Emerging Business Models

The global economy today is home to a number of existing and emerging innovative companies. Capitalists are devising ways of keeping their businesses booming and afloat given the aggressive economic environment. There is a need for meticulous study and research if companies wish to learn their way around the evolving business environment. Businesses today are exploiting the use of technology. The application of technology in corporations has created a highly competitive environment for the entrepreneurs. Scholarly articles stipulate clearly what capitalists require to adopt in order to tackle and survive the snowballing competition. There are a number of business models that are emerging. Older companies and industries are slowly dying down as new ones rise. However, some of them are putting up a fight in this belligerent environment. The new upstarts are not making it any easier for the archaic giants. Upcoming tech-oriented firms are taking over the business industry. These upstarts are using formidable models and technological advances to ensure that they survive in the business arena.

Components of a Business Model

Barquet defines a business model as a strategic management prefiguration, designed to develop efficient and prosperous industries (Barquet, et al. 2011, p. 332). It is a visual representation of a summary of elements that describe a company’s infrastructure, finances, value proposition, customers et cetera (Osterwalder, et al. 2010, p.14). Some of the big minds behind the business model canvas are Alex Osterwalder and Yves Pigneur. Their book, ’The Business Model Generation’ provides illuminating insights for the entrepreneurs, some of which will be discussed in detail in this paper. The model makes it easier for the business planners to visualize the individual elements of their companies. The elements can then be connected to a corporate plan.

Understanding the gap in the business environment can help companies in the transitioning process. That is, more sustainable solutions can be engineered for better business efficacy, product satisfaction, and goal realization. Change is inevitable. Hence, companies should be well equipped and prepared for it. This entails a complete makeover. To be precise, industries should embrace technology and keep up with the global trends. A clearly set business guideline acts as a building block for the corporation or industry’s activities. Osterwalder’s research provided a template that could easily be adopted by different companies. Such companies include IBM, Deloitte, and Ericson, among other big established names (Osterwalder, et al. 2010, p.15). There are emerging online businesses that are on the rise. Some of the companies that are curving their way into the market include the M-kopa Solar, Avtech, and ClickBank. These companies are using Osterwalder’s model which comprised of infrastructure, customer segments, channels, key activities, cost structure, customer relationships, revenue streams, value propositions, and key resources.

Emerging Innovative Online Businesses

M-kopa Solar

Mkopa Solar is a solar energy company that was founded in the year 2011. It is an East African based industry that provides solar energy to houses without a direct connection to the energy grid, at an affordable price. Chad Larson, Nick Hughes, and Jesse More are the proprietors of the company (Frangoul 2015, p.1). The business went commercial in the year 2012. The enterprise is an affiliate of Mpesa, a mobile banking service that is thriving in Kenya and its neighbouring countries. M-kopa Solar can be categorized as an orange industry. Orange business models are entrepreneurial, vibrant and innovative. In most cases, such businesses have a small team which receives support from other investors who come in at specific stages and project levels. The business accumulated capital contributions in 2011 from their partners, Signal point. Some of their top supporting investors are Richard Branson, Blue Haven Initiative, LGT Philanthropy, and Generation Investment. Such companies have a telepresence that enables them to provide solutions through remote working conditions, just like the case of M-kopa Solar which allows subscribers to purchase energy via their mobile phones in the comfort of their homes.

The company initially planned on selling 1000 units of their commodities every week within a span of three years. The premeditated plan was outshined; the goal was achieved within a period of 12 months (Aglionby 2016, p.1). In the year 2015, the company had powered about 150,000 households in Uganda, Tanzania, and Kenya. A bulk majority of the users made their purchases online. Statistics document that close to 10,000 mobile transactions took part in the cloud platform (Frangoul 2015, p.1). The M-kopanet was active almost daily. The platform registered over $40 million worth of revenue by the year 2015 (Odengo 2015), p.1). According to their records, M-kopa established that a significant number of its consumers survived on approximately $2 or less per day (Faris 2015, p.1). The number represented about 80% of its purchasers.

