Business Models as Value Proposition and Set of Capabilities and Resources

Discuss about the Enabling Service Innovation for Dynamic Capabilities.

The paper is mainly highlighting on the literature considering the facts about the business model and the disruption. It should also be explaining the opportunities and the threats which are caused due to the development and implementation of the smart connected products in the existing business model of Commonwealth Bank Australia. It should be focusing on the analysis of the existing business model in the context of business model as value proposition and the business model as the set of capabilities and resources. It should also be concluding about the importance of the existing business model along with the future of the business for the organization under study as well.

According to Bock et al., (2012) the business model is termed as the model which is useful in making the strategic decisions makers in the organizations to take effective decisions on the operations. There is the effective utilization of the internal resources and the external capabilities for any companies operating in any sector. The business model for any organizations laid the foundation in the assessment and reviewing of the specific revenue generated as well the profitability of the firm (Amit & Zott, 2012). The business model is essential in the effective operation of any organizations and for competing against each other. Most of the organizations from time to time have been changing their model of business due to the external pressures coming and disrupting the operations of the business (Serrat, 2017). So most of the organizations are trying to include functionalities and value based operations in their model of business by which they can be able to compete and stay at the top most position within the market. They are trying to make the model to be innovative and lucrative for the shareholders so that the return on investment and the revenue generated should be highest.

The disruption is the term which is associated with business model in common. The term disruption is defined as the breaking down of the business model of any organizations due to the changing internal and external pressure affecting the operations of any organization (Schneider & Spieth, 2013). It is seen that globalisation has a high impact on the operations of the business with the rapid development of the technology. Due to the rapid development in the technology there are changes to be done on the business model and most of the organizations are feeling the pressure and negative outcome of changing the business model and making them innovative which might leads to total disruption of the model (Schneider & Spieth, 2013). The organizations are trying to develop new ideas and want to incorporate in the business model. It is seen that with the changes in the operations and the strategies to be developed by the different organizations, there is always change in the business model to be expected and this makes the business model to be innovative and resilience as well. So organizations trying to develop an innovative business model which often disrupt it and develop from scratch which might not be feasible in the future.

The Disruption of Business Models

Leih, Linden & Teece, (2014) state that the business models which are basically applied in most if the organizations are not so much flexible and streamlined which was in the past. The disruption in the business model is due to the fluctuations in the internal as well the external environment and the other causes have an influence on the operations and strategies of the business organizations.

The smart connected products have the great influence or the impact on the existing business model for the organization Commonwealth bank Australia. The smart connected products are basically the physical product which is interfaced with the software items and they have been producing results for the organizations on a positive note (Massa & Tucci, 2013). This indicates that they are quite useful for the development and improvement of the existing business model for any organizations.  The smart connected products could be the examples of the sensors, software used for developing and streamlining the operations installed at the computer systems, the smartly operated machines or systems which are operated and used by the banking institutions for the different banking operations (Massa & Tucci, 2013). So the smart connected products provide great opportunities for the development and improvement of the existing business model of Commonwealth bank Australia. The smart connected products help in making innovation in the business model with the added functionalities or operations to be incorporated in. It is also seen that the smart connected products provides flexibility and streamlining of the different operations laid down in the business model for the organization under study (Kindström, Kowalkowski & Sandberg, 2013). The smart connected products are also making the bsuienss model of the bank to be understood and make it profitable for the shareholders involved in the organization. The smart connected products makes the business model innovative and stable with the added functionalities and features of the services and products the bank delivers could be made (Leih, Linden & Teece, 2014). It is also seen that the smart connected products provides the opportunities for the existing business model to add proper utilization of the products as well make the business model to improve the business performance for Commonwealth bank Australia.

The threats which are caused due to the smart connected products in the existing business model of Commonwealth bank Australia is that the services which the ban provides might be changed and it could not be understood by the customers and the employees working in the different branches in Australia (Bock et al., 2012). The smart connected products might develop technological flaws in the business operations due to the smart connected products are implemented. The smart connected products implemented in the existing business model might proved to be negative for the understanding of the staffs working in the different branches of the bank as they might not get the idea of how to deal with the changing business model by the organization (Kindström, Kowalkowski & Sandberg, 2013).

