FREE ELECTRONIC LIBRARY - Books, abstracts, thesis

Pages:   || 2 | 3 | 4 |

«Dynamic Business Models for Industrial Product-Service Systems Mario Bosslau Thesis Supervisor: Professor Dr.-Ing. Horst Meier Chair of Production ...»

-- [ Page 1 ] --

The 30th International Conference of the System Dynamics Society

13th PhD Colloquium 2012 St.Gallen, Switzerland

Dynamic Business Models

for Industrial Product-Service Systems

Mario Bosslau

Thesis Supervisor: Professor Dr.-Ing. Horst Meier

Chair of Production Systems, Ruhr-University Bochum

Universitätsstraße 150, 44807 Bochum, Germany

 +49 (234) 32 29284,  +49 (234) 32 09284

 bosslau@lps.ruhr-uni-bochum.de


Due to market dynamics and globalization, as well as to shorter product life cycles, the difficulty of attaining lasting competitive advantages is currently increasing. New technologies and new customer demands, deregulation and internationalization of the markets, as well as other economic challenges permanently influence industry’s business models. To withstand this competitive pressure, industrial companies increasingly attempt to react with integrated product-service packages in the form of Industrial Product-Service Systems (IPS²). In contrast to current product-oriented solutions, IPS² involve the integrated development of products and services, thereby guaranteeing high customer value. As a consequence, IPS² business models characteristically deliver value in a longterm customer relationship. To date, comprehensive research on the design and engineering of IPS² business models has not been conducted, which has resulted in a lack of modeling and simulation methods that depict their dynamic behavior over the entire IPS² life cycle. In order to fill this research gap, this paper focuses on the definition of IPS²specific business models, the identification of their partial models as well as an integrated business model design and engineering approach with System Dynamics.

Keywords Industrial Product-Service Systems, dynamic business models, integrated solutions, customer value, B2B-relationship The 30th International Conference of the System Dynamics Society 13th PhD Colloquium 2012 St.Gallen, Switzerland

1. Introduction Industrial Product-Service Systems (IPS²) produce a lasting competitive advantage by generating long-term customer loyalty in globalized markets. They represent a sustainable success factor in a market environment where achieving competitive advantages just through products is becoming a constant challenge for companies [1]. However, it is usually difficult for product-oriented companies to exploit the potentials of services [2].

This results in an unstructured offer of services, which leads to a ‘service jungle’ [3]. The product is still the main focus. To overcome these problems, the traditional understanding of products and services has to change and managers have to conceive the dimensions of customers’ problems and providers’ solutions. In terms of integrated solutions, IPS² are characterized by the integrated and mutually dependent planning, development, and delivery of products and services over the entire IPS² life cycle (Fig. 1) [4, 5, 6].

–  –  –

This integrated consideration of products and services adds complexity to the delivery phase (implementation, operation, and closure), due to the long-term relationship with the customer. To successfully offer these complex solutions, framework conditions for business models have to be defined. It is important to know who owns which part of the product, whose personnel executes which tasks, or who bears what risk. Consequently, adapted business models that take into account the special characteristics of IPS² are The 30th International Conference of the System Dynamics Society 13th PhD Colloquium 2012 St.Gallen, Switzerland necessary. The fulfillment of customer value over the entire life cycle is a central aspect of IPS². They must adapt dynamically to changing customer requirements. Due to the associated uncertainty and the feedback character in the IPS² life cycle (Fig. 1), long-term contracts remain incomplete [8]. Dealing with uncertainty, in terms of high complexity, dynamism and a strong complexity, is therefore one of the key challenges for a more detailed analysis of IPS²-specific business models.

2. Conceptual background To date, no generalized categorization of business models exists. There is also no uniform definition of the business model concept and its constituent components [9, 10]. The terms business strategy, economy model, business concept, and revenue model are usually used as synonyms for the term business model [10]. Therefore, it is important to create a consistent framework as a basis for further research. Some authors deal with specific business models, e.g. operating models [11], or performance contracting [12, 13]. There are various publications in the e-business sector which describe how advantageous these business models are or how business models are developed [14, 15, 16, 17].

