Michael Lewis (2000: pages 256-257) scoffed at the whole attempt to formalize the definition of business models when he wrote that "Business Model" is one of those terms of art that were central to the Internet boom: it glorifies all manner of half baked plans. All it really meant was how you planned to make money." In an abstract of his paper "A Mesoscopic Approach to Business Models: Nano Research on Management" published in "Economic Issues in China" Dr. Jun yi Weng stated that "Business Model, a well known important and extensively used term by media, management consultancy and business top managers, is just in an embarrassment that there is no consensus about its definition and few papers in academic periodicals." He designed and discusses his conception of business models based interfaces interacting in interior and exterior business environments. (See below) FIG 1 FIG 2 Peter Weill, Thomas W. Malone, Victoria T. D'Urso, George Herman and Stephanie Werner of MIT in their paper "Do Some Business Models Perform Better than others? : A Study of the 1000 Largest US Firms" agree that the concept of business models is while widely discussed is seldom systematically discussed.
The paper then proceeds to postulate a conceptual framework for comprehensively classifying business models. These consist of four basic types of business models (Creator, Landlord, Distributor and Broker), which are each broken down into four variants accordance with type of assets they deal in (physical, financial, intangible and human). Thus giving rise to 16 specialised business Model types." Professor Michael Rappa like many others prefer to present a comprehensive and cogent taxonomy of basic categories as observed on the web as follows: BrokerageAdvertisingInfomediaryMerchantManufacturer (Direct) AffiliateCommunitySubscriptionUtilityHe however, does not believe that these are exhaustive and expects new and interesting variations in the future. KM Lab Inc.
offers an interesting definition: "a Business model is a description of how your company intends to create value in the market place. It includes that unique combination of products, services, image and distribution that your company carries forward. It also includes the underlying organization of people and the operational infrastructure that they use to accomplish their work. In some ways it can be summarized as "how a company intends to make money just like Michael Lewis stated above, however, definition is not so elegantly constructed in that it is tentative and unsure preferring to stick to what it may include without weaving out a clarity of thought. However, this paper chooses this definition as theoretical perspective of analysis for this paper subject to the following modifications: A business model is overall framework and philosophy by which a company (intends or) creates value in the market place through enhancement of its own combination of raw or in-put materials to create products (tangible and intangible including services), product packaging and systematic distribution in order to generate some or the best possible profit. We wish to adopt the principle enunciated by H.
Ches brough and R. S. Rosen bloom that The Business model mediates between the technical and economic domain: Measured in technical domain measured in economic domain FIG 3 From this descriptive model a business model can be viewed as the activity processes, which are combined and designed for generating advantage or profit for a company. There are two levels of technological intervention in the Business endeavour, which we define as "technology of production" and the "technology of trade." These two levels of technological intervention call for a re-evaluation of business models either for modification or for re-invention. The technology of production may bring about greater efficiency in production, improving quantity or quality of production or it may bring about new products entirely.
An example is the development of Wi-Fi, which has created a new product in last mile of Internet connectivity, while WIMAX only increases the range of wireless connectivity over what was covered by Wi-Fi. These two product technologies have challenged existing methods of generating profit by Internet Service and Access Providers and new models are now being proposed to effectively mine the opportunities presented by these new technologies. (See article by Niklas Heyveldop titled: "The evolving public Wi-Fi business case" page 124, "it ASIA Q 3/4 2004). On the other hand the technology of trade directly impacts on business models because it directly changes the methods of doing business and that is what the technology of the Internet has done in create e-commerce and e-business models. Business models have also being classified according to its sales interface. Turban identifies the following main categories: Business-to-business Business-to-consumer Business-to-business-to-consumer Consumer-to-business Consumer-to-Consumer It must be noted that these interface models are not new.
As a matter of fact the Consumer-to-Consumer model is as old as commerce itself. This is the model of trade by barter whereby early man exchanged his some of the products he had for those he did not have. It must be commented that many of the business models being studied today may not be new in themselves but are simply extensions and variations of old traditional models as they have been impacted by the new technological environment. Conceptually their underlying principles may not be so new.
MAYBELLINE'S BUSINESS MODEL Maybelline a pharmaceutical product manufacturer makes drugs and distributes the drugs through a Business-to-Business trade-interface model. We must distinguish between the two aspects of Maybelline business endeavour, which are production and trade. The aspect we are concerned with here is the trade aspect, which is how ICTs have been deployed to improve the process of and its actual sales. However, e-commerce could also be used in its production side for example in procurement of raw materials, synchronization of the internal production processes such as inventory management etc.
Maybelline a company founded in 1915 is one of the largest selling color cosmetics line in the United States. Its sells through outlets of almost every major mass-market retailer, such as supermarkets, drugstores, discount stores and cosmetics specialty stores. Its products are also available in over 70 countries worldwide. Maybelline uses a traditional model in its sales distribution network, which is the use of sales representatives to canvass for business and to arrange for sales. The use of sales representatives who are employees makes this a Business-to-Employee-to-Business interface model. In the 1990 s the company a traditional "mortar" company re-invents itself a click and mortar company through the use of ICTs.
However, one innovation to the sales representative concept is Maybelline's use of its representatives as market intelligence reporters, who actually serve as the eyes of the company to monitor the progress of its products and the way they are handled by the retailers as well as progress of competitors' products. This is the trading / sales structure of the company, which cannot be said to be a new business model.