Building resilience: an introduction to business models

September 27, 2013 Leave a comment

Building resilience: an introduction to business models 

August 06 2013

In today’s business environment it is more important than ever that organisations understand their business model, and are ready to adapt it to counter external threats.

Building resilience: an introduction to business models looks at how business models function and the factors that contribute to their success and failure.  It explores examples of innovative business models disrupting their markets as well as business models which have failed. It also looks at how management accountants can help build business model resilience into strategic planning. Our commercial environment is characterised by rapid change. New technologies are introduced, customer behaviours and desires shift with globalisation, supply and distribution chains mutate. And all at speeds unprecedented in economic history. This means that a business model which worked yesterday could fail tomorrow. With a holistic view of their organisation, management accountants are well placed to understand this link between the business model and commercial success.PUBLISHED SEPTEMBER 27, 2013

RESILIENT BUSINESS MODELS

Strategy and the business model

THE Chartered Global Management Accountant (CGMA) report, Building resilience: An introduction to business models, examines how business models function and the factors that contribute to their success and failure.

The CGMA designation was established by a joint venture between CIMA and the Association of International Certified Professional Accountants (AICPA) to elevate and build recognition of the profession of management accounting.

The report explains the difference between a company’s strategy and its business model, concepts that are often mistaken for each other.

“Strategy can be defined as the course of action, including specifying the resources that are required, that an organisation follows to achieve its specific objectives.”

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PUBLISHED SEPTEMBER 27, 2013

RESILIENT BUSINESS MODELS

A blueprint for success in business

Companies need to build solid models to both make money and respond effectively to changes. By KAN KWOK LEONG

Turning around: Kodak recently emerged from bankruptcy with a new business model focused on selling printing equipment and services to businesses. – AP FILE PHOTO

WHILE it is a given that all companies exist based on a set of principles that dictate how they operate and create value, what many fail to do is ensure that their business model is crafted to be both effective and flexible enough to deal with unexpected events.

Whether it is formally planned or made up along the way, all businesses have a model based on a system of inputs, business activities, outputs and outcomes with a view to making money or creating value over the short, medium and long term.

For instance, an Internet start-up that is looking to offer a social networking app will understand that it needs to create the app itself, attract users to it and, after it has built up a sufficiently large audience, monetise its product by selling advertising or premium services. While this notionally forms a business model, whether it is resilient enough to stand up to the realities of a competitive environment is another question.

“What is really important is that the business has an effective business model – one that will make money for the business. It’s also important that the business model is flexible so that it can be adapted to a changing environment,” said Gillian Lees, head of governance and risk at the Chartered Institute of Management Accountants (CIMA), in an interview with The Business Times.

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Unknown's avatarAbout bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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