Smart Connected Products and the Existing Business Model of Commonwealth Bank Australia

Osterwalder & Pigneur, (2010) stated that the business model canvas is essential in the representation of the business model of any organization. It is the visual representation of the script by which any organization could be able to streamline their operations and finds out ways of completing the operations (Osterwalder & Pigneur, 2010).

It is composed of nine blocks which has the elements like the key partners, key activities, value propositions, customer relationships, customer segments, key resources, channels, cost structure and revenue streams (De Reuver, Bouwman & Haaker, 2013). The key partners are investment partners, financial market, suppliers, sponsorships and regulatory agencies. The key activities are risk assessment, providing loans, securities, customer service, investments, financial advisory and asset management (Gobble, 2014). The value propositions are excellent customer service, expertise, mortgage lending and credit cards, safety to the banking services and innovative culture. The customer relationships maintained by the bank by online banking, account management, personal services, trust, reputation and 24/7 atm. The customer segments are individuals, SMEs and business and governments. The key resources are 51,800 people in 11 countries, 1350 branches, efficiency ratio of 41.8 percent. The technological infrastructure, experienced and talented staffs, brand and tradition are also their key resources. The channels are internet, mobile devices, Home Commonwealth bank Australia, ATM services and business representatives. The cost structure is tax, staff compensation, customer satisfaction, IT infrastructure maintenance and financial costs. The revenue streams are financial revenues, retail banking, commercial banking, investment management, mobile banking, investment management and revenues shared on profits of the customers.

The business model will help in investigating and resolving the issues of the customers paying them the utmost respect and ensure that the integrity of the bank will be maintained (Schneider & Spieth, 2013). This provides them the value of the services they provides it. The customers also get the value with the wide range and high quality of banking services to be adopted by them which is influencing the mindset of the customers (Serrat, 2017). The customers with the existing business model could be able to improve their level of satisfaction as there is reliability and convenience to be developed through their quality services. The business model helps in making the services to be innovative which adds value to the customers as they should be getting the services at the right time and without any delay (Gobble, 2014). The business model will also be providing safety to the banking services they are providing it to the customers.

Opportunities and Threats

The Commonwealth bank of Australia with its innovative and changed business model could be able to generate higher revenues with the reduction in the operational costs of the bank. They have the potential of developing an improved work environment where the employees are fully dedicated and contribute towards the betterment of the branches they are in Australia (De Reuver, Bouwman & Haaker, 2013). They also have the skilled and talented workforce who could be able to provide high quality and ethical services to the customers by which customer satisfaction level could be measured (Amit & Zott, 2012). They have the potential of providing wide range of services like the home loans, personal loans, bank accounts, credit card services and many more and make the customers very much happy (commbank, 2018). The existing business model also helps in making the operations to be made across the globe helps in attracting and managing huge customer portfolio (Euchner, 2016).

Conclusion

It is evident that the existing business model of Commonwealth bank Australia needs to be changed and it should be innovative in order to compete with the other banks situated in Australia and across the globe. It concludes that the improved business model is useful in developing and making the banking operations and services to be streamlined and flexible. It is also evident that the smart connected products implemented for the smooth running of the business operations of Commonwealth bank Australia is maintained at the highest level. It is concluded that the future of the business for Commonwealth bank Australia is highly encouraging and stable.

References

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Massa, L., & Tucci, C. L. (2013). Business model innovation. The Oxford Handbook of Innovation Management, Oxford University Press, Oxford, 420-441.

Osterwalder, A., & Pigneur, Y. (2010). Business modell generation. Hoboken, NJ: Willey.

commbank.(2018). Commbank.com.au. Retrieved 20 April 2018, from https://www.commbank.com.au/

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Schneider, S., & Spieth, P. (2013). Business model innovation: Towards an integrated future research agenda. International Journal of Innovation Management, 17(01), 1340001.

Serrat, O. (2017). Business model innovation. In Knowledge Solutions (pp. 499-507). Springer, Singapore.