A business model refers to the reason behind how an organization develops, delivers, and captures worth, in various social, economic, cultural or otherwise contexts. The process of business model development and modification constitutes a significant portion of organizational strategy and is often referred to as business-model innovation. This strategic approach is frequently used to improve the quality of service delivered by organizations, in light of changes in consumer preferences for the types of services that are offered. Business models may also help to explain why certain types of organizations have achieved success, while others have not.
Different types of business models are based on different assumptions about what drives them. Some assume that customers want to be treated as self-sufficient entities, with their own demands and expectations about the value of a product or service. Others assume that customers behave as homogenous units, who make the same purchases in the same circumstances and at the same rates. Still others assume that customers are capable of making price comparisons across different types of products and services and that the prices they pay to reflect their true value. Still yet, there are some that believe that customers do not have prices or purchasing power, but rather only a right to purchase whatever is being sold to them at a particular price.
The primary objective of applying any business model, therefore, is to identify a relevant business idea, and then exploit it for the purpose of maximizing the value of that value. However, a business need not adopt one method necessarily. Adapting different approaches allows a business to change its ways of doing things and reap more profits. For example, a retail merchant can adapt to changing consumer demand by offering different types of products to suit the varying needs of different groups of buyers. Similarly, an online merchant can use the different methods of payment processing used by different shoppers to create more convenient and better business models.
A standard business model assumes that prices will stay fairly constant and continue to increase, but this is actually a problem. As competition increases, prices start to drop, and it becomes difficult for the small business to remain in business. With such challenges in hand, it becomes necessary for entrepreneurs to look for solutions where they can cut costs while increasing profitability.
One solution that is being adopted by retailers is the adoption of IKEA’s “stores on the internet” concept. This concept enables online stores to adopt all the benefits of a traditional IKEA store, with the added benefit of lower cost and more efficient distribution channels. With the introduction of “stores on the internet”, more customers have the opportunity to make use of IKEA’s catalogues and visit its online stores to make their selection. In fact, it has been proven that such strategy has been effective in increasing sales, especially during the holidays season when conventional retailers suffer from heavy inventory replenishment requirements.
It is important to adopt a unique IKEA business models that will provide you with the opportunity to benefit from its worldwide network of stores. Many businesses, however, do not take into account the benefits that IKEA can bring to their organization. In fact, many companies who rely on IKEA’s traditional business models will fail to realize the significant profit that they can get from using IKEA’s unique marketing strategies. Thus, it is important that you carefully consider all aspects of your business and consider all possible options before you choose the one that is best suited for your organization.
