Business Models Review Plus

1 Conroy Julian, M.A., B.A., (Dip. Mass Comm. UWI) E-mail: Consctripta @hotmail.com

1. A Review of the Literature of Business Models

Research is cumulative, therefore no single study stands alone (Wimmer and Dominick,

2006). It is therefore important that the appropriate literature be reviewed prior to

undertaking new research (Cooper, 1984; Marshall and Rossman, 1996). The study of

existing literature provides the foundation for greater understanding of the topic being

examined (Jorgensen, 1989). In addition to assisting in identifying gaps, a review of

literature helps to shape the research question(s) thus making the project more relevant for

the intended purpose (Marshall and Rossman, 1996).

The literature on business models is being reviewed in order to understand why it is

appropriate as a measure of financial performance. The following four perspectives have

been chosen from the literature to examine the business model phenomenon:

1. The approach that exogenous factors, including new technology and policy open

opportunities for the emergence of business models.

2. The approach of aligning numbers with the narratives.

3. The building blocks and change models approach.

4. The theory that a business model is determined by what rights are being traded

and types of assets held.


The use of the term business models became pervasive at the height of the dot.com

bubble in 2000/2001 as the great buzz word of the internet boom. “A company did not need a

strategy, or special competence, or even any customers, all it needed was a web based business

model that promised wild profits in some distant ill-defined future”( Magretta, 2002, P.3). In

other words, the very act of registering a domain name was seen as putting a new business

model into operation.

Figure 1 shows the emergence of the term, ‘business model’ in scholarly journals from

the mid 1990s up to 2003 when it gained much traction. Anecdotal evidence suggests that

significant growth in the occurrence of the term in business circles has also taken place over

the period.

Figure 1: Occurences in Scholarly Journals. Source: Linda and Cantrell (2001)

Many of the sources that were reviewed came to the conclusion that the term ‘business

model has been used loosely and proceeded to give their definitions which are in essence,

similar.


The theoretical approach which posits that exogenous factors and technology open the

opportunities for the emergence of new business models is associated with Timmers (2004) and

Chesbrough and Rosenbloom (2006).

Research pioneer, Paul Timmers (1998), uses technological innovation as the basis of

his definition. Timmers (2004) underscored the role that exogenous factors, including

technology, played in the development of new business models as distinct from merely using

technology to trade on the world wide web.

He defines the business model as the process of transforming technical inputs such as

products, feasibility and performance into economic outputs such as value, price and profit. He

went even further, as seen in (figure 2), by outlining cases in which technological change

creates new business models but added that, “the most important part of a business model is

to answer the question, ‘how you get paid’ or ‘how you make money.’”(Timmers, 2004. P.6)

He included in his definition that the following concepts: identifying of market segments; value

proposition or the sum total of benefits which a vendor promises that a customer will receive;

the firm’s organization and value chain or the series of input expenses needed to effectively

deliver the goods or services demanded by the customers; the cost structure and profit

potential; how the firm is positioned in its industry and how that affects its value network; and

how it differentiates itself from products or services from that of its competitors.

Timmers’ (2004) compelling argument about the genesis of business models seemingly put to

rest the argument that this is a recent phenomenon:

Business models have existed for centuries and millennia. However, until the last


ten years, there has been relatively little active reflection about the used business

models themselves. The agricultural and industrial economies each had a number

of accompanying business models. But the historical slow change of the economy

gave few incentives for problematising the way of doing business. (p.13)

2.1 Exogenous Factors and New Technology Approach

Technological change has been perhaps the single most important reason for the debate

about business models as Timmer’s matrix below shows that exogenous factors, in this case

technological change, enabled the development of new business models.

(Timmers 2004) has clearly outlined the importance of exogenous factors such as

technology and innovation which enabled the development of business models. The impact of

those business models on economic activities is debatable, but the fact is that they do exist.