The team managed to connect over 300,000 homes in the year 2016 to the solar power grid in East Africa (Rioba 2016, 1). The firm continued to grow, about 44,000 more units were sold across the neighbouring countries; Kenya, Tanzania, and Uganda. The company afterward embarked on shifting their product manufacturing in Kenya. The company’s complementary product, the solar televisions require minimal energy to run. The televisions sets can be powered by very little sunshine. The customers point out that they are satisfied with the efficiency and quality of M-kopa Solar’s commodities. The batteries can last for a period of 4 hours during television viewing and other lighting processes. The battery maintains this charge when both the activities are powered simultaneously. The company attracts its consumers by employing convenient methods of purchase, not to mention providing quality services and products. With the press of a button, an individual can purchase electricity units for consumption. Registering the solar technology is also cheaper than the conventional levies that are charged when connecting the homes to the national electricity grid. The company also uses embedded technology for GSM communication. This feature permits the company to remotely analyse the solar systems. Hence, they are able to monitor the performance of their devices and hence provide optimal solutions for future versions.

ClickBank

ClickBank is an internet-based retail market that sells both digital and physical merchandise. The company is privately owned and was founded in the year 1998. The company is known to have over six-million global clients (Clancy 2014, p1). The company is ranked as the largest e-commerce retailer in North America (Levanduski 2016, p.1). ClickBank connects affiliate markets to their vendors. The company has created a strong name in the e-commerce business following its strict regulations that promote the protection of their clients. Click Bank’s technological advancements enable affiliate clients to make payments, conduct different services, and calculate tax returns, among others. The company’s predictive models enable its users, especially those that have limited time for research and development, to estimate market costs, monitor consumer traffic for long-term predictions, et cetera (Clancy 2014, p1). The business has set protocols that inhibit the freezing of accounts which are brought on by sales spikes. These perks are what sets it apart from its business counterparts. The business currently competes with leading corporations such as Stripe and Digital River (Clancy 2014, p1).

Avtech

Avtech is a company that specializes in surveillance technology. The corporation is based in Taiwan, and was founded in the year 1996 by Coon Houng. It was initially established as a surveillance manufacturer before it transformed into a public company in 2005. In the year 2011, the company shifted again from surveillance into an IT market, under the leadership of Evan Voung (Crawls 2013, p.1). The main key products of the company include the mobile surveillance and Digital Video Recorder (DVR). Avtech targets the Internet protocol (IP) market, especially the IP cameras. The cameras incorporate the feature commonly identified as the Eagle Eyes. The Eagle Eyes’ application is found in tablets, mobile phones, IP cameras, and push video.

Osterwalder’s Business Model

Infrastructure/ Resources

Infrastructure entails the major activities, partnership network and the main resources needed by a company. The resources are vital to satisfy the consumers’ wants and needs. Resources are an essential asset needed to sustain an enterprise. The resources can be in the form of intellectual, human, financial or physical capital. The above-mentioned companies, that is, Clickbank, Mkopa Solar and Avtech all have distinct infrastructures coined to suit their running.

Cost Structure

The cost structure generally determines the expenditure of the company. Businesses either focus on a cost or value-driven set-up. Cost-driven businesses strive to reduce their expenditures as much as possible. Whereas, value-driven companies focus on the value regardless of the expenses. Most value-driven businesses build an empathy map, so to speak. Such a map provides a detailed information about a consumer’s behaviour and preferences. The Avtech Company for instance, redefined their surveillance systems to add value to their clients’ expectations. Rather than the conventional issuance of video evidence, their technological know-hows enable the consumers to protect themselves from impending dangers. Such measures are taken when the surveillance devices send alerts to the clients who later on take the necessary measures.

Activities

A company’s activities determine the survival rates. Platform hosting or production activities are some of the undertakings involved. Avtech’s manufacturing activities keeps the company going. Their products range from sensors to monitoring platforms. The corporation strives to re-invent new products constantly, as they keep up with the emerging trends. M-kopa’s system manufacturing also keeps the company running. The company thrives on the sales that it makes from its products, not to mention the promotional strategies that they use. An example of a promotional strategy used by M-kopa is the acquisition of subsidiary products upon the prompt completion of the partial payments. M-kopa expanded its scope by providing 30,000 solar powered televisions in 2016. The move was designed to increase internet access; part of the company’s revenue generation strategy. ClickBank uses its online platform to provide a number of services such as tax calculations, payment forums et cetera. A number of affiliate companies rely on its platform to handle their in-house activities, especially those that are financially related. Avtech also relies on relationship marketing. The products manufactured answer to the consumers’ needs. Thus, the company strives to shift form the age-old dogma of ‘pushing products’, and instead, cementing the trust of the clients through acquisition and retention tactics. Today, database marketers oversee their clients’ prospects and product histories on digital databases. The database market can be credited to Kate and Robert Kestnbaum (kapost.com 2015, p.1).

