Income model of an organization

Published: 2018-02-20 18:51:05
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Sewanee University of the South
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Financial factors in business

Financial factors in a company are subjective to all the other elements of the ontology. This is the pillar that explains the income model of an organization and the one that determines a company’s profit model. 

Revenue model

This measures the ability of the company to convert their value proposition obtainable to clients to monetary figures. An organizational revenue structure comprises of several revenue sources with various models of pricing. The models of pricing are heftily considered as ICT technology e-business that has offered the internet companies the ability to develop innovative pricing approaches.

The structure of costs

The aspect of cost measures all the expenditures of the company that it incurs from its daily operations while developing, advertising, and offering proposition value to consumers. As such, each of the business models incorporated by firms incurs dissimilar types of expenditures, but the common factor is mode of approach so as to identify and facilitate cost minimization opportunities in the process of value creation. Thus, by using the ICT technologies appropriately, the organizations may discover and device the emerging opportunities to convey quality clientele services as well as other value additional strategies that are relatively budget friendly.

The Profit model segment

Osterwalder concludes that despite the fact that this segment is the actual difference that can be identified between revenue models and the cost, it gives the expression of the entire ontology. The objective of all existing businesses is the maximization of profits that may be accomplished by enhancing the innovation of products and relationships with customers so that expenses may be minimized through effective infrastructural configuration. 

Collaborative consumption

Collaborative consumption can be referred to as the happenings that an individual consume goods and services as a means to participate in joint activities alongside other people (Felson, p.620). Felson’s work was the only research that discussed collaborative consumption other research articles emerged during the 2010s thus this signal the developing importance and popularity of the model. Further, the rise of sharing economy has been facilitated by the increase in the usage of smartphones and social media. Reasons for the increase in the popularity of collaborative consumption are: Firstly, is the growth of the peer-to-peer business platform which can be regarded as the collaboration of the global financial catastrophe aftereffects, the sophistication of technologies and using social networking as a way of life. Secondly, the change of lifestyle have been as a result of the movements in the environmental awareness; thus partial consumers are choosing to lease or share rather than purchasing lifestyle (Leismann, p.189). Thirdly, collaborative consumption is at an increased rate due to the increase in movement to urban areas thus due to congestion it has forced the masses to divert their attention towards recycling and sharing instead of becoming the full owners of the products. 

Peer-to-peer platform of exchange can reflect a variety of elements in life stretching from offering services, acquiring capital, having skills, goods, and capacity. Botsman (n.p) arranged all the studies of the collaborative consumption into three different types of systems:

The first one is the product service structure; this tables out the opportunity for companies to offer goods as services rather than selling them as goods.  In this case, the products are private and can be easily shared or leased out on the basis of peer-to-peer platform. For instance, Zilok.com is a product service system acquires a platform to render peer-to-peer rental services on technological inputs and building equipment. The website became popular because of its ability to solve problems that a significant proportion of U.S homes have power drills that are maximally used either six minutes to fifteen minutes in their lives. 

Redistribution markets; the redistribution markets refer to the pre-owned o used products which are transported from a location they are no longer of necessity to a located they are needed to which they can be sold, free, o swapped. Thus the redistribution markets significantly assist in prolonging the usage lifespan of a good, recycling the functionality of the good, this is a good example of the sustainable business platform. 

Collaborative lifestyles: often individuals who have the same necessities and passions come in contact to exchange intangible goods for instance skills, space, money, or time. The exchange can occur in small geographical scale like in cities or local areas, or on an international scale where the intangible assets are shared via the digital platform.

It can be observed that there lacks uniform description of the termed collaborative consumption in the web thus, this is the study concept that is used in reference of any activity or movement that involves the peer-to-peer sharing, swap of  goods, exchanging, and trading activities on the bottom-most level. It is acknowledged that peer-to-peer markets comprise of making transactions between two persons thus the markets have a common feature with generalized two-sided markets.

Two-sided market

This concept of the two-sided market is dated back when individuals started to trade goods for assets. Technology has significantly taken the two-sided markets to a whole different level facilitating trade and exchange of goods on a worldwide scale thus creating opportunities for startup business and individual parties to enter into the new marketplaces without the need for physical presence. Most authors refer to a marketplace as two-sided market when there exists two trading parties whereby by one group engaging then the value of the other parties concurrently increases. Rochet and Tirole (n.p), brought forward a definition that seemed to be more restructured in that two-sided marketplace is the whereby the volume of trading transactions can be altered by implementing higher prices to one side of the marketplace while reducing the charges that are paid by the other side in an equivalent amount. For instance the use of credit card services whereby the choosing of a credit card by a customer is dependent on the number of traders who accept and approve it. Also, the acceptance of the credit cards by those merchants depends on the number of the consumers who use it. Therefore, the decision of to use the credit card as a transaction platform highly depends on the size of the network on the each side. The two-sided marketplace have thrived especially in the digital environment whereby most individuals make use of the internet, transaction procedures, connecting vendors and clients, and connecting customers and advertisements.

sheldon

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