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Business model research in emerging markets

Priority areas of development: management
2015
Department: Laboratory of Network Organizational Forms

Goal of research: The object of this study are business models, their features in different sectors in emerging markets. 

The project goal was to develop and test an approach to the analysis of BM, in the context of establishing a common conceptual framework and consolidation of the various areas of managerial studies. In order to achieve the goals the following problems were set and solved:

  • Development and testing of a mixed methodology of qualitative and quantitative research design for BM as well as the general scheme and sequence of study;
  • Testing methodology for assessing the operational perspective of business model in the steel industry;
  • Qualitative research among managers of Russian and international companies. Research of specific features of non-store retail BMs (e-commerce and direct sales);
  • Analysis of the innovative business models formation and implementation;
  • Case research of BMs in emerging markets.

Methodology: The research project used a set of methods, including inductive and deductive method, statistical analysis methods, the method case study research, the survey method, the method of in-depth interviews.

Empirical base of research: This project is based on various sources of information (surveys of top and middle management, individual entrepreneurs, official statistics, materials of international organizations and think tanks). In particular, the project used data of Rosstat, World Bank and the OECD, annual survey of business executives published by the World Economic Forum, Global Competitiveness Report, reports by analytical and rating agencies, materials, quarterly and annual reports, company websites..

Results of research:

The novelty of the research and the most important results are as follows:

  • In the research project presented the network approach to BM analysis was operationalized and tested. This approach uses an interconnected network of market agents as the unit of analysis instead of a separate company. In this framework the process of value creation and distribution along the value chain is regarded as a joint mechanism with allows value distribution based on the power and dominance of the chain members. This approach validated the sequence of BM analysis (a scheme), which provides:
  1. conducting of the simultaneous analysis of the network of actors and their roles in relation to the dominant node (the analysis and visualization of a network and dominant actors);
  2. explanation opportunity of the mechanism of interaction of adjacent chain links and the contribution of the dominant actor in the coordination of the interaction processes;
  3. evaluation of possible failures (mismatch) in conjunction players (analysis of interaction), and suggested methods to prevent them;
  4. the possibility of monitoring the results of the interaction of agents in the network dynamics (products / services, information, cash flow, the change in position in the network, change the flow of client), creating conditions for the sustainable chain.
  • As a result of testing in the pharmaceutical market BM structure was visualized, the main groups of participants of the value chain and their role were identified; classification of BM in the market depending on the position of the dominant unit was introduced. Also the results of the interaction mechanisms and focal firms and other participants in the chain were analyzed. As a result, the possible failures arising between different groups of participants were classified as well as ways to overcome them available to the focal firm.
  • Developing the logic of assessment of working in an emerging market BM, project participants tested the proposed approach on the steel market and have demonstrated a wide range of approaches. It was shown that in the steel industry the essential element of the BM is the value chain (including its operational and logistical units) as the basis for the organization of key business processes and costs-effectiveness modeling the of business. On the basis of the content of metal production options a generic value chain in the steel industry was built, the model of logistic components of BM was developed, and a matrix of possible BM configurations for metallurgy companies was suggested. Also the gradient of the value chain in the steel industry was described. With detailed technological and logistic component of the matrix of possible BMs the analysis of modern BMs was conducted for the leading companies in the steel industry of the Russian Federation.
  • On the basis of secondary information the analysis of the current state of the sector nonstore trade was conducted the barriers  to the development and growth potential nonstore trade were identified.
  • Empirical data obtained as a result of in-depth interviews with representatives of companies in the field of e-commerce, as well as independent distributors nationwide study (which was conducted laboratory), served as the basis for identifying characteristics of BM in this area.
  • According to the results of the analysis the sectoral context was proved to have a significant impact on the formation and development of BM in nonstore trade. At the same time active Internet penetration growth in the Russian Federation contributes to both the formation of new forms and the transformation of the nonstore trade as well as the existing BM transformation
  • Based on the analysis of secondary data and materials 36 in-depth interviews with the leaders of the Russian companies in e-commerce industry the drivers of the market growth were identified as well as the key consumer choice criteria: comfort, price and proposed range. It is also one of the features of companies’ BMs in e-commerce to develop omni-channel communication that combines online and offline consumer experience. As the result the consumers can gain access to retail brands in various ways, anywhere and anytime.
  • The result of the analysis on the impact of Internet technology activities in direct sales distributors identified two main points. On the one hand, technology helps distributor in performing analytical, marketing, communication and logistics functions. On the other hand the availability of information on the company's website and other resources reduces the importance of the distributor’s role in the BM. The study revealed the differences in the use of real and virtual channels of communication in different customers’ and distributors’ age groups. Young people are more active in the Internet. Despite the "under-utilization" of these technologies in communications, the older generation of distributors shows higher sales performance. Analysis of variance showed that, despite the introduction of Internet communications in BM direct sales, the priority of interpersonal communication is present for all age groups.
  • The report presents the results of new studies of innovative business models, IBM for the purpose of strategic business adaptation to the challenges caused by changes in the business environment in Russia and ensure its competitiveness. In individual case studies the two main types of IBM are highlighted and shown (new design and reconfiguration of the existing BM) as well as BM categories (types) (descriptive, normative, instrumental and managerial and didactic).
  • On the basis of the 4I innovative BM development model and the evolution analysis of the models of innovation processes certain opportunities of strategic analysis and marketing research methods application in the design process and the transformation of the IBM.
  • In the final section of the study various cases of the proposed schemes of BM and IBM analysis and implementation are demonstrated in the Russian market.