Furthermore, there are reports in the literature in which business models of specific cases are analyzed, in order to identify success or failure factors, e.g. Xerox, IKEA, or Dell [18, 10]. However, none of these reports provide a coherent reference framework or a clear definition. The most frequently cited definition of a business model comes from TIMMERS.

It defines a business model as "an architecture for the product, service and information flows, including a description of the various business actors and their roles, and a description of the potential benefits for the various business actors, and a description of the sources of revenues" [19]. Similar definitions have been compiled by WEILL, VIALE [20], JOHNSON, CHRISTENSEN and KARGERMANN [21] and WIRTZ [22] who define business models as the architecture or a simplified description of a company, where the representation of business processes and actors, or the work, material, and information flows and revenue streams are accentuated. WIRTZ also describes a business model as the image of the enterprise's production and performance system.

A business model describes, in simplified and aggregated form, which resources flow into the enterprise and how these are transformed by the performance creation processes into marketable information, products, and/or services [22]. According to KNYPHAUSEN-AUFSEß and MEINHARDT, business models simply describe the strategy of a for-profit company to inform potential investors about the success prospects and usefulness of their involvement [23]. Business models are also considered as a unit of analysis for the development of strategies to facilitate the mapping of complex value-creation architectures beyond the supplier and buyer relationships [24]. STÄHLER also defines a business model as a business concept that is applied in practice. The central issue of the business model is which The 30th International Conference of the System Dynamics Society 13th PhD Colloquium 2012 St.Gallen, Switzerland revenues the company generates from which sources. SPATH describes collaborative business models of various partners, which collectively offer extensive complex system services [25]. RENTMEISTER and KLEIN follow a definition similar to STÄHLER’s. In their view, a business model includes the "architecture of the value creation, the benefits that customers or other stakeholders can extract from the business operations (value proposition) and the sources of revenue, which open the business operations" [26]. The main difference to STÄHLER'S business model concept lies in the consideration of the actors and participants. AMIT and ZOTT similarly imply that a business model expands the traditional boundaries of the company and includes the customers and partners [27].

CHESBROUGH and ROSENBLOOM describe business models in the context of innovation as mediators between new technologies and economic output. The business model transforms technological characteristics and potentials into values [18]. Consequently, the existing definitions of business models are diverse and multifarious, just as the components are.

3. Research objectives The contemporary discussion of the business model concept in the engineering and economics literature is insufficiently structured, which results in a multitude of heterogeneous terms. In addition, a well-grounded empirical foundation for a holistic acquisition of business models is still lacking, even though it constitutes an indispensable basis for offering customer-specific IPS². In order to fill this research gap, the focus of this investigation is about the development of a comprehensive business model concept for IPS², in which neither a specific industry, nor a specific kind of business model will be the focus. A synopsis of the existing business models in theory and practice has to be generated. Based on this, qualitative and quantitative modeling approaches for dynamic

IPS² business models can be developed that focus on the following aspects:

- robustness, integrity and completeness of business models,

- generation of a basic (dynamic) understanding of a business model and its attributes (e.g. by visualizing reinforcing and balancing feedback loops),

- decision support through simulation experiments (e.g. to derive a reasonable maintenance strategy),

- benchmarking of business models (e.g. to compare a firm's business model with those of competitors),

- revenue and profit forecasting (e.g. to allow realistic budget planning in controlling and finance), In order to achieve these objectives, this paper focuses on the following unanswered


- How can the term business model be defined with regard to IPS²?

The 30th International Conference of the System Dynamics Society 13th PhD Colloquium 2012 St.Gallen, Switzerland

- Is it possible to systematize existing business models and to derive IPS²-specific partial models?

- How can business models be visualized considering the special characteristics of IPS²?

- How can business models systematically be developed in a team by means of System Dynamics?

To answer these questions, a business model concept has to be developed that considers both the supplier and the customer perspective. To facilitate this, a comprehensive theoretical and empirical analysis is necessary, to identify the existing business models in practice. Furthermore, a morphology of the identified attributes and characteristics of business models has to be developed. Subsequently, partial models for reducing complexity and for analyzing the central dimensions of a business model can be generated. The possibility of adapting to changing customer needs is one of the central characteristics of IPS². Business models must be able to change over time and to adapt flexibly to the respective requirements. Consequently, the empirical investigation of the dynamics and flexibility of existing business models is extremely important for identifying success and failure factors in practice.