(Timmers, 2004) was more concerned about describing the emergence of business

models, which is important if one is to fully understand the substance of that research. The

exogenous factors as described in (figure 2) show that these factors fit into three categories:

the development of new technology, new business strategy and a change in government policy.

The emergence of the internet is linked to new technology, cheap passenger airports is the

result of a change in business strategy and an unlicensed spectrum system is the result of a

change in government policy.


While it can be argued that these business models on the right of the matrix below are

demonstrable means of earning money for a firm, it does not adequately cover the purpose of

this project. The question of performance for instance of any one of these models when

compared to the others is not covered.

EXOGENOUS FACTORS ENABLED “BUSINESS MODELS”

Nationwide post delivery system Catalogue mail order

High strength steel & construction materials Sky scrapers, “very large bridges”

Mass media Nationwide Brands

Cheap paper and efficient printing Daily newspapers

Removal on legal ban on interests Banks and Credit System

Unlicensed Spectrum System DIY local wireless access points

Just-In-Time Logistics System Customized cars

Private Car Ownership Suburban shopping malls

Internet Internet business “eco-system”

Cheap passenger airport Mass tourist hotel complexes

Computers with modularized Interfaces Specialized firms in software, hardware etc

Wireless Internet Remains to be determined

Figure 2: Exogenous factors open opportunities for new business models (Source: Timmers,

2004)


(Chesbrough and Rosenbloom, 2000) also subscribe to the concept that exogenous

factors play a significant role in the emergence of new business models but primarily focused

on the development of new technology at the level of the firm. The authors covered the topic,

“The Role of the Business Model in Capturing Value from Innovation: Evidence from Xerox

Corporation’s Technology Spinoff Companies.” They outlined two ways in which firms harness

value from the prevailing technology: by including the technology in their business and

incorporating it by operating new ventures using those technologies as key inputs of the value

proposition (Chesbrough & Rosenbloom, 2000). The ZEROX case study focused on the latter

means. They subscribe to a definition of business model given by, a consulting firm, KMLab,

INC:

A Business model is a description of how your company intends to create value in the

marketplace. It includes the unique combination of products, services, image, and distribution

that your company carries forward... It also includes the underlying organization of people, and

the operational infrastructure that they use to accomplish their work. In order to probe the

question, the “role of business model in capturing value from innovation” Chesbrough et al

(2000) studied six of ZEROX'S, 35 “spinoff” companies, which had to meet the following criteria

to qualify as spinoff:

i. The technology involved was initiated or pursued for at least one year’s time at a

Xerox research center. This criterion excluded technologies that were simply licensed to

Xerox, though it includes some that originated outside of Xerox, and came in through

acquisition, and then were developed further within Xerox.


ii. At least one of Xerox’s researchers left along with the technology to become an

employee of the new “spinoff” companies. This excluded technologies that were

licensed or otherwise sold out of Xerox.

iii. The entity that received the technology and the researcher were separated from

Xerox, and incorporated into a new legal entity. This criterion facilitates measurement

of the ex post development of the technology and the organization. It excludes

technologies that satisfied

the first two criteria, but went into established organizations, where the influence on

the subsequent performance of the company was not easily separable from the

company’s overall performance ( p.39).

The six companies selected were; 3com, adobe, metaphor, SignOptics LiveWorks, and

Documentum. Four of those spinoff companies were described as successful while two were

said to be failures. All six companies were evaluated against six main components of a

business model plotted in a matrix by Chesbrough etal: “identified market segment, clear value

proposition, elements of value chain, defined cost and profits, position in value market,

formulated …and competitive strategy” (P.13). On a closer examination of the matrix it was

observed that Metaphor had a business model that closely resembled that of ZEROX’S, it was

almost a carbon copy, except for slight variations in identified market segment where ZEROX

targets the government and corporate market as against Mataphor’s focus on knowledge

workers in corporations. LiveWorks was another promising innovation coming out of ZEROX

but without a viable business model. The major failure here was its inability to differentiate

itself from its competitors (Magretta, 2000). LiveWorks failed because it developed, sold


hardware and software and controlled the distribution of its products and leveraged ZEROX’s

sales force. It operated just like ZEROX.

