Business Model Innovation and Organizational Design

Question: Discuss about the Business Model Innovation and Organizational Design. Answer: The introduction of the European economy requires the present status of the European Union. The economic condition of the European Union has been updated since the recent turmoil of Global Financial Crisis. All the countries in Europe, especially those who are under the European Union are treated as a single country by their purchasing power parity. Currently, the economy of Europe is moving through the business cycle from depression to boom. The economy crashed around 2007 after the Lehman Brothers crashed, which created a financial crisis affecting most of the major economies in the world. Many companies and banks were bankrupted increasing the rate of unemployment. According to Serricchio, Tsakatika and Quaglia (2013) like the other major economies of Europe, Germany and Greece has suffered the same blow due to the crisis. Germany due to its internal strength of the economy was less affected by the crisis than Greece. The financial crisis brought the financial loopholes in Greeces economy out in the open. The economies have taken significant steps since then to come out of the depression. These steps incorporate innovation, renovating business models of the organizations, digital revolution, re-invention of an organization's policies, and entrepreneurship. The assignment will analyze four European companies to support the steps taken by the organizations. According to Bock and George (2014), the European Union was created honoring the concept that those countries which are engaged in trade are less likely to go to war against. After the World War II and the Cold War, the political and economic dependency was required to reduce any future possibility of war and the openness between the member countries will create business opportunities. During the Global Financial Crisis, the organizations which were the backbone of the European economy took a financial hit which broke the financial conditions of the member countries. Common people were largely affected by the consequences of the crisis. The governments of the member countries have taken several countermeasures collectively to follow an inclusive growth agenda. These measures incorporate both government infrastructure and non-government bodies of Europe. The measures followed by several organizations like Sebamed(Sebapharma) and Springer SE in Germany and Thenamaris Shipping company and Apivita farms in Greece, as stated below: Innovation: Since the Global Financial Crisis of 2007, business innovation, research and development have been stagnating due to low funding and lack of investments. These are needed to innovate. Innovation is one of the basic components that keep an organization floating and sustaining. It is applicable in many ways in an organization. According to Cummings and Worley (2014), the innovation can be of the business model, financial model, technological, digital, and others, in the organization. The German company SebaPharma, a part of Sebamed, created by Heinz Maurer in 1957, has a story of success in the medicinal skin care industry. After the financial crisis had got over, the company has invested rapidly in the innovating new business model and products, which can bring back the market demand the multinational organization was facing previously (Sebamed 2016). Another company of the same country, Axel Springer SE, Europes one of the largest digital publishing houses has faced the same crisis. The organization was founded in the year 1946. The company has survived this long due to the consistent innovation in the organization. Axel Springer SE has an employee capacity of 15,000 presently. Even before the Global Financial Crisis hit the economy of Europe, the organization had a consistent record of investment in research and development wing. The organization made its financial strength with the help of technological and business model innovations. As the company is expand ing since its early days, the adaptation of new issues in the business model was experienced by the organization. The financial crisis thus could not affect the company as it did to most of the companies in the Europe. Thenamaris, a shipping company from Greece, was founded in the year 1970. The company has grown rapidly since then. During the Global Financial Crisis, the economy was hurt badly due to its previous loopholes in the economy. This made the shipping company strive for perfection during the recent years. As stated by Spolaore and Wacziarg (2013), the innovation in business guided the company through the tough times to get out of the stagnating economy of Greece. The company Apivita farms in Greece, founded in 1972 operates in the cosmetics industry. The organization has innovated several formulas for its products which made those highly demanded. The Global Financial Crisis had hit the companys fund badly. But with innovative ideas for the products and business plans, the company avoided bankruptcy and turned around for a better and stronger future. Business model: According to Boons et al. (2013), the business model plays a crucial role in determining an organization's future. Without a proper business model, an organization cannot survive in the long run. An innovative and strong business model is required to stay ahead of the competitors. Since the Global Financial Crisis, the European companies along with their counterparts from the rest of the world has changed or updated their business model, as it can increase the profitability and revenue of the organization. A clear and well-structured business model shows efficiency in the production process of a company. Sebapharma of Germany and Apivita of Greece have been operating in more or less the same industry for quite a long time. The business plans of these companies have outsmarted their rivals in their respective countries. With constant innovation and efficient distribution system, these organizations have avoided the financial crisis of 2007. The business models of these companies are well structured. Axel Springer SE of Germany has a clear business model which helps the organization in creating and distributing high quality information (Axelspringer 2016). The organization's extensive holdings incorporate successfully authorized multimedia label groups like DIE WELT and BILD. It also includes newspapers, magazines, and ventures in TV and radio companies. The shipping company Thenamaris has improved their business model slowly to survive in the industry. Since the financial crisis of 2007, the organization has made its business model to acquire the maximum of the domestic market. This attribute helped the company to survive the blow of the Global financial crisis. Start-ups: The post-Global Financial Crisis period has seen a high rate of unemployment. Due to the weak level of demand, the production has stopped in many organizations. This situation had the potential of starting a stagnating depression. Due to the