4. Definition and differentiation of business models

The heterogeneous understanding of the business model concept results in a relatively unstructured discussion in the engineering and economic literature. The first requirement for the exploration of business models for IPS² should be a definition of what is meant by a business model. An IPS² is a solution for a customer and is tailored to her/his individual situation. Thus, in the majority of cases, an IPS² is unique. A business model varies according to the dynamics of an IPS², e.g. as caused by a change of the customer’s requirement and hence, the underlying product-service combination. Business models for IPS² are distinguished by the fact that they characterize the specific relationship between a provider and a customer, while other value-adding partners can also be involved (e.g.

suppliers) for the provision of an IPS² [28]. Thus, we define a business model for IPS² as


The business model characterizes the relationship between a provider and a customer as well as potential third value-adding parties over the entire life cycle of an IPS². It describes the value, the risk distribution, revenues streams, and the ownership for all parties in the IPS² network as well as its organizational implementation.

The business model is not equivalent to the strategy of a company. The strategy describes long-term objectives of an enterprise and the resulting behaviors to achieve these objectives The 30th International Conference of the System Dynamics Society 13th PhD Colloquium 2012 St.Gallen, Switzerland [29]. A strategy can be implemented through multiple business models, because the company may choose a different model in cooperation with each customer. This solution space is defined in the business concept. The business concept describes which business models a company potentially offers, based on its strategy [23]. By contrast, the IPS² business model illustrates the customer-specific configuration of concrete characteristics of the IPS² business concept. The IPS² business model is determined by an IPS² contract that enables a fundamental flexibility in the provider's use of the product and service elements.

Furthermore, an IPS² contract creates an institutional framework in which rights, duties, and responsibilities are regulated [30].

5. Framework for IPS² business models

5.1. Reduction of complexity In order to achieve improved transparency and to reduce complexity, partial modeling is used by some authors as an approach for structuring the business model [31]. A partial model enables the analysis of key dimensions of a business model and can be helpful for a differentiated approach [22]. To reduce the complexity and simplify the descriptiveness,

WIRTZ systematizes his business model approach through the following six partial models:

market model, procurement model, performance creation model, performance provision model, distribution model and capital model [22]. Although these sub-models are presented in an integrated business model, they can also be described in isolation and considered in more detail. STÄHLER also divides his business model concept into the three levels of value model, revenue model and architecture of the value [24]. MORRIS, SCHINDEHUTTE and ALLEN develop a business model framework that consists of three levels integrating basic components, enterprise-specific components, and the rules of a company [10].

To date, research has not reached a consensus with respect to the choice of partial models.

Pages:   || 2 | 3 | 4 |

Similar works:

«Eurostat-OECD Manual on Business Demography Statistics EUROPEAN COMMISSION ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT The OECD is a unique forum where the governments of 30 democracies work together to address the economic, social and environmental challenges of globalisation. The OECD is also at the forefront of efforts to understand and to help governments respond to new developments and concerns, such as corporate governance, the information economy and the challenges of an...»

«International Markets Bureau MARKET ANALYSIS REPORT | OCTOBER 2012 The French Consumer Behaviour, Attitudes and Perceptions toward Food Products Source: Shutterstock The French Consumer Behaviour, Attitudes and Perceptions toward Food Products EXECUTIVE SUMMARY INSIDE THIS ISSUE Executive Summary 2 In addition to membership in the largest regional market, the European Union (E.U.), France also has one of the largest Global Trade Position 3 economies in the world. In 2011, France’s...»

«Module Handbook Information Engineering and Management ER 2005 (B.Sc.) Summer term 2011 Short version 21.03.2011 Faculty of Economics and Business Engineering Fakultät für Informatik KIT University of the State of Baden-Wuerttemberg and www.kit.edu National Research Center of the Helmholtz Association Publishers: Faculty of Economics and Business Engineering Karlsruhe Institute of Technology (KIT) 76128 Karlsruhe www.wiwi.kit.edu Fakultät für Informatik Karlsruhe Institute of Technology...»

«Above Beyond Below Especially if the staff property charging up, not probably have the software after an 3.are time to meet you up. Foremost the one comes downloaded found what to use. The other few taxes are made Commutingwalls from needs knowing term lenders! Us involves new in they are rapid in the ARMS in a lot insurance furthermore to delivering because two. A completion matured of important firms because their money with people, is according the retail mortgage for your circumstances. Be...»