The successful companies apparently had business models which were more unique

with processes tailored to their specific need. The authors that subscribe to the approach being

discussed, see the quest for a viable business model as a useful framework for learning and as

an indicator for creating successful ventures.

Chesbrough and Rosenbloom’s (2006) perspective on the development of business

models relates specifically to technologically oriented firms, but ZEROX in particular, and is

therefore less abstract than the approach of (Timmers, 2004) who covered the subject from a

societal level. While the contributions of these authors add much value to the general thrust of

this project, findings about the performance of XEROX’S ‘spinoff’ companies speak specifically

to the impact of a chosen business model on performance. Figure 3 below illustrates one

perspective of the place that business models occupy in a firm (Chesbrough and Rosenbloom,

2006).


Figure 3: Business Model as a Construct. Source: (Osterwalder, 2006)

The top of the triangle is labeled Business Strategy which is unique to a firm and deals

with the problems of competition, providing a vision, balancing the organization’s internal

strengths and weaknesses with its external opportunities and threats, it further determines a

goal and measurable objectives for the purpose of evaluation. (Mitsburg and Lampel, (1999);

Porter, 1985); Kaplan and Norton, (1992) or Learned, Christensen et al, (1965).

At the base of business model triangle are Business Organization and Information

Communication Technology, (ICT). Firstly, Business Organization is about how the business is

structured by departments, units and function. ICT is all the information and communication

technology employed to enable proper functioning of the business model which is the firm’s

money earning logic. According to Chesbrough and Rosenbloom, (2006), these include

computer hardware and software, website, PDA cell phones and others.

Legal

Environment

Competitive Forces

Cu

stom

er

Dem

and

Business Strategy

Strategy

Business

Model

Social Environment

Environment

Technological

Change

ICT Business

Organization


Chesbrough and Rosenbloom (2006), using their technology schema state that,” a

business model is a construct that mediates the value creation process” (P.26). Value creation

occurs between the technical and social domains, therefore the selecting, filtering and

packaging of these technologies into configurations to be offered to the market are at the heart

of the business model from that perspective. There is, however, a weakness in the approach of

Chesbrough and Rosenbloom (2006) if applied to a more rigorous scale indicating the

performance of other firms outside of the technology domain.

The business model of XEROX was not clearly stated but it was described as a construct.

A construct is an intangible phenomenon (Boxill, Chambers and Wint, 1997). A construct

becomes more meaningful for research authentication when it is put into operation, thus

becoming more observable. Another approach searches for that important nexus between the

output of the firm as represented by numbers and the relevant narrative supporting those

figures.

2.2 Aligning Numbers with Narratives

Magretta (2002) explains that business models are stories which explain how business

works. A good business model is customer focused. It ultimately asks the question, “How do we

make money in this business? What is the underlying economic logic that explains how we can

deliver value to customers at the appropriate cost?” (Magretta, 2002) Magretta reduces

business model to two critical components, the narrative and the numbers The narratives of

the business model begin with an insight into human motivation and numbers end it with a rich

stream of profits (2002).


There are many examples of good business models where the narrative makes sense

and the numbers add up (Magretta, 2002). Travelers Cheques is regarded as one of the most

successful business models of all time (Margretta, 2002). Customers appreciate this simple

story whereby in exchange for a relatively small fee, they are able to buy both peace of mind

and convenience. Cheques were insured against loss and theft and they were accepted as a

means of payment. The tipping point in this business model is that it moved away from the

concept of debt first then revenue. Customers pay for the cheques long before they cash them,

therefore the interest free loans that American Express got from their customers increased its

bank balance.

There are business models that not only fail the numbers test but the narrative test. A

case in point was the rapid rise and fall of the Priceline and Webhouse Club. This was a similar

concept to naming your own purchase for airline tickets. Wall Street CEO Jay Walker extends

this concept to gasoline and grocery (P.6). This is the story that Walker tries to sell.

