Organizations tend to try to operate more than one business model at a time. Moreover, this may be devilishly difficult. When organizations work more than one business model often, they tend to fail. However, situations, where companies need to address different customer segment, needs it may require a business model for each customer segment. For an organization to outdo competitors or forestall its distributors in the market, for it to expand into new markets and make efficient use of its fixed assets it may require a couple of business models to operate their operations. This article discusses the need to have more than one business model as well as the challenges of managing multiple models.
The geographical scope of this article is not restricted to only IBM and Compaq. It focuses on business as a whole in whatever region they are operating in; every organization needs effective business models that complement each other to reinforce and turn unviable possibilities into profitable opportunities.
Key Findings and Contributions
Nowhere have the perils of running tandem business models been more evident than in the airline industry, LAN Airlines flourishes by running three distinct operations at the same time. The Chilean carrier has thrived by integrating a full-service international passenger airline business model with an air cargo business while separately operating a no-frills passenger model for domestic flights.
Since the introduction of using more than one business model, LAN has had a growth in its revenues; it has steadily raised its annual profits. It has also been able to succeed where its rivals have not, through a suitable appreciation of the way different business models relate to one another. Throughout the article, it is evident that companies should recognize which models are substitutes and need to be kept separate to avid conflicting and those that complement and strengthen each other to have a competitive advantage to its competitors.
Evaluation and Suggestions
The article states the benefits of having more than one business model in an organization. Having more than one business model helps in the diversification of revenues and profits. Organizations can utilize their physical assets effectively as well as reduces threats that may come from new entrants. Organizations, where they use tandem business models, can have an advantage in having additional investments, greater employee flexibility and broader organizations skills which are beneficial to their operations.
The article addresses some of the challenges that may result from having more than one business model. It properly supports the idea that when business models are substituted are bound to conflict; it is also stated that managing different business models may be difficult, which may need to train employees. It, however, states the significance of differentiating business models that complement and those that substitute. The article focuses on two important questions; to what extent do the business model share major physical assets and to what extent the resources and capabilities result from operating each business model compatible?
The article is well articulated and can be used by researchers tending to learn on why it is necessary to have more than one business model. The objectives of this article are stated, and researchers can easily find information in which they are interested in. facts are supported making the article of great use to the researcher.
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