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Dynamic Aspects of Business Model Development

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Dynamic Aspects of Business Model Development Master Thesis, MSc Program in Business and Economics, specialization in Marketing and Media Management, Stockholm School of Economics Spring 2012 Dynamic Aspects of Business Model Development Authors Ludvig Ekelund (40089) Gustaf Sundlöf (21174) Tutor Christopher Rosenqvist Abstract Little research has been done concerning the dynamic process of how business models develop, change and evolve. Hence, what affect how business models develop, changed and evolve? And what principles and practices are employed by firms in this process? In order to begin bridging this gap in existing business model literature a qualitative study was conducted of how the business models of seven actors within the Swedish TV-industry have developed. The study captures aspects of how business models are developed over time, as well as in relation to other market actors. Within observed cases the development of the firms’ business models seem to evolve as activity systems in which a key principle is the purposeful utilization of complementarities between different offerings and platforms. Our findings also show that a business model development may be significantly facilitated by the use of business model triggers. In addition, the dominant logic of a firm significantly affects what routes for business model development are chosen. Responsive behavior due to direct and indirect interdependencies between actors is also prominent in this process. Further, by engaging in actions as to shape existing market practices actors engage in indirect business model development. The usage of existing technological assets in new, originally unintended ways, have also been an important source of business model development. Keywords: Business models; Business model development; Business development 1 INTRODUCTION ......................................................................................................................................... 4 1.1 INTRODUCTION AND PURPOSE .............................................................................................................................4 1.2 DELIMITATIONS ................................................................................................................................................6 1.3 DISPOSITION AND OVERVIEW ...............................................................................................................................7 2 METHODOLOGY ........................................................................................................................................ 7 2.1 RESEARCH STRATEGY .........................................................................................................................................7 2.1.1 Epistemological considerations ..........................................................................................................7 2.1.2 Ontological considerations .................................................................................................................8 2.1.3 Deduction, induction or abduction .....................................................................................................8 2.1.4 Qualitative or quantitative .................................................................................................................9 2.2 RESEARCH DESIGN ...........................................................................................................................................10 2.2.1 Case study.........................................................................................................................................10 2.2.2 Selection of cases and case representatives .....................................................................................11 2.2.3 Empirical data collection and analysis .............................................................................................13 2.2.4 Literature review ..............................................................................................................................16 2.3 LIMITATIONS ..................................................................................................................................................16 2.4 RESEARCH QUALITY .........................................................................................................................................17 3 THEORETICAL OVERVIEW ........................................................................................................................ 18 3.1 INTRODUCTION TO THE BM CONCEPT .................................................................................................................18 3.1.1 The BM concept is not one, but many concepts ...............................................................................19 3.1.2 The conceptual idea of BMs – what it aims to reflect ......................................................................19 3.1.3 The link between strategy and BMs .................................................................................................20 3.1.4 A note on BM development ..............................................................................................................20 3.2 THE MODEL OF THE BM: DEFINITIONS AND COMPONENTS .......................................................................................21 3.3 TOWARD A MORE DYNAMIC PERSPECTIVE ON BMS ................................................................................................22 3.3.1 BMs as complex systems of interrelated activities ...........................................................................22 3.4 FOUR RELATED AREAS AFFECTING HOW BMS EVOLVE .............................................................................................26 3.4.1 The importance of context ...............................................................................................................26 3.4.2 The dominant logic ...........................................................................................................................27 3.4.3 Business networks – conflict and stability affecting BM development.............................................29 3.4.4 The impact of new technologies and innovation ..............................................................................30 3.4.5 Practices involved in the shaping of markets ...................................................................................32 3.5 RESEARCH MODEL – A LITERATURE SYNTHESIS .......................................................................................................33 4 EMPIRICAL FINDINGS .............................................................................................................................. 34 4.1 THE INTRODUCTION OF COMMERCIAL TV IN SWEDEN.............................................................................................34 4.1.1 The actors of commercial television from a value chain perspective ...............................................35 4.2 CASE: KINNEVIK/SCANSAT BROADCASTING/MTG/TV3 .........................................................................................36 4.2.1 MTG’s business 1987-2000 – the evolution of commercial Swedish television ................................36 4.2.2 The relationship with the advertiser and the creation of ‘currency’.................................................37 4.2.3 The invention of the second-pay-TV-window ...................................................................................38 4.2.4 Business logics ..................................................................................................................................38 4.3 CASE: COM HEM AB (CH) ...............................................................................................................................40 4.3.1 From cable-TV distributor to telecom company – the new beginning of CH ....................................40 4.3.2 On demand and time shifting – business development of today .....................................................42 4.4 CASE: TELIASONERA (TS) .................................................................................................................................43 4.4.1 Business development of TV .............................................................................................................44 4.4.2 The issues of content rights ..............................................................................................................44 4.4.3 The capacity of the net and double sided BMs .................................................................................45 4.5 CASE: BOXER TV-ACCESS AB (BOXER) ................................................................................................................45 4.5.1 The business idea of Boxer 2008-2010 .............................................................................................45 4.5.2 The development of product and services 2008-2010 ......................................................................45 4.5.3 The business idea of Boxer current 2012 ..........................................................................................46 4.6 CASE: CANAL DIGITAL (CD) ..............................................................................................................................46 4.6.1 Focus strategy ..................................................................................................................................47 2 4.6.2 Aspects of
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