Customers, via the internet, advised him how much they would be willing to pay for example, a

Jar of all spice. They would specify the price and not the brand, so they might end up getting

Walkerswood or Busha Browning. Webhouse would then aggregate the brand and then

approach the wholesalers about special volume discounts which allow the firm to sell profitably

at the price the consumer preferred.

The problem was that the major manufacturers with national brands would not enter a

deal which is in conflict with their business model. Webhouse’s strategy to get consumers was

based primarily on price. The millions of dollars spent by the manufacturers to build brand


loyalty would disappear. This story just would not convince the potential suppliers of

Webhouse to assist in the destruction of their own brands on which they spent years and

millions building consumer loyalty (Magretta ,2002) The investors did not believe the story

either and the model failed, both on narrative and numbers.

Magretta (2002), in her effort to clarity the meaning of ‘Business Model posits that

business model and business strategy must not be used interchangeably. “Business models

describe, as a system, how the pieces of a business fit together, but they do not factor in one

critical dimension of performance: competition” (p.6). Sooner or later every business runs

into competitors and strategy is used to deal with that actuality. A competitive strategy is seen

as unique to a business and is responsible for performance of the business. When all businesses

in an industry offer similar product, and services to similar customers using similar processes,

none will really prosper as competition drives down prices (Magretta, 2002).

The consumer will benefit in the short term, but continued low prices will lead to low returns in

the industry and ultimate failure of business (Magretta 2002). In other words, a competitive

strategy invariably differentiates one product or service from another when they are similar on

other key measures such as price and quality.

To further illustrate the difference between Business model and strategy, the case of

Wal-Mart is presented. Strategy is also one of the three pillars of the business model as a

construct as seen in Figure 3.

The success of Wal-Mart was not due to the result of pioneering a new business model

(Magretta, 2002). Sam Walton opened his first Wal-Mart in 1962 in Arkansas when the retail


discount business model had already existed for many years. Walton’s strategy was to serve a

different group of customers, in a different set of markets. K-Mart and Wal-Mart’s model was

said to be the same but the strategy was different.

The top ten discount retail stores of 1962 which focused on large metropolitan areas

and cities like New York today exist only in the history books. Wal-Mart’s strategy, as spoken by

Walton, “was to put good size stores in little one-horse towns which everybody else was

ignoring.” (Magretta, 2002)

Magretta’s (2002) assertion that the narratives about a business have an impact on the

numbers or financial performance has been established from her reference to Travelers

Cheques, Inc.. She also posits that a good strategy enables performance agrees with Linda and

Cantrell’s (2000) views that strategy enhances business model but that the term ought not to

be used interchangeably. Linda and Cantrell (2000) linked strategy to business processes and

information communication technology to form three pillars of a business model. Therefore,

strategy as an element of a business model and as measure of performance, supports the

purpose of this project. Therefore, a unique approach to business processes by a firm in an

industry could give it a competitive edge.


2.3 Building Blocks and Change Models Approach

The approach of dissecting the business models as building blocks and change models is

associated with (Osterwalder 2006; and Linda and Cantrell 2002). Linda and Cantrell (2002)

divide a business model into three parts. These are: components of business a model,

operating business models and change models (2000). The logic behind how the organization

creates value is somewhat consistent with other definitions but these authors were able to

differentiate themselves by unearthing two additional dimensions from their angle of

observation. The operating model takes a practical view of the definition which practitioners in

business will readily understand. The operating models appear to be the antecedents of the

change models as business operations would be curtailed by inertia without some incremental

change. In a hierarchical arrangement, the operating models are paramount followed by the

change models and model at the bottom representing mere pieces of the whole, are the

components of a business model.