Value Proposition

Another core element that pops up when discussing business models is the value proposition. Value propositions provide a company’s identity. A successful company or business is shaped by the quality of its value proposition. That is to say, a value proposition is a determinant factor in the growth and progression of a business entity. The idea behind a value proposition is to attract potential consumers to a given service or product. In essence, the commodity should be able to solve a particular problem better than its competing equivalents in the market. A proposition is regarded as a promise made by the company to its consumers. Therefore, it is necessary that the proposition is displayed in plain sight. This move can be made possible through the use of an aptly designed website.

The proposition should be precise and enticing such that the intention is clearly represented without necessitating the need for an explanation (Hardy 2005, p.14). What this means is that the proposition should be bold. Ideally, a short and memorable tagline. The tagline may comprise of the main headline and a sub-headline. The sub-headline is best displayed below the main headline as a complimentary phrase. Complementary in the sense that it provides further information about the commodity or service in question. It should demonstrate why the consumers should cherry-pick the commodity over the rest of the commodities in the market. Specific points and features may be highlighted or presented in bullet points for easy skimming. Added visualization creates a clear picture for the consumers, not to mention enabling easy recall. No specific format is followed. The business slogans are unique for each company. Nevertheless, it is important that clichés are avoided. Overused phrases will underrate the product. Consequently, a false illusion of the product will be established.

M-kopa Solar’s name is a proposition in itself. The word Kopa, is translated in Kiswahili as an act of borrowing. Such a catchphrase immediately provides a potential buyer with the lucidity that the product is affordable and easily accessible. The M in the logo stands for mobile, thus further indicating that the company provides its services at the click of a button. Click Bank’s brand name is another perfect example of an informative title. The word click demonstrates the aptness of the company, let alone it’s Symbology that greatly emphasizes this scenario. Powerful transactions and commercial activities are done across the globe on this platform at the click of a button (Deatsch 2009, p.1).

Customers groups and segments

The customer segments idyllically describe the variant organizations or groups that a company aspires to have or reach. Consumers are the heart of the business. Without their support, the company has no basis for survival. Their presence is vital, not only as spectators but as a profitable and active entity. The lot can be segmented into distinct groups based on common behaviour, attributes and needs (Osterwalder, et al. 2010, p. 20). A business model helps to classify the variant consumer subdivisions. Consequently, the organizations’ heads can use this information to determine which group they should concentrate on. In doing this, the company is able to have a strong understanding of its consumers’ needs.

The different segments should be classified based on the customers’ justifiable needs, profitability, if and whether the clients are willing to pay for what they ask for, if the clients are reachable, among other specificities relative to the diverse industries. After determining the varied divisions, a business is obligated to serve the needs of the respective class members. For example, the elite should be provided with high-quality commodities which match their financial contribution. For instance, gadgets such as the iPhone, Rolex and some designer merchandise fall into these categories of needs.

Another typical example is the issuance of credit cards. Companies provide exclusive services to the cardholders and those willing to accept the credit cards. Another case in point is that of M-kopa solar energy. Jesse More targeted the rural areas since he wanted to make a difference in the lives of the locals. Furthermore, this consumer segment demonstrated its willingness to purchase the products. The remote nature of the environment also made mobile usage the best option for conducting the transactions. The locals do not have to travel to the cities in order to register into the energy grid. Consequently, the idea of convenience attracts them to the commodity, and this gives m-kopa solar a competitive advantage over the other energy companies.

Customer Relationships

When it comes to Customer Relationships, businesses ought to establish the kind of connection they wish to form with their clientele. Some of the common affiliations available include:

Self Service: This type of association crops from indirect interactions between the clients and the corporation. The organization, in this case, provides the necessary tools required by the consumers to best serve themselves. This strategy is commonly used by ClickBank clients. The users create Business and commercial accounts where they interact with the vendors.

Computerized Services: In this scenario, an automated system is personalized such that it can distinguish and identify the clients’ preferences. Case in point, ClickBank, which provides consumer product suggestions to their affiliates based on their purchase history.

Dedicated Assistance:

such assistance entails the intimate hands-on association between the sales representatives and the clients. The representatives provide answers to some intricate queries and solutions to the various challenges experienced by the clients. ClickBank provides easy solutions and services to clients who have limited time to man their companies.

