w88 casino: The business model must meet user value
(Source: "China Business News"C7 version on September 15, 2014 Reporter:Zhao Zheng)
For an e-commerce company like JD.com that has been unprofitable for ten years, how it can still gain continued recognition from the capital market is a bit difficult to understand from the outside. However, in the past ten years, JD.com has always insisted on operating in a pure e-commerce model, building its own logistics, reducing intermediate links, and providing consumers with high-quality products and satisfactory services in the shortest possible time. existProfessor Wu Ge, w88 casino of International Business, w88 casinoIt seems that it is precisely because the business model of Jingdong Mall focuses on satisfying the value of users, therefore, the business model of Jingdong Mall is a successful business model.
Today, for many entrepreneurial and innovative companies, business models have become the key to attracting the attention of the capital market and the driving force for their sustainable development. How to interpret a business model and how to evaluate a good business model? The author interviewed Professor Wu Ge from the International Business w88 casino of the w88 casino.
It is user value, not customer value
In today’s era when “Internet thinking” is becoming more and more popular, mentioning business model is still a hot word. Today’s eye-catching companies: Xiaomi,360, JD.com, and Alibaba all have unique business models. Therefore, studying these companies cannot avoid studying their business models.
However, when it comes to business model, such a familiar concept, the academic community has always lacked a consensus definition. There are dozens of definitions. The more representative one is Dr. Zhu Wuxiang’s definition of “business model is the transaction structure of stakeholders”. However, in w88 casino's view, this definition is not yet complete. w88 casino believes that the business model must be based on products and services, and a long-term dynamic profitable transaction structure for stakeholders is constructed to realize user value.
For such a definition,w88 casinobelieves that it should be interpreted from four aspects: based on product services, reflecting user value, and emphasizing long-term and dynamic nature.
In fact, business models are not castles in the air. They must be based on products and services. The competition among enterprises is essentially the competition of products and services, not the competition of business models. Business models must be based on products and services. "As long as it has a good business model, it must have excellent products and services." w88 casino emphasized.
The business model emphasizes user value, not customer value. In the Internet era, many services are free, such as Baidu’s search, Tencent’s WeChat,360's anti-virus, as a consumer, even though you have not paid for them, you can still become its user. As a user, your use increases their user value.
Another key point of the business model is long-term. The concept of short-term does not constitute a model. For example, JD.com, as a successfully listed e-commerce company, may not be profitable in the long term. This reflects the long-term nature of the business model. A good business model is not a short-term evaluation, but a long-term perspective. Many business models can be unprofitable in the short term. Once a profit protection mechanism can be established, the profit model will be difficult to copy and catch up, such as Taobao and Tmall Mall.
In addition,w88 casinoEmphasis on the dynamic nature of business models, because as the environment continues to change, user preferences will also change, and business models need to be constantly adjusted to ultimately achieve profitability. Unprofitable business models will ultimately fail.
Good business models have standards
Why do some business models seem perfect, but eventually fail? Why do many venture capital institutions’ optimistic business models fail to succeed in the end?
w88 casinoThe professor believes that from the perspective of the product market, the quality of a business model can be evaluated from four perspectives, namely, the model is simple, standardized, controllable and asset-light.
In reality, most successful business models are very simple. From JD.com and Focus Media to Home Inns and Baidu, their business models are not complicated. But in fact, behind the simple business model is extreme complexity. The simpler the business model, the greater the need for scale and capital thresholds. The simpler the business model, the higher the requirements for capital and scale. "A good business model should not be too complex. Too complex will involve various interest relationships. Too many relationships are involved, and the property rights and legal protection involved are often unable to be implemented."
The second standard is to have certain standardization as the basis. A good business model can be copied by oneself, but it is difficult for others to copy it. It requires you to have a certain standardization as a basis and rely more on the system rather than relying on people. For example, Ctrip has been able to standardize services. Only through standardization can rapid replication be achieved.
A good model requires a certain degree of control. When an enterprise has certain control over the industrial chain of an industry, it has certain pricing power. For example, Dong'e Ejiao, after Dong'e Ejiao gradually became synonymous with the Ejiao industry, it has certain pricing power over the upstream raw materials; and Belle International, because of its multi-brand strategy and brand strength, has relatively strong control over channels and terminals in department store channels.
At a specific stage, a good business model is often asset-light. When small businesses first enter the market, they are often asset-light. As their strength increases, they will gradually become asset-heavy. "Asset-light and asset-heavy are relative concepts. When you are relatively strong, you must have stronger control in the industrial chain, which will often increase the weight of assets and eventually become a vertical integration model."w88 casinorepresents.
