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Business Model Analysis for Mobile Business

Mobile business is a young promising industry created by the emergence of wireless data networks. Similar to other emerging industries, it is characterised by a large number of uncertainties at different levels, in particular concerning technology, business strategy and consumer demand.

This essay focuses on analysing several strategic approaches used by these businesses to position themselves in the most favourably in the value system, as well as to manage strategic uncertainties.

This work intends to achieve that by applying business model analysis methodology for better understanding of the strategic approaches of these actors, and will make a case for successful business models, which are likely to be the ones best addressing the economic issues underlying the industry, mobility, network effects and natural monopolies.


Business Model Analysis for Mobile Business







Business models usually comprise of four basic elements (Osterwalder & Pigneur, 2002). These elements will form the basis of this paper as they will lead to strategies that can be applied by mobile businesses. These elements are: 1) value proposition that deals with innovation of a product and delivers value to the customer (Bouwman, 2002), 2) the relationship strategy and channels that are used in defining and reaching customers, 3) the infrastructure required to fulfil the value proposition which contains the resources that are required by partnership networks and internal activities, and 4) the financial aspects of a firm which include the capital base and ultimately deals with profitability.

The mobile business sector is very fragmented due to the fact that there are many actors required for its success. The main actors are technology, networks and applications. The middle of the pyramid has mobile users who have varying needs that must be fulfilled. These needs are fulfilled by three different clusters of support and complementary blocks. They are: technology, which deals with hardware, network equipment, mobile platforms and devices; communication, encompassing transmission capabilities of different networks; and services, which include content, user applications, and support services (Looney et al, 2004). These clusters have to be analysed within social contexts that inhibit or enable them and also within a regulatory framework. Subsequent discussion will analyse some of the most successful mobile businesses as well as some that are not successful. The final part of the paper will offer factors that are deemed central to success.


One of the most successful mobile businesses is Uber. The company which started in San Francisco has spread to over seven cities including Paris (Heath, 2011). There are many reasons why the company has succeeded so rapidly as well as numerous challenges that it has faced.

Pricing and experience

First, Uber’s prices and experience have given it a competitive advantage. The company has three pricing mechanisms including fixed rates from airports, standard rates that are charged per mile or minute and the dynamic charge. The overall prices for Uber experiences are nearly twice those of common cabs. Nevertheless, customers have taken to the service due to the convenience it affords them. A customer does not have to spend long hours waiting for a cab. After ordering for a cab through a mobile app, the driver arrives within 10 minutes and calls the customer by name (McClaine, 2012). Although the prices are a bit high, there are no incremental fares for additional customers in the same cab.


The vast network of Uber cabs is also an advantage. Rather than own these cabs, the business leases them from individual owners and takes 25% of the proceeds. These monies are paid through the mobile app as long as the company possesses the customer’s credit information. The app allows for synchronization of driver positions with Uber customers and allows for real time planning of the job (Russell, 2012).

To achieve efficiency, Uber has two technological components that have contributed to its success. The first is the user interface and the second is the demand calculation system. The app uses GPS on android and iPhone devices to locate users relative to Uber cabs and ensures that there is little lag time between requesting for a Uber cab and the arrival of one (Robbins, 2011). The company constantly updates its app so as to incorporate the most recent technologies.


Most of the mobile businesses that have enjoyed success have done so through mimicry of technology firms rather than the industry they operate. Kalanick, Uber’s founder, utilised his employees’ competencies and knowledge to seek ways of challenging established businesses in the transport industry. He never wanted the business to be considered a service of typical cab company. The main strategy was to position the company as an innovation that would revolutionise a technologically stagnant industry. Rather than buy cabs, the company utilised already existent infrastructure by introducing efficiency, a commodity that customers were willing to pay for (Sinanian, 2011). The transport industry in the US is heavily regulated meaning that the players have little incentive to invest in revolutionary techniques. This gap was exploited by Uber in its revolutionary business.

The gap created by technological stagnation in the US transport sector was utilised by Uber through a noisy entry strategy. Kalanick used his flamboyance and charisma to promote the company outside the traditional media. Since the target customers for the product were individuals owning smartphones, the most utilised promotional channel was social media. Around 50% of the population in the US owns a smartphone (Tofel, 2010) and due to the inconveniences experienced in the popular taxi cab industry, the company identified a gap where customers yearned for cleanliness, professionalism and convenience and were ready to pay a premium for it. The highest growth has been at individuals in the professional class but the uptake for the product has transcended class differences.

Kalanick realises that the most valuable asset at Uber is human resources. As such, the company has pushed its executives to map as many inputs and outputs as they can in order to track them technologically (Bacon, 2012). This has led to the company consistently beating its own revenue and growth forecasts. The company values information and has adopted progressive metrics for measuring customer experiences, level of service, and quality of products offered. These metrics are developed and monitored using sophisticated technologies.

The main suppliers for the Uber business are the cab drivers and owners. Since Uber has its own pricing mechanism independent of that of regular cabs, the company seeks to make its drivers happy by allowing them to keep 75% of the proceeds. The company’s 25% is a high amount considering that Uber prices are on average 50% higher than those of normal cabs (Reed, 2012). In order to ensure that drivers adhere to Uber quality standards, the company has invested in a driver monitoring program that has been utilised to high levels of success. Uber users get access to driver rankings and are allowed to make decisions depending on their perceptions. This competition between drivers has created a positive working environment with every driver striving for a higher standard in order to be a user favourite.