Community Platforms:

a community platform provides a direct means of communicating with the clients. Direct interactions are made between the organizations’ personnel and their clientele. In this type of communication, knowledge is shared and the intricate problems can be solved for a large number of consumers at the same time. However, there are some instances where such platforms interfere with the security of the consumers. Users are becoming increasingly cautious about their privacy rights. Some companies profile their clients based on their internet traffic histories. Such is achieved through data mining. Some service providers provide such elaborate details to businesses or companies who later on start sending coupons and promotional messages to the customers. Technological advances are good. Timmer posits that the e-commerce models have potential benefits to business actors. Platforms such as E-auctions, E-shops, collaboration platforms, and virtual communities have made business transactions and communications easy (Timmer 1998, p. 4). Nevertheless, proper protocols should be set in place, and entrepreneurs should be ethical in their dealings (Mason 1996, p. 25).

Co-creation:

when a company concentrates on addressing the consumers’ needs, it can acquire some vital information. This is a characteristic form of interactive branding tools. The customers’ input may provide insight into the flaws of a certain product, or otherwise provide exceptional ideas that would help modify the product. Some of these inputs are what sets companies apart (Finder 2015, p.50). That is organizations that act on the clients’ suggestions best serve their needs. Take for instance the M-kopa users. Consumers, through the m-kopanet actively give suggestions to the service providers. The online forums provide them with the opportunity to suggest improvements they wish to enjoy in the next generation of solar products. For instance, some of the clients want a battery that can stay on for longer hours in order to accommodate their energy uses. Avtech provides their clients with technical training and support upon request. The team has a command centre that answers the clients’ inquisitions, not to mention deploying optimization services.

Revenue Streams

A revenue stream keeps the business afloat. Revenue is what blood is to the human body. Essentially, there are three major forms of revenue, they are: the usage fees, recurring and transaction revenues. Ideally, transaction revenues are those revenue forms obtained from the sale of a product. Recurring revenues, on the other hand, are subscription fees. Whereas usage fees are those determined by the amount of time spend by a consumer on a company’s products. Mkopa-Solar generates its revenue from a number of sources. For instance, the client’s usage of its products. Some of the revenue is also sourced from the solar products that they sell to the public. After which, the revenue accrues from monthly subscriptions, and new product acquisition. Felix Ogutu, a consumer from Kisumu purchased a solar kit, after which he purchased a smartphone on instalments after finishing off his solar payment period (Faris 2015, p.1). The purchase of the android phone was made possible by M-kopa’s instalment plan. A business strategy that has prompted its popularity among the locals. Currently, the repayment rates for the solar system is about 93%, whereas that of the secondary products is 98% (Faris 2015, p. 1).What M-kopa is doing, is setting its priorities straight. That is, client acquisition, conversion, then retention. Avtech thrives on the products that it manufactures, as well as the popularity of their devices. Hence, the company depends on both the usage and value generated revenues. Avtech’s products are popular given the efficiency that they provide. Employees are able to track and monitor their employee’s whereabouts. This exercise usually enables them to improve on the productivity levels of the workers. Avtech models also contain interactive analytical programs that help improve the performances within a workflow pattern. The company generally uses Customer Relationship Management (CRM) software to interact with the consumers. Analytical provisions thus enable Avtech to improve the clientele satisfaction based on the data obtained in the monitoring programs (Bain and Company Guide 2018, p.1).

Channel Strategy

A channel strategy is a plan set by the entrepreneur for moving a service or a commodity through a commerce chain to the consumers. There are a number of channel options to choose from. Ideally, it is best to identify the most direct channel where the products are sold directly to the end users. Vendors can also use e-commerce channels which employ the use of the internet to provide goods and services. Companies can also employ the use of intermediaries such as first and second tier distribution networks. Channels may also entail the advertisement of the products to the consumers. Such advertisements maybe in the form of websites, social media platforms, physical or virtual storefronts. It is important that a company evaluates the best social or communication platform to market its products. M-kopa for instance thought it best to use the radio Media given the financial situation of its largest client community. A large number of people in the rural areas rely on the radio channels to relay and receive information. Felix Ogutu a resident from Kisumu Kenya found out about M-kopa Solar from the radio on a bus ride on his way home (Faris 2015, p.1).

A sustainable service system for commodities (S-PSS), has become a new trendsetter (Barquet, et al. 2016, p.437). The S-PSS business model is a step in the right direction. The methodology presents benefits on a three-dimensional level. This type of business model promotes the inclusion of social and environmental aspects into clearly laid out business goals. A number of scholarly articles are now providing insight into competitive superiority. Nonetheless, the PSS models can easily result in catastrophic environmental consequences if the company’s elements are not well balanced. Such incidences occur when the industries care about the economic aspects alone (Porter 2001, p. 63). Not to mention, some of the data mining activities infringe on the privacy rights of the consumers. Such incoherencies dampen the sustainability of the PSS model. Therefore, it is important that the model is well understood such that it can be used to achieve maximum sustainability.

