The French firm, Webraska, was established in 1998 to offer a wireless navigation solution as an alternative to maps and CD-ROM based car navigation tools. The business model was based on access through mobile phones and car terminals, and on different access modes such as SMS, WAP, and call centers. An apparent shift in demand from wireless carriers away from purchasing turnkey services toward owning the technology platform begged the question of whether the company should modify its business model to become a software vendor.
The teaching objectives are: (1) to give an example of a firm that was faced with the fundamental choice between two business models; (2) to sharpen the understanding of the value drivers of business models, which define the potential of the business model for value creation, and thus help in evaluating, and comparing different business model designs; (3) to add dynamic considerations to the static analysis of business models, and to highlight that evolution of business model designs may involve considerable challenges: (a) requirements in terms of credibility and legitimacy and established partnerships that may not be easy to fulfill, especially for young firms; (b) organisational costs of shifting; (c) opportunity costs of not shifting; and (c) loss of flexibility (eg, getting locked into a business model that may not be optimal when the environment changes the next time); and (4) lastly, to learn about a new industry (wireless telecommunication) and a new life cycle stage (start-up, early stage).
- Business model
- Value creation
- Entrepreneurship
- Competition
- New venture
- Venture design
- Change
- Telecommunication
