global companies outsourced |
| · The online auction business model | | | | some processes or other, Indian PSUs‘ business |
| · The bricks and clicks business model | | | | strategy should encompass outsourcing philosophy in |
| · Loyalty business models | | | | major scale primarily due to :- |
| · Collective business models | | | | Ø Concentrate on Focus Areas / Core |
| · The industrialization of services business | | | | Competencies. |
| model | | | | Ø Access to World Class Capabilities, rather |
| · The servitization of products business | | | | than possessing them. |
| model | | | | Ø Risks can be shared in terms of Capital |
| · The low-cost carrier business model | | | | Investments, etc |
| · The online content business model | | | | Ø Reduction in Operating Costs. |
| Applicability of appropriate Business Model for Indian | | | | Ø Resources not available internally. |
| PSUs | | | | Companies outsource because they do not have |
| · Monopolistic Business Model :- It is a | | | | access to the required resources within the company. |
| nearly a situation in which a single firm is the sole | | | | Sometimes this is due to expansion or reorganization. |
| provider of a product or service. Indian PSUs is likely | | | | It may also be due to changing business |
| to command such situation for certain capital | | | | requirements. |
| intensive high end product although Globalized | | | | Ø Accelerate re-engineering benefits. |
| economy can always throw up challenge. | | | | Outsourcing is often a by-product of another |
| Pricing Strategy should be to set price where Marginal | | | | powerful management tool, business process |
| Cost should be at least equal to Marginal revenue. | | | | re-engineering. It allows an organization to |
| Reduction of operating cost by virtue of all | | | | immediately realize some benefits from this process. |
| Management techniques will maximize earning. | | | | Ø Cash Infusion. Outsourcing often involves |
| It is also often argued that monopolies tend to | | | | the transfer of assets from the customer to the |
| become less efficient and innovative over time, | | | | provider, such as equipment, facilities, leases and |
| becoming "complacent giants", because they don't | | | | licenses. |