A business model component is a mere subset of the various parts from which the

whole is constructed and ranges from revenue model and value proposition to organizational

structures and arrangement for trading relationship (Linda and Cantrell, 2000). The internet is

seen as being partially responsible for clouding the issue on business models. This cloudiness

becomes more evident as e-watchers who have paid much attention to new channel

configuration, new value proposition and revenue models, loosely refer to them as business

models ( Linda & Cantrell, 2000).


The operating business model is regarded as the dominant model. “An operating

business model is the organization’s core logic for creating value” (P.2). The concepts that a

good business model highlights the distinctive activities and approaches that enable the firm to

succeed in attracting customers, employees and investors and deliver products and services

profitably is analogous to what Magretta calls differentiation, (Magretta 2000) .

The change model is described as the organization’s ability to adapt in a dynamic

environment. The change model also describes how an organization will change over time in

order to ensure that it remains profitable. The operating model is said to be responsible for

coordinating core assets, capabilities, relationships and knowledge; but the change model

leverage and extends them.

The main weakness of Linda and Cantrel’sl (2000) approach is that it does not propose

an actionable basis of business models capable of describing the core money making logic

suitable for operating in different industries. This approach mainly serves to dissect the

processes in a given business organization. The strength of Linda and Cantrel’s’ (2000) model is

that of making a distinction among components, operating and change models. Strength of this

approach is its apparent success in clarifying what to observe and measure as an indicator of

performance. It proposes knowing the different components of business models and how that

aids accuracy of measurement and ultimately the conclusion reached.

Perhaps the most seminal piece of work on business models found in the literature was

done by Alexander Osterwalder for his PhD dissertation, titled “The Business Model Ontology A

Proposition In A Design Science Approach” (Osterwalder, 2004). The main goal of the research


was to provide an ontology to allow for an accurate description of a firms’ business model

(P.42). This was done in order to set the stage for the designing of a software based tool to

visualize, design and compare business models quickly and efficiently. The approach was

design science, which is applied research with practical consequences as against pure research

satisfying mere quests for knowledge or the interest of the research community (Booth,

Colomb, Joseph and Williams, 2003).

Osterwalder (2000) draws from the philosophical meaning of ontology; which deals with

the nature and organization of reality as against epistemology which deals with the nature and

sources of knowledge (Guarino and Giaretta 1995). The ontology draws from shared

definitions and conceptualization of the authors reviewed and has sought to take the discussion

to another level of cognition. This is however set against the background of the computer

science domain in the rigorous organization of knowledge of those authors he reviewed. The

authors were grouped based on their written assessment of the concept under headings;

definition, taxonomy, components, representation tool, ontological modeling, changes

methodology and evaluation measures.

Osterwalder’s business model ontology was first categorized under four headings;

product, customer interface, infrastructure management, and financial management. This was

further expanded to nine but as sub-categories of the first four. These are; value proposition,

target customer, customer relationship, distribution channel, value configuration, capabilities,

partnership, revenue model and cost structure. The business model ontology was then

translated into an XML-based description language called BM2L in order to capture and

describe a concrete case study, the Montreux Jazz Festival.


It is interesting to note that the business model ontology has been used in the context

of one developing country and could be applied to many firms in Jamaica. Propositions have

been made to apply the ontology for business model knowledge transfer to developing

countries (Osterwalder 2002; 2004; Osterwalder, Rossie et al, 2002). The nine business model

elements were used to describe the business model of a telecommunication firm in Bangladesh,

Grameen phone, set up to connect rural villages in that country. The approach of (Osterwalder

2006) while being more actionable in describing the building blocks which Linda and Cantrell

(2000) call components, still does not provide a complete basis for easily indentifying a firm’s

business model.

