12 August 2019 Author/Compiled by Mirella Haldimann (EAWAG) Raphael Graser (Antenna Foundation) Reviewed by Astrid Agthoven (Aqua for All) Jeske Verhoeven (IRC) Caroline Saul Jennings (EAWAG) Julie Smolnitchi (Skat Consulting) A business can operate with one (“simple”) or multiple (“complex”) business models, addressing one or multiple value propositions through one or multiple product or service offerings. Such business strategies can entail complementary products or a product that is complemented with a value adding service that is charged for. These strategies can leverage profitability and encompass a broader customer base as well as higher per customer turnover. The case study of TARA in India provides insights of how a multiple business model in the safe water sector can increase the likeliness to breaking even. What are simple and complex business models?Factsheet Block Body A simple business model addresses a value proposition through one particular product or service. A complex business model addresses a potentially broader value proposition through one or more products and services (SMITH ET AL., 2010). Multiple business models address multiple value propositions through one or more products and services. In order to understand this distinction of business models better, the table below provides definitions and examples:
Comparison of complexity of business models. Source: Antenna, 2018 Why consider having one or multiple business models?Factsheet Block Body It is not only important to assess the crucial elements of a business model as discussed in the previous sections (see factsheets on value proposition, value creation and value capture) but to consider also whether a business ought to operate with one or multiple business models. As a company starts out it may find that one single business model makes more sense to cater to a particular value proposition, while at later stages new value proposing markets might require entirely different business models. While a new business model might not be necessary in such case, modified or new products and services can entail complete reconfigurations of the existing business model so that it makes more sense to operate with multiple business models for the operations to function well (CHESBROUGH, 2010). Considering the way to go about commercialising new products and services can lead to more revenue streams and the option to diversify risk. For example, seasonality (people purchase less water during rainy season as additional sources of water are available as found by Spring Health) could make it useful for social enterprises to focus on differing markets to overcome low consumption and thus difficult cash flow periods. For whom are one or multiple business models relevant?Factsheet Block Body Reflecting on simple or multiple business models is interesting for every safe water enterprise that is considering developing or launching new products, services, expanding to additional markets or would like to increase their revenue streams. In particular when reflecting on the development of new business models to commercialise additional products it is recommended to consider the aspect of simple or multiple business models, especially for safe water businesses working with bottom of the pyramid customers - which is per se a challenging environment asking for innovative ideas. Subscribe here to the new Sanitation and Water Entrepreneurship Pact (SWEP) newsletter. SWEP is a network of organizations joining hands to help entrepreneurs design and develop lasting water and sanitation businesses. How can one or multiple business models be implemented?Factsheet Block Body Methods to reflect on business model decisions - a participatory process with different stakeholders/employees of your company is key - workshop session where the strategy of the social business is discussed; applying the following methodologies:
These methodologies can be used to facilitate discussions. In order to take a decision on simple or multiple business models the following strategic aspects have to be considered:
Factsheet Block Body The case study of TARA in India provides insights of how a multiple business model in the safe water sector can increase the likeliness to breaking even. Alternative Versions toWhat is a single business?A single business strategy exists when a company derives more than 95 percent of its revenue from a single business activity. As that percentage decreases, a business is said to be following increasingly diversified strategies.
What is the difference between single and multi business organizations?A single business organization operates in a single industry whereas the multiple business organization operates across industries with products or services in two or more. Strategic management and initiatives are used by organizations to shape the future direction the organization will pursue.
What are the advantages of single business plan?Operating from a single business strategy provides your small business the ability to adjust the overall business plan quickly, because you're not also tweaking separate business strategies and operational procedures for all of your company's various departments.
What is single and dominant business?Companies that follow single- or dominant-business strategies have low levels of diversification. A single business is a company where more than 90% of its revenues are generated by the dominant business. A dominant business is a company that generates between 70 and 95% of their sales within a single category.
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