E-Business Model Design

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E-Business Model Design, Classification, and Measurements
Magali Dubosson-Torbay Alexander Osterwalder Yves Pigneur

Executive Summary “Business model” is one of the latest buzzwords in the Internet and electronic business world. This article has the ambition to give this term a more rigorous content. The objective is threefold. The first objective is to propose a theoretical e-business model framework for doing business in the Internet era. The second is to propose a multidimensional classification-scheme for e-Business Models, as opposed to the actual tendency in academic literature to use two-dimensional classifications. The final objective is to define critical success factors, based on a field study in order to find out and compare the performance indicators used by e-business firms that are competing with similar business models. © 2002 John Wiley & Sons, Inc.

INTRODUCTION

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here have been several attempts to classify all the business models consistently emerging with the coming of the New Economy in order to understand how ecompanies are making or not making money. Some companies have seen their business model highly publicized such as the reverse auction model of Priceline or online grocery model of Peapod. But is it all so clear? For instance, ebay.com might be typical of an Agora B-Web (Tapscott et al., 2000), but at the same time, ebay.com might be considered as being a merchandiser online (transaction.net) or an auction broker (Rappa, 2001). All of them are considering the same object, but from different perspectives. Is there a better or a worse way to classify the business models? Are they allowing comparisons? Do they help to understand the strategies of the different actors within a same category, for instance, the online grocery stores? Are they explaining why some of them benefit from better financial figures? Nowadays, new business models finished emerging in electronic commerce and can become a major stake in the e-business game (Kalakota, 1999; Maître & Magali Dubosson-Torbay is a researcher in operation management at the University of Lausanne, Switzerland. Alexander Osterwalder is a Ph.D. student in information systems. Yves Pigneur is a Professor of Information Systems at the University of Lausanne.

Thunderbird International Business Review, Vol. 44(1) 5–23 • January–February 2002 © 2002 John Wiley & Sons, Inc.

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Magali Dubosson-Torbay

Alexander Osterwalder

Yves Pigneur

Aladjidi, 1999). It is even possible to patent them in some countries (Pavento, 1999). Understanding the new business models and helping to design and measure them are important research issues, not so well covered until now. The next section presents a definition and the components of a business model as a new framework. The section following suggests using this framework to classify and compare business models. Finally, we show through examples how to translate the core processes of the business models into a set of relevant measures for each component of the adopted framework.

E-BUSINESS MODEL DESIGN Several authors show that with the success of Information and Communication Technologies (ICT)–particularly the Internet–organizational transformations are taking place in industries and companies (Martinez, 2000; Tapscott et al., 2000; Timmers, 2000). The e-Business Model approach we propose in this article should help a firm structure its organization in a way that it becomes more efficient, more flexible, and responsive to customer demand, to forecast possible future scenarios and therefore, to stay competitive in the Internet era. E-business modeling has similar goals to enterprise modeling in general. Modeling helps firms develop business visions and strategies, identify and assess business opportunities, redesign and align business operations, share knowledge about the business and its vision and ensure the acceptance of business decisions through committing stakeholders to the decisions made...
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