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Part (A) - What is a Business Model? A business model can be described as the plan a company or an organization implements in order to create profits and generate revenues. A business model usually includes the description of the operations and the functions of the business, ways to create profit and expenditures to be incurred. The business model is a part of the business strategy.
"... all too often, a successful new business model becomes the business model for companies not creative enough to invent their own." -Gary Hamel (Leading the Revolution: How to Thrive in Turbulent Times by Making Innovation a Way of Life).
A business model illustrates how a business plans to attract customers to pay for the services or value it can provide to its customers and how to convert these into profit. In theory, it states what customers need, how they need it and how the business intends to best meet that expectation (to maximize satisfaction and revenue).
Some of the components and operations of a business model:
A business model must be unique to a business. It describes the business's ultimate purpose and how to go about doing it. So, a copied model is a model just for appearance and will ultimately serve no purpose.
A business model can be used by managers in the company for future growth or development of the business. It helps the business focus on the its objectives and goals, as reviewing it periodically will ensure the business will focused on changes in the market and current economic conditions.
Part (B) - Researching Business Models
Section (I) - Amazon's Business Model
"Amazon.com strives to be the e-commerce destination where consumers can find and discover anything they want to buy online." -Jeff Bezos, founder of Amazon.com.
Amazon.com is one of the greatest examples of an e-commerce business. Internet is the sole business channel that Amazon uses to trade with its customers. This has given Amazon great advantages over its competitors.
Most of Amazon's competitors use the brick and mortar stores as their primary method of distribution. This involves opening central distribution warehouses in important locations where they are forced to pay premium rents. Thus, opening a store front will also require them to hire sales representatives (to whom they have to pay salaries) for the daily operations. These in turn create large overheads for the business. Amazon does not suffer from any such overheads. Their business model allows them to have their warehouses in cheaper, low rent locations. They do not have any needs for sales representatives, as all transactions are performed online.
As the internet becomes ever more popular, more consumers head towards e-commerce websites for online transaction for consumer products and services. Online transactions allow customers to preview, discuss, examine reviews and ratings of other customers and order goods from the comfort of their homes or offices, and also save time and energy.
One of the most profitable departments for Amazon is their large selection of books and e-books. Amazon's competitive advantages allow them to store larger qualities of books than most in the e-commerce market. Kindle, Amazon's own electronic book reader, allows users to store hundreds of books digitally in the book reader's memory. It also allows customers to purchase e-books from Amazon's Kindle store and have access to all required information at their fingertips.
These competitive advantages allow Amazon to sell their goods at lower prices and provide more discounts in order to create customer satisfaction. Amazon's longtime presence on the World Wide Web has created positive reputation and gives its customer a sense of security. Such advantages have made Amazon.com very difficult to compete against.
Amazon.com was founded by Jeff Bezos, whose confidence in World Wide Web even before the .com boom has proved to be critical for Amazon's past and current success.
Section (II) - Google's Business Model
"Basically, our goal is to organize the world's information and to make it universally accessible and useful." -Larry Page, founder of Google.
"Obviously everyone wants to be successful, but I want to be looked back on as being very innovative, very trusted and ethical and ultimately making a big difference in the world." -Sergey Brin, founder of Google.
Google is a highly successful business best known for their World Wide Web search engine. Google has been able to broaden the scope of their business ever since it was founded in 1998.
Google, from the advent of their business chose to ignore conventional methods in designing their business. During the .com boom, Google, unlike its competitors who invested million in brand building, discreetly decided to just build a better internet search engine. News spread, largely due to word of mouth, of Google's superior search capabilities. Thus, search services became one of their main business ventures.
The primary source of revenue for Google is AdWords. It is an advertising platform which uses a pay-per-click system. It is helps companies advertise their products and services, worldwide.
The key to Google's success in the search engine market are due to many factors:
Google introduced the search engine with a clean, simple, and with a minimal user interface. This was a key element for people with slow internet connections.
Google had good understanding of the human perception.
Google was faster and more reliable.
They introduced smart but risky business models such as AdWords. It proved to be a successful venture.
