Advanced Management Control and Sustainable Development Lecture 9: “Integrating” Business Model and Strategy Prof. Angelo Riccaboni University of Siena Department of Business and Law angelo.riccaboni@unisi.it

Agenda Business Models and to IIRC framework Business Models and academics Business Model Capitals 5 groups of components between Strategy and Business Models 6 fundamental factors included into the Business Model Business Models and IR Framework Financial capitals of Business Model Intangible capitals of Business Model Natural capitals of Business Model Interaction between BM with Internal and External capitals

BUSINESS MODEL IIRC framework “The organization’s chosen system of inputs, business activities, outputs and outcomes that aims to create value over the short, medium and long term”

Business Models according to academics Timmers (1998) defines BM: «an architecture of the product, service and information flow, including a description of the various business actors and their roles» Tucker (2001) defines BM “a description of how your company creates value for customers that in turn generated revenue and profits for your company” Zott and Amit (2001) defines BM “the content structure, and governance of transactions designed so as to create value through the exploitation of business opportunities” Chesbrough and Rosenbloom (2002) defines BM «as a heuristic logic that connects technical potential with the realisation of economic value» Seddon and Lewis (2003) defines BM as “an abstract representation of some aspects of an organization’s strategy; it outlines the essential details one needs to know to understand how an organization can successfully deliver value to its customers ”

Industry, customers and competitors Product offering 5 groups of components between strategy and Business Models have been identified : Industry, customers and competitors Product offering Activities and organization Resources and competences Factor markets and suppliers

6 fundamental factors included into the Business Model: How does the organization create value? – factors related to the offering Who does the organization create value for? – market factors What is its source of competence? – internal capability factors How does the organization position itself competitively? – competitive strategy factors How does the organization make money? – economic factor What are its time, scope and size ambitions? – personal/investor factors

Business Models and IR Framework Business Model- is at the heart of the organization Key elements – inputs, activities, outputs and outcomes Aim of the company - to create value over the short, medium and long term

Financial capitals of business Model Financial and manufactured capitals are the ones organizations most commonly report on These capitals are the core and the real capitals of the company Financial capital – are debt and equity finance Manufactures capital – are set of tools and equipment used in production process

Intangible capitals of Business Model Intangibles capitals - Human, Intellectual and Social and Relational Human capital includes – stock of knowledge, skills, abilities of people (employees and managers) Intellectual capitals include – value of brand and reputation, licences, patents, intellectual property, copyrights Social and Relationship capital include – different effective relationships with other economic actors in order to mediate economic transactions, enhancing individual and collective well-being

Natural capital of Business Model Natural capitals – represent the stock of natural resources or environmental assets (soil, air, water), that can contribute to the development of the organization’s activities, coming out affected, positively or negatively

Interaction between BM with Internal and External capitals

Interaction between BM with Internal and External capitals IR Framework considers the linkages between an organization’s Business Model and its strategy. The Multi-stage approach follows the following steps: Focus on the concepts of strategy and the business model in use Identify their main components and relationships, and understand how they are linked with the external environment combine all these elements within the IR, receiving an information feedback in terms of performance metrics and recommendation for future changes