Modification of Business Model Based on Financial Model Analyses

Abstract

The aim of this article is twofold: to consider the interrelation between the two constructs of both business and financial models, and to propose a framework approach for transforming business model components based on the financial model investigation. We consider the financial model as a projection of the business model into formal financial language. The paper has a conceptual research character. Based on well-established terms we introduce the method of business model changing. We employ both methods of relationship matrix and morphological matrix to rank the business model components for changing based on sensitivity analysis of the business model, and propose a formal logic of generating ideas for these changes. The proposed method should complement other methods of business model change, especially ones that are focused on the analysis of the firm's external environment. The paper contributes to the methods of business model changing. The study has limitations. In particular, the paper shows only the opportunities of using the sensitivity analysis to rank business model changes, while other methods of financial analysis could give crucial information about business model behavior under different conditions: risks, explanation, robustness, etc. Further research should expand and formalize the analysis of financial models with aim of business model reconfiguration.