Soon after, Google quickly introduced many impressive new products, such as Gmail, Google Checkout, Google Earth, etc.
All in all, Google's success lies with their unconventional ways of doing business and risky undertaking.
Section (III) - British Sky Broadcasting's Business Model
"Choice, Flexibility, Quality, Control - These are the key elements of the Sky customer experience. This year we've built on these strengths while also investing our efforts in ensuring that the business is well equipped in a marketplace that is evolving rapidly." -James Murdoch, CEO of British Sky Broadcasting.
British Sky Broadcasting is a United Kingdom based pay television and Internet Service Provider. They provide their services in UK and Ireland. Sky commissions and acquire programs to broadcast their own channels and supply some of those channels to other ISP and cable operators for retransmitting to their subscribers.
Sky Broadcasting has several products for both its own retail channel and the third parties' such as:
Sky Mobile TV
Digital Subscriber Line (DSL) connectivity
In 2004, Sky and its subsidiaries introduced a new long-term strategy to increase the number of subscribers, as they plan primarily to maximize shareholder value. Sky believes that the pay television sector in UK has great potential for growth.
For their future success, Sky focuses on innovation as their core business model. According to Sky, customers ultimately choose its services because of the 'choice' Sky provides. As stated by the CEO of Sky, the user's freedom in choosing and controlling comes above all else, and Sky hopes to provide freedom with as much flexibility and quality as possible.
In September 2010, they acquired Virgin Media Television.
Sky aims to be the best in the entertainment market. They plan to reach these targets with innovation, good quality programming and superior customer services.
Section (IV) - Microsoft's Business Model
"As we look ahead into the next century, leaders will be those who empower others." -Bill Gates, chairman of Microsoft (non-executive).
Microsoft is a company best known for their line of Windows operating system. Right from the start, Microsoft has created software that can be used by customers without extensive support, services or training. Windows currently used by millions around the world as it can be easily used by inexperienced beginners and tech-enthusiasts alike.
Microsoft employs a high volume but low cost business model. It is also helps and supports development of the local economy.
Microsoft aims to empower its customers with innovative and creative solutions to business problems, as Microsoft believes they have the greatest potential to serve them. They have five business divisions:
Windows and Windows Live Division -responsible for Windows family products and relationship with other personal computer manufacturers as well as online Windows Live services.
Server and Tools -provides solution and services for Microsoft software server products.
Online Services Division -supports Microsoft's online advertising platform as well as Bing and other MSN services.
Microsoft Business Division -responsible for the Microsoft Office suites.
Entertainment and Device Division -supports entertainment systems; Xbox systems, hardware and accessories, Live! Connectivity. Zune multimedia device, etc.
In recent times, Microsoft's business model has been greatly threatened by the introduction of open-source software development platforms. In this case, one of Microsoft's greatest threats comes from Google, whose push for open-source platforms have been largely successful.
"Microsoft is not about greed. It's about innovation and fairness." -Bill Gates, chairman of Microsoft (non-executive).
Assignment - TASK 2
Part (A) - What is a Business Case?
A business case can be described as a document that states the reasoning for launching or initiating a task or a project. A business case document may come in various forms, for example, a presentation or a short verbal argument. It is usually a well-structured document.
This document can also be used as a decision-making tool to determine how profit-generation or cash-flow will be affected by undertaking certain decisions over a period of time. Special attention is paid to Internal Rate of Return or IRR.
"An explanation of how a new project, product, etc. is going to be successful and why people should invest money in it." -Definition from Longman Business English Dictionary.
A business case document should logically describe how when undertaking a certain task or a project support the business' needs and justifies the effort that would be spent on it. Both the quantifiable and the unquantifiable characteristics are record in a well-designed and persuasive business case.
"Innovation comes only from readily and seamlessly sharing information rather than hoarding it." -Tom Peters, co-author of "In Search of Excellence".
A business case document can also be considered to be a way of sharing information within the company. By communicating the proposer's idea to the entire organization, information sharing is improved. This document is usually built or owned by company stakeholders or sponsors, instead of project managers.
