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Approaching Business Models from an Economic Perspective examines business model logic and explores the model from different aspects including definition, design, functionality, elements, and self-sustaining logic. It explains the essence and core elements of a business model and unlocks its mysteries, helping transform business model practices into an expedient set of theories that in turn facilitate application in real scenarios. The book explores the logic behind the six major elements and enables entrepreneurs to study and implement business model theory and make decisions confidently based on a compelling logic. Moreover, it demonstrates through an array of convincing examples that a transaction structure and its six elements follow the principles of increasing transaction value, reducing transaction costs, and mitigating transaction risks.
Table of Contents
1 Introduction: The Business Model and Transaction structure.- Transaction Value, Costs, and Risks in the Transaction structure.- The Six Elements of a Transaction structure.- From Discovery and Reconstruction to Interpretation and Competition and Design.- 2 Business Models and Transaction Value, Costs and Risks.- The Business Model: A Transaction structure for Stakeholders.- Maximizing Value with a Superior Business Model.-Dynamic Business Model Analysis.- The Six Elements of a Business Model.- Relationships and Differences between Business Models and Other Management Theories.- 3 The Business Model with Minimal Transaction Costs.- A Good Place to Start: Rural Cooperatives.- Production: Supplier Cooperative – Aalsmeer Flower Auction.- Service: Customer Cooperative – CUMA.- Service: Customer Cooperative –MIGROS.- Financing: Customer Cooperative – Rabobank.- The Second Example: Housing Cooperatives in Sweden.- The Third Example: Mondragon - Employee Cooperatives.- The Fourth Example: Various Non-Profit Organizations (No Owner).- The Fifth Example: Another Type of Charity Organization – Social Business.- Business Tradition in Shanxi – A Trade-off between Market Transactions and Ownership Transfer.- Business Model vs. Structurally Competitive Advantages.- 4 Business Model Positioning and Strategic Positioning.- Strategic Positioning and Marketing Positioning.- Business Model Positioning: Ways to Satisfy Stakeholder Needs.- Business Mode Positioning Analysis I: Property Transferring Rights.- Business Mode Positioning Analysis II: Transaction Process.- Business Mode Positioning Analysis III: Products, Services, Solutions or Profiting Tools.- 5 Profit Model One: Fixed-Income, Remaining-Profit and Profit-Sharing.- Fixed and Variable Contribution of Resources and Capabilities.- Fixed-Income, Remaining-Profit and Profit-Sharing Models.- Element One: Transaction Value.- Element Two: Transaction Costs.- Element Three: Capability to Bear Risks.-How to Determine Profit Models.- Combination of Profit Models.- Competition between Profit Models.- 6 Profit Model Two: Admission, Toll, Parking, Fuel and Sharing Fees.- Do They Create New Transaction Value?.- Do They Bring Down Transaction Costs?.- Do They Reduce Transaction Risks?.- Structural Differences based on Vendor Strength.- 7 Profit Model Three: Combined Pricing.- Product-Combined Pricing.- Two-Tier Pricing.- Razor-Blade and Blade-Razor.- End to End (E2E) Solutions.- Supermarket Shelf.- Consumer-Combined Pricing.- Cross Subsidization.- Batch Pricing.- Time-Of-Use Pricing.- 8 Profit Sources.- Which Resources and Capabilities Yield Profit?.- Who Create Profits?.- From PM0 to PM"x": Building a Value Ecosystem for Stakeholders.- Flexible Shifts Between Cost and Profit.- 9 Creating Value through Key Resources and Capabilities.- What Are Key Resource and Capabilities?.- How are Resources and Capabilities Obtained?.- How can High Value be Created with Key Resources and Capabilities?.- 10 Cash Flow Structure and Endogenous Finance.- Cash Flow Structure and Transaction Value, Costs and Risks.- Cash Flow Structure: Indicator of Dealing Structures.- Cash Flow Structure: Basis to Design Financial Tools.- Business Model and Endogenous Finance.- Appendix: Economic Definitions of Financial Tools.- 11 Platform-Based Business Models.- The Platform: More is Better.- Why choose a platform business model?.- Platform Profit Model: Sources of Income and Pricing Modes.- Sources of Income.- Pricing Mode.- Competition and Evolution for Digital Media Platforms.- 12 The Soft Integrated Business Model.- Soft Vertical Integration: BP Solar’s Strategy.- Soft Industry Chain Integration: Gold Wind’s Business Model Evolution.- Resources and Capabilities Required for ‘Soft Integration’.- Annex: Driving Factors of Integration Strategy.