failures of banks, funding the start-ups had gone down largely. As stated by Davenport (2013), this situation calls for new entrepreneurs who can create new job opportunities for the unemployed persons. This system absorbing the unemployed population of the member countries of the European Union will help their economies grow, collectively. The tour conducted in the European companies are not startups, but the financial crisis had led to a situation, where the old organizations are creating new business models and innovating their products along with the production process. These companies needed such intensive care which is required by a start-up. To survive the financial crunch, the companies can take help from their governments in the form of subsidies, rebates, and others (Bergek et al. 2013). Digital revolution: As stated by Reynolds et al. (2014), the digital revolution is referred to the change of technology from mechanical and analog to digital electronics used in the organizations operating in several industries. With digital revolution in the industry, the organization in that industry can ensure less cost of production and efficiency in the manufacturing process. Digital revolution is costly at first but reduces the cost of production in the long run. The visited companies in Germany and Greece can use this process to change the production mechanism to a more digitalized way. The existing companies in the European Union use computerized technology for production as it helps the organizations in producing more units with efficient and low costs. This attribute can help an organization in expanding. The digital revolution is a portion of the theory given by Schumpeter of the evolution of socio-economy. According to Clark, Osterwalder and Pigneur (2012), with more concentration on the digital revolution, creative destruction occurs. It increases efficiency in every tier of the production process. New skilled and unskilled labors get absorbed in the production system of the organizations. Hence, it is also beneficial for the country where the organizations are operating. Re-invention: According to Schneider and Spieth (2013), sometimes creating new technologies are not the answer for all the problems an economy faces. With the introduction of new technologies, new workers get employment, but if the innovation is a disruptive one, often it destroys previous employments. If new business plans and models are taken into consideration, people from the previous model might not fit into the new structure of the organizations. According to West, Ford, and Ibrahim (2015), this will create more unemployment. There is one way to ensure that both the new and technologies bring the change that the economy needs, and that is re-invention. It means an organization updates its old business model with new technologies and ideas rather than throwing the old model out of the production process. This will help the workers of the old business model to adopt the new technologies and remain in the productive side of employment. Sebapharma has reinvented its business model keeping at par with the old model. The new techniques being used by the medicinal skin care company are not disruptive in nature, giving the old workers ample time to fit in with the new system. Apivita of Greece is following the same procedure to survive the ups and downs of the business cycle (Apivita 2016). Axel Springer SE of Germany has followed the procedures of reinventing its business models which kept the organization in an advantageous position. Reinventing the business model has guarded the organization from all the issues that came in the economy where the organization operates. Even when the European economy was largely affected by the Global Financial Crisis Axel Springer SE has expanded its business over Europe. This was possible due to the reinvention strategy followed by the organization. Thenamaris is operating in an industry where new invention takes time and resources. Reinvention in this organization will make Thenamaris more attractive to the clients and consumes fewer resources. This will increase the market demand for the services provided by the company. The stock price for the company will also rise (Thenamaris 2016). Corporate entrepreneurship: Corporate entrepreneurship is largely defined as a system which goes on within an existing organization leading to new business ventures. It also ensures new products and services. This pushes an organization ahead in the race with its competitors. The existing teams in an organization find ways to foster and launch a new business which different from the parent organization. As stated by Leih, Linden and Teece (2014), the benefits of the new business serve the purpose of the parent organization increasing its assets, resources, and position in the market. This was suggested by the economists during the period of financial crisis, as it can absorb more men and create employment by the economists during the period of financial crisis, as it can absorb more men and create employment. This was also suggested because the start-ups had little resources to include the unemployed people. Hence it will be beneficial for both the organization and the economy. The German company Axel Springer SE has followed this strategy by creating new brands like BILD, WELT, and FAKT. This process has absorbed more than 15,000 persons. Steps like this by the established firms increase employment and strengthen an economy. The other visited companies have also adopted this strategy to increase their assets. In the backdrop of the Global Financial Crisis, the major affected economies all over the world have tried to get up from the stagnating depression caused in the year 2007. Many established organizations and startups helped in this process. Many people lost their jobs during the crisis. These organizations like organizations like Sebamed(Sebapharma) and Springer SE in Germany and Thenamaris Shipping company and Apivita farms in Greece, absorbed many of those unemployed people. These organizations improved their business styles and models to survive in the long run, which in turn, benefited the economies of the countries where the organizations operated. References: Apivita, (2016). Our history. [online] Apivita.com. Available at: https://www.apivita.com/our_history [Accessed 2 Nov. 2016]. Axelspringer, (2016). Company Structure Axel Springer SE. [online] Axelspringer.de. Available at: https://www.axelspringer.de/en/artikel/Company-Structure_40339.html [Accessed 2 Nov. 2016]. Bergek, A., Berggren, C., Magnusson, T. and Hobday, M., 2013. Technological discontinuities and the challenge for incumbent firms: Destruction, disruption or creative accumulation?. Research Policy, 42(6), pp.1210-1224. Bock, A.J. and George, G., 2014. Agile Business Model Innovation. European Business Review, p.8. Boons, F., Montalvo, C., Quist, J. and Wagner, M., 2013. Sustainable innovation, business models and economic performance: an overview. 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