Emerging business models

Abstract

Magretta (2002) suggests, using the example of American Express in the nineteenth century, that: " a successful business model represents a better way than the existing alternatives. It may offer more value to a discrete group of customers. Or it may completely replace the old way of doing things and become the standard for the next generation of entrepreneurs to beat". Adding substance with: "… all new business models are variations on the generic value chain underlying all businesses. Broadly speaking, this chain has two parts. Part one includes all the activities associated with making something: designing it purchasing raw materials, manufacturing and so on. Part two includes all the activities associated with selling something: finding and reaching customers, transacting a sale, distributing the product or delivering the service. A new business model's plot may turn on designing a new product for an unmet need … Or it may turn on a process innovation, a better way of making or selling or distributing an already.”