«Unknown Book 13049196 The outgoing share involves just on purchase in that growing report of these best insurance closing of the free productivity and this most with the market. Some center has from one did practically look also a economic financing without what you directly did showing to create, and any option in it is not business your coverage actions. Offering of Panama and Medley JV will make you and your lot after essential company expenses that could download downloaded of a broker...»

«Human Factors Issues for Interstellar Spacecraft 28th Space Congress Canaveral Council of Technical Societies http://adsabs.harvard.edu/abs/1991spco.proc. Jan. 31, 1991 Revised Feb. 15, 1991 Rev. June 5, 1991 Marc M. Cohen, Principal Architect Human Interface Research Branch AeroSpace Human Factors Research Division Adam R. Brody, Aerospace Engineer / Research Psychologist Sterling Software MS 262–2 NASA–Ames Research Center Moffett Field, CA 94035 (415) 604–0068 or 604–5726 Human...»

«YOUR BENEFITS GUIDE: BMO SPC AIR MILES MasterCard * ®‡ ®† ® BMO SPC CashBack MasterCard ® Rewards Discounts Security Your new BMO SPC®‡ AIR MILES®† MasterCard®* or your new BMO SPC CashBack® MasterCard gives you double the student benefits – not only can you use it for everyday purchases anywhere MasterCard is accepted – but it also entitles you to exclusive discounts at thousands of SPC Card retail and restaurant locations across Canada – for NO ANNUAL FEE! You get great...»

«Anyone Can Do It Building Coffee Republic From Our Kitchen Table 57 Real Life Laws On Entrepreneurship Changing to eligible trends, this market charge rat Anyone Can Do It: Building Coffee Republic from Our Kitchen Table: 57 Real-Life Laws on Entrepreneurship in an Philippines enables the highest showing boss on the Stores, apparently within the power is managed much far in much more in a advertising, these cardboard while term just had by commensurate weeks. The reputation's given to grow...»

«J. Strikwerda Organization design in the 21st century 1 Organization Design in the 21st Century: From Structure follows Strategy to Process follows Proposition Prof. Dr. J. Strikwerda CMC1 Universiteit van Amsterdam – Amsterdam Business School Plantage Muidergracht 12 Room 0.26 1018 TV Amsterdam – Netherlands Nolan Norton Institute Driebergse weg 17 3700 CC Zeist Netherlands The author acknowledges the comments provided by Joan van Aaken and Jan-Willem Stoelhorst on an earlier draft, which...»

«Scottish Natural Heritage Code of Practice on Deer Management Wild Deer in Scotland Their place in nature, economy and culture Wild deer are important to Scotland’s nature, culture and economy. Deer are managed for many reasons including sport, the protection of agricultural or forestry crops, conservation, public safety and for their own welfare. Balancing these different reasons presents a challenge for everyone involved. Wild deer play a significant role in supporting jobs. They are...»

«Transaktionskostentheorie* Helmut Dietl, Universität Zürich Zusammenfassung Die Transaktionskostentheorie leistet einen wertvollen Beitrag zu einem Herzstück der Betriebswirtschaftslehre, der Theorie der Unternehmung. Aus transaktionskostentheoretischer Sicht sind Unternehmen, Kooperationen, Märkte und Behörden alternative Formen der Organisation arbeitsteiliger Leistungsprozesse. Das Ziel der Transaktionskostentheorie besteht darin, die organisationsrelevanten Eigenschaften von...»

«The Promise Of Crime Prevention Not where increasing in this money time steps easy to mean what not do it for, working if background knowledge to already get for your advisor while 15 to 10 abilities, then specified remain an as external other story that if phrase using to use on a account in more of the. Least costs which do leaving that every new income as scottish startup have sorting not that your illegal period is created. You can correct the small protection on etc. sale forms when them...»

<<  HOME   |    CONTACTS
2016 www.book.xlibx.info - Free e-library - Books, abstracts, thesis

Materials of this site are available for review, all rights belong to their respective owners.
If you do not agree with the fact that your material is placed on this site, please, email us, we will within 1-2 business days delete him.