Supporting business model decisions: a scenario-based simulation approach

Abstract

Abstract:A key challenge for entrepreneurs is to find a robust and scalable business model. In complex environments, business model decisions often build on highly uncertain assumptions. The uncertainty increases when the entrepreneurial venture is confronted with unexpected changes in the environment. This paper proposes an approach to support entrepreneurs in understanding the future implications of their business model decisions. The approach combines system dynamics simulation modelling with formal scenario building. The paper presents a novel conceptual approach to modelling business models. It develops a business model simulation for a multi-sided platform such as the online marketplace eBay. The paper builds future scenarios to conduct simulation experiments that incorporate the uncertainty of developments external to the firm. Based on historic data of eBay, it demonstrates how the scenario-based simulation approach allows comparing the implications of different revenue model options on eBay's performance. Finally, the research discusses the general applicability of the scenario-based simulation approach as a tool for entrepreneurial decision making.

Understanding platform business models: A mixed methods study of marketplaces

“…featurebased for premium services) (options derived from Osterwalder, 2004). For marketplaces, the business model is further defined by the decision to monetize supply-side participants, demand-side participants, or a third party (Täuscher & Chafac, 2016). Since we focus on start-ups, we further include the option 'none' if the firm has not yet started to monetize its services.…”

From a traditional steel producer towards an industrial product-service systems provider in the German offshore wind market - a system-oriented practical case study

“…The discipline of systems thinking is needed, because of the assumption, that humans draw incorrect conclusions and hence make erroneous decisions due to limited perception of the human mind and imperfect information (Richmond, 2013). Systems thinking principles like focusing on causal relationships and feedback loops provide a deeper and holistic understanding of a decision-making problem (Banson, 2015;Täuscher and Chafac, 2016). System dynamics is a quantitative and experimental approach, which provides a basis for the design and understanding of effective economic and industrial systems (Forrester, 1958;Morecroft, 2015).…”

“…Such as understanding the structure and behaviour of a whole market as well as for understanding and analysing different business strategies (Banson, 2015;Nguyen et al, 2015;Torres et al, 2017). Further, System Dynamics is used for analysing decision-making problems concerning the adaption of partial models within business models in manifold contexts (Maani, 2004;Meier and Bosslau, 2013;Abdelkafi and Täuscher, 2016;Täuscher and Chafac, 2016).…”

“…In particular, literature concerning business models primarily concentrates on defining and categorising business models. However, little research focuses on operationalising business models for enhanced decision support (Täuscher and Chafac, 2016). Besides that, there is no support regarding the acquisition of the required competencies taking into account the special characteristics of the offshore wind market.…”

From a traditional steel producer towards an industrial product-service systems provider in the German offshore wind market - a system-oriented practical case study

“…The discipline of systems thinking is needed, because of the assumption, that humans draw incorrect conclusions and hence make erroneous decisions due to limited perception of the human mind and imperfect information (Richmond, 2013). Systems thinking principles like focusing on causal relationships and feedback loops provide a deeper and holistic understanding of a decision-making problem (Banson, 2015;Täuscher and Chafac, 2016).…”