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18th Bled eConference eIntegration in Action Bled, Slovenia, June 6 - 8, 2005

Business Model: a prerequisite for success in the network economy

  • 1.

    Elena Tavlaki

  • 2.

    Euripides Loukis

University of Aegean, Greece etavlaki@aegean.gr eloukis@aegean.gr

Abstract The contemporary network economy is built on powerful fixed and mobile network infrastructures. These infrastructures provide the solid ground for the continuous and rapid introduction of innovative both telecommunication services and business application servicesOne of the most critical preconditions for the success of these services is to be based on sound business models. Especially today, in the dawn of the networked economy, the concept of business model is not a theoretical tool but a prerequisite for success. Business model is one of the most common factors encountered for, when Internet firms succeed in business. Furthermore, the rapid introduction of innovative applications necessitates the rational design of their business model. However, despite the extensive use, and sometimes misuse, of the business model concept, there is not extensive the scientific research that has been conducted in this area. Moreover, there is still some ambiguity concerning the exact meaning of this concept, which results in a diversity of definitions and a confusion in terminology. In the present paper, initially we present a literature review on the theoretical foundations of business model presenting its definitions- and its components. . Then we focus on the research that has been conducted so far concerning methodologies for designing new business models, we identify its shortcomings and we propose a new framework for ‘digital’ business model design, by implementing it in a real - life business case.

1 Introduction

The contemporary network economy is built on powerful fixed and mobile network infrastructures. These infrastructures provide the solid ground for the continuous introduction of innovative both telecommunication services and business application services. Nevertheless, the exploitation and the profitability of these network infrastructures depend heavily on the commercial success of the services running on them. The innovative services and applications changed the ecosystem of the economy and created new market space. A critical precondition for the success of these services is to be based on sound business models, as business model is one of the most common factors encountered for, when Internet

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