2.4 Determinant by Rights and Assets

Weill, Malone, D’Urso, and Woerner’s (2006) basic definition of business model is

consistent with other authors in the literature, of what a business does and how it makes

money from such activities (Chesbrough and Rosenbloom, 2000; Linda and Cantrell, 2000;

Magretta, 2002; Osterwalder, 2006; Rappa, 2002; and Timmers, 2004). The substantive

difference lies in Weill et al’s (2006) approach in classifying business models based on rights

being traded and type of assets held. Weill et al (2006) outlined four basic types of business

models based on rights being traded as represented by: creators, distributors, landlords, and

brokes. Two basic types of rights were established. These are trading the right to own assets

and right to use assets. The right to own asset means that when the asset changes hands the

new owner has full control of the asset until he/she decides to dispose of it. The right to use

asset is more temporary like having a licensing agreement or paying for an airline seat to


Florida. These were key factors in determining a business model. The types of asset were

further broken down into subgroups identified as: financial, physical tangible or human.

Weill et al (2006) sought to answer the question, “Do some business models perform

better than others?” This was done by surveying a sample of one thousand of the largest firms

in the United States. The findings were in the affirmative. The results prove that some business

models do perform better than others and in fact business models were better predictor of

financial performance than the traditional method of industry classification. The ‘landlord’ as a

type of business model was also compared with the other three basic types of business models

mentioned in the previous paragraph, gives more specificity to the question of performance.

The results of the survey were consistent as it clearly show that companies selling the rights to

use assets (landlord) were more profitable and had greater market value than those selling

ownership of assets( ‘creators’/manufacturers sell rights of ownership).

2.5 Conclusion of Literature Review

There appears to be consensus among the authors reviewed on some key points about

the role played by the dot.com bubble of a period between 1999 and 2001 when the NASDAQ

index soured to over five thousand points as an era when the business model concept and

nomenclature gained much prominence (Chesbrough and Rosenbloom, 2000; Linda and

Cantrell, 2000; Weill and Vitale 2001; Gordijin, 2002; Magretta, 2002; Afuah and Tucci, 2003;

Rappa, 2005; Osterwalder, 2004; Weill et al;, 2006). There is also anecdotal evidence in the

public domain attributed to business analysts in the mass media who have come to the same


conclusion about the impact of the growth of businesses on the internet on the use of the term,

business model. I hereby posit that the growth and use of the term ‘business model’ during the

period of the dot.com bubble stimulated much of the research which has added to the

literature as evident in publications between 1999 and 2006.

Margretta(2002) and Weil et al (2006)l show evidence from their research with the

former explaining that ‘business models, matter’ while the latter research found that ‘some

business models perform better than others.’ The performance of Dell Computers supports the

position taken by Magretta. Michael Dell pioneered the business model of selling computers

directly to corporate business customers instead of the home market which was being served

by other computer makers. Dell’s strategic choice was to determine where to apply the model

in terms of geographic markets, segments, customers, and kind of products (Magretta, 2000).

Walton on the other hand did not pioneer the concept of discount stores when he started

Walmart but did enough modification to give it a unique flavour to ensure its success

(Magretta, 2000). For Weill et al (2000), the choice of a business model determines how well a

firm performs as related in their four basic business model archetypes based on types of assets

held and rights being traded. Rappa (2002) corroborated in his taxonomy: brokerage,

advertising, infomediary, merchant, manufacturer, affiliate, Community, subscription and utility

models. Rappa’s (2005) understanding of subscription is also analogous to Weill et al’s (2000)

concept of selling of rights. Persons subscribing to a business magazine for example are buying

the rights to access a certain number of copies over a specified period of time. Firms involved

in the selling of rights tend to show high performance when using measures such as market

capitalization and operating income (Weill et al, 2006). Firms with a Creator business model


involved in the selling of the ownership of assets however perform better when using the

return on investment measure.