Conclusion

Essentially, the M-kopa solar business model asphyxiates a significant amount of obstacles faced by the less privileged in the society, some of which include, financial services. Small payments match the unprecedented income flow of the low-income households. ClickBank provides exceptional services to their users. Security protocols and the varied financial services make it a formidable force in the market. Avtech’s technological aptness on the other hand provide consumers with real time solutions. A business model is thus a vital tool to a company. Different companies have unique elements that they deem vital for their strategies. Therefore, careful planning and organization determine the success or failure of a business model.

References

Aglionby, J., 2016. Light Bulb Moment for M-kopa. [Online] Available at: https://www.ft.com/content/ccfaa1ba-d0f1-11e5-831d-09f7778e7377? mhq5j=e5 [Accessed 18 March 2016].

Bain & Guide., 2018. Customer Relationship Management. [Online]

Available at: www.bain.com/publications/articles/management-tools-customer- relationship-management.aspx

[Accessed 23 November 2015]

Barquet, A. P., Seidel, J., Seliger, G. & Kohl, H., 2016. Sustainability Factors for PSS Business Models. Science Direct, Volume 47, pp. 436-441.

Barquet, A. P. B. et al., 2011. Business Model Elements for Product-Service System. 3 ed. Berlin Heidelberg: Springer.

Clancy, H., 2014. ClickBank e-commerce Proposition for Time-Challenged Digital Entrepreneurs. [Online] Available at: https://www.zdnet.com/article/clickbanks-e- commerce-proposition-for-time-challenged-digital-entrepreneurs/ [Accessed 13 November 2014].

Crawls, A., 2013. Alexa Crawls. [Online] Available at: https://web.archive.org/web/20130715063744/https://www.avtech.com.tw/index.php?opti on=com_content&view=article&id=72&itemid=246&lang=en#expand

[Accessed 13 January 2013].

Deatsch, K., 2009. Gross Merchandise Sales at ClickBank.com Rise 8% in the First Half.

[Online] Available at: https://www.digitalcommerce360.com/internet-retailer/

[Accessed 26 June 2011].

Faris, S., 2015. The Solar Company Making Profit on Poor Africans. [Online] Available at: https://www.bloomberg.com/features/2015-mkopa-solar-in-africa/ [Accessed 2 December 2015].

Finder, R. L., Jr. (2015). Financial professional’s guide to communication: how to strengthen client relationships and build new ones. [Place of publication not identified], Financial Times Pren Hall.

Frangoul, A., 2015. Pay-as-you-go solar power takes off in Africa. [Online] Available at: https://www.cnbc.com/2015/02/25/pay-as-you-go-solar-power-takes-off-in-africa.html

[Accessed 25 February 2015].

Hardy, J. G. (2005). The core value proposition: capture the power of your business building ideas! : A new and powerful starting point for innovative business development.

https://www.overdrive.com/search?q=8C546ABC-F755-4DBC-BA97-F28CD91A348D.

Kapost.com, 2015. A Brief History of Digital Marketing Technology. [Online]

Available at: https://kapost.com/history-of-digital-marketing-technology/

[Accessed 8 February 2017].

Levanduski, M., 2016. ClickBank Makes Internet Retailer Top 100 List. [Online] Available at: http://pacedm.com/2016/05/clickbank-makes-internet-retailer-top-100-list/ [Accessed 10 May 2016].

Odengo, R., 2015. East Africa: M-kopa’s Founder On Bringing Hundreds of Solar Jobs to East Africa and What He Looks for In New Hires. [Online] Available at: https://allafrica.com/stories/201511131483.html

[Accessed 13 November 2015].

Porter. E, 2001. Strategy and the Internet. Harvard Business Review, 79(3), pp. 62-78.

Mason, J., 1996. Qualitative researching. London: Sage.

Osterwalder, A., Pigneur, Y. & Smith, A., 2010. Business Model Generation. 1 ed. s.l.: Wiley.

Rioba, B., 2016. Solar-powered Televisions brighten Homes in Rural Kenya. [Online]

Available at: http://news.trust.org/item/20160801101608-ao2bw/

[Accessed 1 August 2016].

SWIFT, R. S. (2001). Accelerating customer relationships: using CRM and relationship technologies. Upper Saddle River, NJ, Prentice Hall PTR.

Timmer, P., 1998. Business Models for Electronic Markets. Electronic Markets, 2(8), p. 4.