Decision 2 Business and revenue models strategies

Business model

A summary of how a company will generate revenue, identifying its product offering, value-added services, revenue sources and target customers.

Revenue models

Describe methods of generating income for an organisation.

Early (first) mover advantage

An early entrant into the marketplace.

A further aspect of Internet strategy formulation closely related to product development options is the review of opportunities from new business and revenue models, (first introduced in Chapter 2 and discussed further in the next chapter in the sections on product and price). Evaluating new models is important since if companies do not review opportunities to innovate then competitors and new entrants certainly will. Andy Grove of Intel famously said: 'Only the paranoid will survive', alluding to the need to review new revenue opportunities and competitor innovations. A willingness to test and experiment with new business models is also required. Dell is another example of a technology company that regularly reviews and modifies its business model as shown in Mini Case Study 4.1 'Innovation in the Dell business model'. Companies at the bleeding edge of technology such as Google and Yahoo! constantly innovate through acquiring other companies and internal research and development (Witness Google Labs (http://labs.google.com) and Yahoo! Research (http://research.google.com)). The case study on Tesco.com at the end of this chapter also highlights innovation in the Tesco business model facilitated through online channels.

Mini Case Study 4.1

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