Business case documentation can range from highly formal, well-structured and detailed documents to brief and informal. A comprehensive business case should contain the following information:
the project background
expected project costs
expect benefits to the business if project is undertaken
a section for GAP analysis
The business case should be reviewed at various stages of the project or task to ensure that the undertaking of the project is still justified and if the continuing will deliver the solution the business needs in time. Reviewing the business case may result in the organization amending or terminating the project if it's not feasible.
Part (B) - Outlining Business Cases
Section (I) - The Samsung Galaxy Tab
The Samsung Galaxy Tab is a Google Android based compact-tablet computer. The primary purpose of this product was to compete with the Apple iPad. The Galaxy Tab offers features that are quite similar to the iPad, for example, a large, multi-touch capable capacitive touchscreen, Internet browsing, etc.
There is a large and lucrative market for tablet computers. A tablet is a product that usually positioned between a laptop and smaller devices such as, a smartphone. The primary advantage of using a tablet is that they are really light, run cool and have no mechanical parts such as fan, etc. A tablet is really handy when reading e-books or newspapers, digitally.
The Galaxy Tab has numerous advantages over the iPad, such as:
GSM/voice network support - The Galaxy Tab supports full mobile telephony through the GSM network. The iPad can only use the data line for mobile internet access.
Has two cameras - While the iPad does not come with any form of camera, the Galaxy Tab features two camera, front facing and rear facing. The front facing camera can be used for video calls.
Storage expandability - The Galaxy Tab features a memory card slot that can be used to expand the storage to required amount. The iPad has fixed storage amount.
Multi-Tasking - By utilizing Google Android's latest platform, the Galaxy Tab give its users the ability to multitask.
Lighter, better out-of-the-box video playback, has more RAM and support for Adobe Flash content, etc.
The iPad also has its own benefits over the Tab, for e.g. larger LED based screen with slightly higher resolution, the giant Apple App store, etc.
Although, the iPad and the Galaxy Tab are competing products, the goals are pretty much the same. While Samsung has to prove to most of its customers the strengths of the Tab, Apple, on the other hand, has a huge fan base and customer following which has helped greatly in the iPad's sales numbers.
The benefit of introducing the Galaxy Tab is that the market now has a real alternate solution to the Apple iPad. Customers are no longer tied down to a single choice when shopping for performance tablets. Observing the benefits of introducing performance tablets in the markets, many other competing companies decided to introduce their own products as well, with their own proprietary hardware and operating systems, while having their own individual benefits.
The next generation Galaxy Tab is already in works at Samsung's. It is rumored to feature Samsung's award-winning SuperAMOLED touchscreen which was, much to the disappointment of the customers, absent from the current Galaxy Tab.
Section (II) - The Floating Bridge
The Floating Bridge is one of Dubai's prides. The bridge cost the Government of Dubai a sum of 155 million Dirhams which is around about 42.2 million US Dollars. The bridge is also a technological marvel as it 'floats' on the water and is also built for heavy traffic and rush hours.
A business model for the Floating Bridge should include its many features and benefits.
This project was initiated by the Dubai RTA (Road and Transport Authority) and was launched in 16 July 2007 as fifth crossing on the Dubai Creek. As Dubai is quite a busy city, such alternate routes are necessary to alleviate the large traffic congestions on the other routes. Along with the Floating Bridge, there are total five crossings across Deira and Bur Dubai. The others are as follows:
Al Shindagha Tunnel
Al Maktoum Bridge (Salik Toll System)
Al Garhoud Bridge (Salik Toll System)
Business Bay Crossing
The Floating Bridge also provides as one of the toll free routes, to and fro Deira and Bur Dubai. The RTA specifically opened the Floating Bridge, two weeks after the launch of Dubai's toll system called Salik. While the Maktoum Bridge requires motorists to pay tolls, however, the Floating Bridge is free and is parallel to the Maktoum Bridge. The Floating Bridge is estimated to have reduced 37% of the traffic on the Maktoum Bridge.
The Floating Bridge is probably most used crossing out of the five. This mostly due to the bridge, having been well placed and Salik-free. Furthermore, the Floating Bridge has a heavy traffic capacity. The RTA rates it as 6000 vehicles per hour through six lanes (3000 in each direction, through three lanes).
