An ontology for e-business models – alexander osterwalder

CMI3410 – Competing in the digital economy Osterwalder, A. & Pigneur, Y. (2004), An ontology for e-business models in Currie, W. (ed.)
"Value Creation from E-Business Models” (2004), Butterworth-Heinemann (M. Pullar’s
I have set the pages as landscape so the restructured model on page 2 fits with as little text wrapping as possible to keep the hierarchical structure in place. I have
removed my comments so you can add your own.
If there is something I have missed then please let me know so I can add it back into my copy as well! I’d advise reading, (at least skim reading) the original article
before using this to give it more of a context and familiarity. His model is still the core, so what I have restructured may be partly meaningless without background
information from the original paper.
Hope it helps.
An 'ontology is a rigorously defined framework that provides a shared and common understanding of a domain that can be communicated between people and
heterogeneous, widely spread application systems. By merging the conceptually rich business model approach with the more rigorous ontological approach and by
applying them to e-business, we achieve an appropriate foundation for tools that would allow the understanding, sharing and communication, change, measuring
and simulation of e-business models.
Three elements make up a business model:
• Revenue and product aspects • Business actor and network aspects Business models represent a way of doing business under uncertainty and describe a logic of a ‘business system’ for creating value. We perceive business models as the conceptual implementation (blueprint) of a business strategy that allows to align strategy, business organization and information systems and represents the foundation for the implementation of business processes and information systems. The role of the manager is to adapt a company’s business model to external forces, such as competition, legal, social or technological change and changes in customer demand. CMI3410 – Competing in the digital economy A couple of observations from this model, along with a restructure of its components: • Very clear definition of goals between senior managers and implementers – needs a rigorously defined business model to facilitate this • New Economics of information – reach a large set of customers with very rich content • Product Innovation – needed to give differentiation from rivals Value Proposition – the overall bundle of products/services that represent value for a customer segment, it is based on capabilities.  Offerings – the offerings define (by parts) what the value proposition is (as whole) • Description • Reasoning – Use: Driving, Risk Reduction: Insurance, Effort Reduction: Home Delivery • Life Cycle – Creation, Appropriation (possession): Amazon One-Click, Consumption: Music, Renewal: Updates, Transfer: Disposal • Value Level – Me-Too: Commodity, Innovation Imitation: PocketPc, Excellence: Swiss Watches, Innovation: Viagra?! • Price Level – Free: News, Economy: Jet2, Market: Shares, High-End: Rolex Target Customer – customer segment receives the value proposition Distribution Channels – company -> customer communication, delivers value proposition to target customer  Links – Is the main building block, channel is aggregated view. Customer Relationship – acquisition, retention, add-on selling  Mechanisms – inherits from a link and is the function between company and customer. • Personalized – personalise use data analysis to personalize the relationship • Trust – Security, e.g. VeriSign provides a trust mechanism • Brand – Pivotal resource, competitive advantage – sponsorship e.g. Club Nokia Capability – must dispose of a number of these to be able to offer Value Proposition  Resources – source of capabilities • Tangible – plants, equipment, cash • Intangible – brand, patents, copyrights • Human – people who create value with tangible and intangible resources Value Configuration (Activities) – arrangement of one or several activities, relies on capabilities, contains configuration types(value chain, value shop and value network)  Activities – actions a company performs • Level – distinguishes between primary and support activities • Nature – denoted by the configuration type, chain, shop, network • Resource Relation (my term adapted from Resources) Fits – one or more required by resource Shares – more then one shares the same resource Partnerships – cooperative agreement by two or more parties, coordinating capabilities, resources and activities  Agreements – function of the partnership • Reasoning - optimisations and economies of scale, reduction of risk and uncertainty and acquisition of resources • Degree of Integration – how closely linked • Degree of Dependency – more closely linked = harder to part! Not covered, reason being it is how the company makes money through the use of the above 3 blocks


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