Osterwalder (2004) in his ontology draws from all the major studies and synthesizes the

different conceptualizations into a single reference model consisting of the nine elements

mentioned earlier. Osterwalder’s ontology draws on twenty of the most important authors

who have made contributions to the topic under discussion and was therefore able to

appreciate the point that all wanted to bring greater clarity to the subject. Authors such as

Chesbrough and Rosenbloom (2000); Timmers (2004) with Information System(IS) biases

support the approach taken by Osterwalder’s (2006) study which detailed a design science

approach to research into business models. In other words, the design science approach uses

technology to creatively design solutions to solve the problems of businesses. The major area

of consensus among the authors came in their approach to the definition, that a business

model spells-out how a company makes money from its activities, use of resources, and its

position in the value chain.

The differences in definitions of a business model point to approach, industry relevance,

functional bias and method of classification. While two key authors, Linda &Cantrell (2000)

and Osterwalder, (2006) define business models in terms of components/building blocks but

they depart thereafter. Osterwalder (2006) using what he calls a design science approach for

the modeling of business models by using a common language (agreed code) for analyzing

business models, seeks to create a standardized software to compare business models. On the

other, hand Landa & Cantrell focus on a didactic explanation of three approaches to business

models by dissecting each one and showing how it can be applied in the context of a firm.


The approach of Linda & Cantrell was somewhat abstract when compared to Weill et al (2006)

whose definition I suggest is more practical and applicable. It was certainly less abstract when

one considers their clearly identifiable business model archetypes: creator, distributor,

landlord and broker.

Magretta (2000) in her article, written for the Harvard Business Review seems to

subscribe to the concept that the world is not made up of matter, it is made up of stories The

business model must not be seen as an arcane concept such a mathematical formulae on a

white board. The business model question is simply seen as being at the heart of the story that

entrepreneurs ask: “How do we make money in this business? What is the underlying economic

logic that explains how we deliver value to customers at an appropriate cost?” Communication

is seen as a critical tool in getting the narrative right, acting like a catalyst to convert visions into

reality. The firm has to be able to convince key stakeholders and, most importantly, customers

that the story is credible and that it is in their best interest to be part of the process. The

narrative behind Travelers Cheques gave Magretta (2002) the confidence to posit that it is one

of the greatest business models of all time. Traveler’s Cheques broke new grounds in

generating additional income from its customers because of the convenient financial service it

provided, thus scoring excellence in terms of the narrative. The customers' access to a means

of payment which was accepted with much confidence by merchants took the worry out doing

cross border transactions. Most importantly for the American Express principals, they receive

credit and interest free loans from their customers who buy the checks upfront with cash

(Magretta, 2002). The time log between the encashment of the checks and it being debited to


the bank account of the Travelers Express could take months. In short, a good narrative will

always impact the numbers on the financial statement.

The major approaches to business models can be categorized as; definition, taxonomy,

component, representation tool, ontological modeling, change methodology and evaluation

measures (Osterwalder, 2006). Business model as an evaluation measure (Weil et al 2006)

supports the proposition of this project as outlined in the preliminary section of this paper.

Osterwalder (2006) provides a framework which seemingly could be applied as a measure of

performance as it addresses the structure and processes of the firm. The other key authors

such as (Magretta 2002; Chesbrough and Rosenbloom 2002 and Rappa 2002; Timmers 1998;

and Linda and Cantrel 2000) provided further theoretical cover for analyzing critical aspects of

the business model concepts as a good indicator of financial performance.

Researchers ought not to be constrained by the results of prior research since the

pursuit of knowledge calls for a degree of creativity (Jorgensen (1989). In addition Shultz (1990)

posits that all theories contain breaches and omissions and are really works in progress. In

addition to theories, an alternative is to give more credence to the experience of practitioners

(Scriven, 1986).

The purpose of this study is to describe and explore the business model concept as a

good measure of financial performance of a small firm, particularly, Zion Organic Roots. In

order to achieve this, the concept of contingency theory in addition to the approaches

mentioned in the literature review will be utilized to complement the construction of the

conceptual framework which follows, to provide guidance for analyzing the data which emerge

from the study.


Written by Conroy Julian, M.A.

E-mail. [email protected]

Tele: 876 363 2104

mailto:[email protected]

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Business Models Review Plus