The bridge is opened daily to allow boats to pass through. This is done during off hours between 2200 hours to 0600 hours.
The Floating Bridge was opened with much fanfare. The traffic conditions in Dubai are quite an issue for motorists, so the launch of a new, free route was widely welcomed. The government of Dubai built the bridge to generate public well-fare and reduce accidents due to heavy traffic on busy crossings.
Even though the Floating Bridge is a technical marvel, it is still a temporary bridge. The Floating Bridge is stated to be replaced by RTA with a new and even larger bridge called the Dubai Smile. Some of the benefits and facts of Dubai Smile:
The project is estimated to cost 810 million Dirhams (approx. 220.5 million US Dollar)
Said to have twelve lanes (six in each direction, with footpaths)
To have a rating of 24,000 vehicles per hour
The project is to be completed by 2012
The business case of the Floating Bridge should include all of the above and facts and benefits.
Assignment - TASK 3
Part (A) - What is Human Capital?
Human capital is the set of skills that an individual (or employee) learns or acquires through his/her job, training or other career experiences which determines and/or increases his/her value in the marketplace. The human capital skills contain but not limited to the following:
knowledge and experience
"Did you realize that approximately 42% of the average company's intellectual capital exists only within its employees' heads?" -Thomas Brailsford, Research Manager @ Hallmark Cards.
Human Capital is seen as an important growth factor by modern growth theory. It is a capital that is not owned by the organizations or the business owners. It is owned by the employees in the market. The company hires human capital for their business operations.
Human Capital can be viewed as a time based asset. For example, employees start work at 8am to 6pm. The company only has the human capital for as long as the employees remain in the company.
"The biggest tragedy in America is not the waste of natural resources, though this is tragic. The biggest tragedy is the waste of human resources." -Oliver Wendell Holmes.
Time perspective human capital and human capital risk can be categorized in the same way and in the same key activities:
Knowledge Activities (activities of one individual)
Collaboration Activities (activities of more than one individuals)
Process Activities (knowledge and collaboration activities that are generated by the company's organizational structure, e.g. company policy)
Absence Activities (annual leaves, sick leaves)
Part (B) - Importance of Human Capital in Consultancy Organizations
The concept of Human Capital is a complex and cannot be easily described. The importance of the concept is as large as concept itself. As mention earlier in the previous part, the human capital is set of skill acquired by an individual. It can also be described as the individual's professional experience.
A KPI is a baseline that is set by an organization when evaluating what skills are required by the individual that the organization needs, as many individuals possess different types of skills. For this to happen, an organization or a company needs to understand what skill they require in an individual. This requirement is then properly communicated to the people who are responsible for interviewing or hiring from outside (e.g. Human Resource department). Sometimes large organizations utilize computer-based decision-making system to help in this regard.
These systems are also used in consultancy agencies looking to increase their business productivity. An HCI or a Human Capital Intelligence system can be used by the organization in their plan for strategic growth. The decision making system can help in regards to hiring the correct person with the prerequisite behavior requirements. It also is used to determine who requires training and in what way to increase their productivity and efficiency. This creates a KPI or Key Performance Indicators for the company, so it is easier for them to compare potential candidate to the KPI baseline and determine who is the most suitable for the job and if they are required to train and how much should spent on training the new employee before he/she starts. Consultancy organization managers can use HCI system to recognize market trends and company needs, thus managing the human capital resources more effectively.
HCI systems effectively increase overall company productivity. The better decision making increases employee morale organization wide. This will increase their productivity increase competition against their rival organizations. Collaboration and teamwork increases and these characteristics attract innovation and new talents. Better decision making will determine if the company survives an economic or market recession.
But the organization should not helplessly depend on the HCI system. Human consideration should also be taken into account. The HCI will select the most qualified individual, but sometimes that is not what the organization may require. A less qualified individual may selected for his/her personal skills and the organization may spend a small amount towards training. This course of action may lead to better results than hiring the individual with a high qualification but with lower personal skills.