Abstract
PurposeThe car no longer serves simply as a means of transport but is at the core of a new concept of mobility. Car manufacturers are seizing opportunities to change the traditional business model of the auto business. Innovation in this business model has become vital to survival in today’s dynamic market conditions. This paper aims to find out what factors motivate and drive business model change and what the resulting business model innovation is.Design/methodology/approachThis qualitative study is based on a single case, namely, BMW as an illustrative example of an advanced, highly innovative customer-centric service business model (BM). The study adopts a document analysis method to reveal the firm’s BMI process.FindingsFirst, the study presents a conceptual framework for business model change with the factors –motivators and drivers – that impact on the process of change. BMW’s BMI and its impacting factors are discussed based on this model. The McKinsey 7 s Model framework, the elements of which are strategy, structure, systems, shared values, style, staff and skills is used as an analytical tool to discuss new business model implementation. The study highlights the BM configuration of a traditional car manufacturer, the car as a product and the new car as a service concept.Originality/valueThis study reveals the BMI of BMW’s digital services and its key motivators and drivers. BMW mostly innovates in three key dimensions of the Business model. These are value creation, value delivery and value capture. Most of the elements in these dimensions are innovated.
Highlights
Technological innovations, market dynamics and changes in customer preferences have greatly impacted the traditional business model of manufacturing firms
Changes happen at the level of value creation, value delivery and value capture. Any change in these dimensions results in business model innovation which is defined as an activity or process in which core elements of an enterprise and its business rationale are purposely transformed to achieve operational and strategic advancements
The structure of this article is as follows: first, this study explores the business model literature to outline the factors impacting innovation, and a framework for the business model innovation process is proposed
Summary
Technological innovations, market dynamics and changes in customer preferences have greatly impacted the traditional business model of manufacturing firms. While many firms struggle to generate a substantial profit from product sales, others try to identify opportunities by integrating product-related and value-added services. The days are gone when firms focused solely on product-centric business. A new business strategy known as service integration has evolved in the manufacturing sector. Changes happen at the level of value creation, value delivery and value capture. Any change in these dimensions results in business model innovation which is defined as an activity or process in which core elements of an enterprise and its business rationale are purposely transformed to achieve operational and strategic advancements
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