Publications:


Ideas in Marketing: Finding the New and Polishing the Old. San Francisco : Springer International Publishing, 2015. 
Kolesnik N. A. Interorganizational Network Management Model, in: Ideas in Marketing: Finding the New and Polishing the Old. San Francisco : Springer International Publishing, 2015. С. 726-734. 
Rebiazina V. A., Smirnova M., Podmetina D., Volchek D. Uncovering Driving Forces for Better Product Innovation: Have Russian Firms Learned to Balance the Focus on Internal and External Partners?, in: Adoption of Innovation. Balancing Internal and External Stakeholders in the Marketing of Innovation. Switzerland : Springer International Publishing, 2015. С. 197-222. 
Rozhkov A., Smirnova M. M., Rebiazina V. A. Customer orientation in emerging markets: concepts and empitical tests, in: Emerging Markets and the Future of the BRIC Nations. Massachusetts : Edward Elgar Publishing, 2015. С. 170-191. 
Стерлигова А. Н. Логистический контекст бизнес-модели предприятия // Логистика и управление цепями поставок. 2015. № 1. C. 24-34. 
Rebiazina V. A., Smirnova M., Khomich S. Cooperation at Different Stages of Innovation Process: the Effect on Company's Performance / Graduate School of Management Saint-Petersburg State University. Series # 4 (E)-2015 "Working Papers". 2015. No. 4. 
Kolesnik N. A., Tretyak O. Internet Technologies in Communication Strategies of Distributors, in: 17th Eurasia Business and Economics Society (EBES) Conference Proceedings. Venice , 2015. С. 1897-1906. 
Daviy A., Rebiazina V. A. Investigating Barriers and Drivers of the E-Commerce Market in Russia / Высшая школа экономики. Series MAN "Management". 2015. No. WP BRP 40/MAN/2015. 
Колесник Н. А. Модель анализа взаимоотношений с партнерами в межфирменной сети, in: Современный менеджмент: проблемы, гипотезы, исследования. Вып.6 [Электронный ресурс]: Сборник научных трудов. Москва : Издательский дом НИУ ВШЭ, 2015. С. 23-36. 
Колесник Н. А. Функции создания ценности в межфирменных отношениях, in: XV апрельская международная научная конференция по проблемам развития экономики и общества: в 4-х книгах. Москва : Издательский дом НИУ ВШЭ, 2015. С. 241-250.