Competing Through Business Models

Course Number 1250

Associate Professor Ramon Casadesus-Masanell
Fall, 29 Sessions
Student choice of exam or paper

The course addresses the following questions: What is a business model? What features should a good business model possess? How do the business models of industry participants interact with one another? How robust is a business model to actions by other industry participants? How aggressively can a given business model distress those of other industry participants?
The course has three modules: Business Model Essentials, Competitive Interaction, and Competing with Business Models.

Business Model Essentials

The first module introduces the notion of business model. The goal is to initiate the study of the dynamic properties of a variety of business models and assess whether those contribute to the development of a sustainable competitive advantage. This section builds on and extends the Competitive Advantage module in the Required Curriculum Strategy course and purposively studies the dynamics of business models in isolation from those of other players (such as competitors, complementors, suppliers and/or buyers).

How well a given business model works depends not only on its inner structure but also on the models used by competitors and other constituents of the business landscape. This observation brings us to the second module on competitive interaction.

Competitive Interaction Essentials

The second module presents techniques for the study of competitive interaction. Interdependence in decision-making presents tremendous opportunities for the design of robust business models. We will adopt both the leader and the follower's perspectives. From the point of view of the leader, we will study techniques to deter strategic threats. From the follower's perspective, we will consider methods to successfully attack established leaders. We will examine in detail the logic of the sequences of moves and countermoves and the resulting transformation of the competitive landscape over time.

This section is divided into several sub-modules each tackling competitive interaction in a different strategic variable:
price, product positioning, capacity, technology, and entry/exit. This module is decisively quantitative and the cases will demand thorough analytical work by the students prior to each session.

Competing with Business Models

The first two modules equip students with the basic concepts and tools necessary to satisfactorily embark on the analysis of competition through business models. While the first part of the course studies business models in isolation of those of other players, the third module focuses on the interdependencies of a firm's business model with the models of other industry participants (competitors, complementors, suppliers and customers). We will see that the ability of a business model to realize its full potential depends not only on its own internal configuration but most importantly on the features of the business models chosen by the other players with which the firm interacts. This part of the course brings together the first and the second modules as it infuses competitive interaction into the analysis of the dynamics of business models.

The third module reveals that competing with business models entails more than simply managing individual strategic variables (lowering prices, launching new products, or boosting advertising spending). Competing with business models means stimulating existing and creating new dynamic competences while concurrently blocking and destroying competitors' competence endowments. The goal of this module is to discover ways to configure business models that neutralize the undesirable features of other players' models and, at the same time, build a sustainable advantage.