Theory of constraint methodology where the constraint is the business model

Abstract

This paper addresses the issue of business model (BM) management and its relationship to the theory of constraints (TOC). Coman and Ronen (Coman, A. and Ronen,B., 2007. Managing strategic and tactical constraints in the hi-tech industry. International Journal of Production Research, 38(7), 1631–1639) have extended TOC methodology to include the alignment of the organisation's competencies with the business arena's strategic constraints. The aim of this paper is to take TOC one step further and to combine it with the business models theory. Business models have become important value creators due to the proliferation of new and innovative business models (i.e. new ways of creating value). New firms with new business models are threatening and replacing established companies and conventional ways of doing business. Among these are the music, publishing, books, retail, airline and many other industries. This paper argues that in the wake of the World Wide Web, contract manufacturing and globalisation it not enough to manage the firms (internal, external or strategic) constraints. In addition, the management of the firm's BM as a potential constraint is a key factor in the modern management theory.