Dialogue
China Economic Cooperation: You are an expert who mainly studies finance and finance. How do you interpret the profit protection mechanism of enterprises? What are the different paths to profit protection mechanisms?
w88 casino: If a ship has a small hole, it can still continue sailing, but slowly water will come in, and if it is not blocked, the ship will sink. For an enterprise, the profit protection mechanism focuses on long-term competitiveness, not short-term high growth. In the past, it was believed that products, market share, market leaders, and execution capabilities were the profit protection mechanism. In fact, this was a misjudgment; from a financial perspective, the profit protection mechanism was a barrier to generating a long-term high return on capital. One is a non-market profit protection mechanism, such as monopoly; the other is a market profit protection mechanism, which is divided into three types: one is having a brand, one is having technology, and the other is having control in the industry value chain. A typical example is DuPont's Lycra. DuPont's Lycra was originally a clothing fabric, but through the brand+Technology+In terms of industry control, Lycra occupies the triangle of profit protection. We call this the "iron triangle" of profit protection.
China Economic Cooperation: How do companies define the business scope of their business models? How is this element understood overall? Are there any actual cases of enterprises that can demonstrate the importance of business scope to business models?
w88 casino: In the traditional industrial economic era, the concept of business scope was actually an industry. Because business models encounter the Internet, the boundaries between industries and industries have become blurred. For example, a restaurant not only produces food but also serves customers. Is it a manufacturing or service industry? Nowadays, the Internet is a super industry that can span many industries. Many of its competitors are no longer in the same industry. Banks have been impacted by Internet finance, and the education industry has been impacted by the Internet industry. The cross-industry nature of business models has been particularly highlighted. We can no longer define ourselves in terms of products and industries, but must rethink the identity and role of enterprises from the needs of consumers.
China Economic Cooperation: Private equity funds also attach great importance to the business model when judging the quality of a project, but how do they judge the quality of the business model? Why do many projects invested by private equity funds fail? For exampleITAT。
w88 casino: If you don’t have money to create a business model, you can’t start it. If you have money to start a model, you have to look for private equity, because you are asset-light and cannot get a bank loan. You go find itPE, I think there are four points about how private equity looks at your model. First, it depends on whether the model has been verified. It mainly depends on whether there are successful models that have been verified abroad, so that it will be easier to succeed when copied to China; second, whether the business model is simple and clear,PEWhat matters is whether the logical relationship between buying and selling is clear; third, when starting out, resources are limited, so you need to be professional and focused, usually small but beautiful, and find the pain points; fourth, for entrepreneurs, a model can be done as long as it makes money, even if the time is short, butPEWe pay more attention to making money in the long term, and we can copy it to different areas to make money. Therefore, making money in the short term is not a good standard.
Zhongjing: Although many scholars are studying business models, business models are still a more practical thing after all. For you, what useful support can your research on business models provide to companies and entrepreneurs? What is the value of studying business models to the practical world?
w88 casino: The greatest characteristic of social science lies in practice. Each theory has its own successful practice. This does not mean that academic theories are useless. Although business model theory cannot guarantee you the sufficient conditions for success, it can help you avoid detours and make fewer mistakes that you should not make. This is the purpose of learning business model theoretical knowledge. Although learning design is one aspect of business model, another big aspect is practice. Models are made, and they need to be constantly thought and adjusted in the process. In addition, business models do not conflict with traditional management theories. A well-designed model also requires good management and execution. If execution is poor, the business will still fail.
Introduction to w88 casino
w88 casino, male,1967Year5Yue Sheng, a native of Nanjing, Jiangsu Province, is a professor and doctoral supervisor in the Accounting Department of the International Business w88 casino of the w88 casino, deputy director of the International Finance and Accounting Research Center of the w88 casino, an executive director of the 4th Board of Directors of the China Financial Accounting Society, and a director of the 6th and 7th Board of Directors of the Financial Cost Branch of the Accounting Society of China. Bachelor of Science in Mathematics, Master of Accounting, PhD in Finance.
w88 casino has been engaged in the war for many yearsMBA、EMBA, full-time master's degree, undergraduate, UKACCAAdvanced training course, United StatesIFＭThe research and teaching of "Cost and Management Accounting" and "Win in Business Model" courses in the M training class and the on-the-job MBA class have formed a teaching style that integrates finance, management and strategy. He has rich practical experience in corporate financial management and has served as a senior consultant for many companies. Published monographs include "International Accounting", "Modern Management Accounting", "Research on International Accounting Property Rights System", "Identification and Prevention of Financial Report Whitewashing Techniques", "Financial Reporting Traps", etc.
Attachment: Original report link address:
http://www.cb.com.cn/person/2014_0913/1083524.html
