Business Model as a Base for Building Firms’ Competitiveness

Tihana Koprivnjak,Sunčica Oberman Peterka

doi:10.3390/su12219278

Abstract

Designing and creating a business model is crucial for a successful firm’s operation in today’s market in a complex and changing environment. A business model is the factor that differentiates one firm from another—it defines the distinctions of the firm, how the firm deals with the competition, the firms’ partnerships, and customer relations. This paper explores the role of the business model in the creation of sustainable competitive advantage. The empirical part of the paper presents the business model of three small companies from the Information and Communications Technology (ICT) industry in Croatia using the Business Model Canvas. Additionally, business model components were also analyzed using a framework for evaluating a business model. The results of the analysis point to a few crucial components of the business model, on which small ICT firms in Croatia build their competitive advantage by creating significant distinctions of those components. These distinctions are essential for their longevity and sustainability.

Highlights

More and more investors and other stakeholders are asking companies to explain their business using the business model concept [1]
Doing business in today’s market is characterized by strong competition, which means that finding and maintaining a competitive advantage is a difficult challenge for any firm
The business model is the basis for defining the competitive advantage of each venture, because it helps in understanding and defining its specificity

Summary

Introduction

More and more investors and other stakeholders are asking companies to explain their business using the business model concept [1]. The business model has become a commonly used tool for defining and illustrating all aspects of a firm. It is primarily used as the basis for defining the competitive advantage of each firm, talks about how the firm appears on the market, deals the competitors, and defines partnership relations as well as relationships with customers. In order for a firm to operate successfully in today’s market, in an extremely complex and changing environment, it is crucial to design and create a business model that will ensure a competitive advantage for the company. Even firms that meet the same consumer need and have a similar marketing strategy for their products, may have completely different business models [4]

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