There are many uncertainties and challenges that the company faces. The first is legal issues dealing with taxi regulations (Mangalindan, 2012). These laws have seen the prices of a medallion move from $10 in 1937 to about $1 million in the latest medallion auction (Grynbaum, 2011). The rigidity of rules and the constant demand for cabs has created a major challenge for the company (Shontell, 2012). Since the company does not own any cabs, it has no way of controlling regulation for those it is in contract with. There have been numerous tussles with taxi commissions and other interest groups keen on preventing Uber from leveraging its prompt service to take customers away from a business whose technology intake is low (DeBonis, 2012).

Other businesses

Success has been realised by many mobile businesses. Zynga, for example, a company that produces games primarily found on Facebook, raked in $830 million in 2013. Another popular game maker, King, that produces the addictive Candy Crash Saga generated about $2 billion in the same year. These companies among many others including the makers of the very popular Angry Birds game, Rovio, were some of the most profitable start-ups in the last couple of years. Statistics however indicate that Zynga and King have lost considerable ground after offering their IPOs while Rovio, estimated to be worth between $6 billion and $8 billion in 2012 is currently worth less than half that amount (Hayes, 2015). There are numerous reasons that can be cited for the bad performance of some of these mobile businesses including the fact that consumers have a short-term memory and fail to follow up on some of these ventures due to the abundance of similar offers. Consumers do not become loyal to some businesses because they are short-term in themselves and they usually lose interest after the first download. After initial usage, many users delete these apps and move on to the dearth of similar offerings.

Some of the most successful mobile businesses include Facebook, Whatsapp and Google +. Among the top ten bestselling apps in the market today, six of them are owned by Google whereas the others are owned by large technology and social network companies (Varshneya, 2013). The trend indicates that the success of a mobile business requires a different approach from that of the industry that the business seeks to compete in. additionally, app-specific businesses seem to be losing prevalence as consumers shift towards free apps that are downloaded by users. Nonetheless, businesses like Uber and AirBnB, used by people seeking to let their homes, seem to be performing well in the market. Industry commentators however argue that such success may be fleeting and that mobile businesses require a combination of factors in order to become successful.

Factors for success

The strategy that is best for a particular business is that which maximizes its overall benefits. Mobile networks being prevalent in the world today means that they can no longer be utilised as tactical or piecemeal solutions to identified business problems but rather as strategic tools to achievement of set objectives (Gebauer & Shaw, 2004). There are many ways that mobile businesses today can maximize benefits that they accrue. The specific approaches can be interpreted as strategies and should be adopted not individually but rather as a comprehensive method of goal achievement.

Customer focus and service

Businesses today recognise that central to their success is customer service. The proliferation of Tablets, Smart Phones and the more traditional laptops equipped with unlimited internet capabilities means that businesses now have the capacity to make customer service a central focus.  Customers are increasingly becoming more knowledgeable on the products that they consume and continuously require information on products and services (Constance & Gower, 2001). There are also numerous similar businesses that are being started meaning that customers are usually spoiled for choice. Businesses now have the capacity to promptly address customer queries through utilization of mobile capabilities. Service personnel should have ready access to information about the company relevant to customers and should avail it on demand and where necessitated. Additionally, sales executives should log into customer sites and proactively search for customer preferences in order to make recommendations on product and service improvements in anticipation of customer shifts (Andersen et al., 2003). Some of the most successful mobile businesses have fallen prey to the attacker’s advantage since they have failed to be proactive in the market. Many of mobile business start-ups usually have novel and innovative ideas that usually lead to initial success. However, failure to fill cognitive holes and the diseconomies of scope lead these businesses to lose ground to new entrants with fresher but inherently similar ideas.

Mobile businesses are additionally more prompt in delivery of products to customers (Tarasewich et al, 2002). There is a direct link between customers and sales executives made possible by new technological capabilities that allow for prompt exchange of information. Mobile businesses should use numerous resources available to them to ensure that their products and services receive maximum visibility. They should continuously send promotional material to customers in order to inform them of product and service offerings or seek clarifications on product and service preferences (Ryan & Harrison, 2000).

Cooper et al (2000) argue that one of the main intangible benefits of increased technological capability is improved customer service. There has been increase in the space for interaction between service providers with customers. Enhancement of IT capabilities can create switching costs for consumers and increase the bargaining power of suppliers consequently enhancing the competitive position of the business in question (Jarvenpaa et al, 2003). However, since this advantage may apply to all mobile start-ups, it is important that individual businesses craft more innovative ways of reaching their customers than their competitors.

Maximizing image

Mobile businesses have the opportunity for maximizing their image. Businesses that have achieved a high level of wireless data network integration appear more proficient in comparison to those still utilizing traditional methods of data sharing and processing. The increased capacity from IT integration allows leaders in the mobile business industry to create innovative products and consequently a competitive advantage (Porter, 1979). IT ensures that business operations are flexible so that much of the time is used in the generation of new knowledge (Griffiths & Finlay, 2004). Businesses whose sales representatives use new cutting-edge technologies in promoting to different customer groups appear innovative and may attract customers by association.

While traditional business requirements like knowing product offerings and characteristics are still relevant today, they are assisted by IT (Kohli & Devaraj, 2004). This means that sales executives have the requisite knowledge about products and services at their fingertips. They can promptly disseminate this information to interested customers as well as promptly confirm details that may have been updated or they forgot. Thus, businesses appear capable and confident bolstering their image (Barnes, 2002).

Human resource capacity building

Businesses today recognise that their most important resources are human resources. They thus invest in building capacity of these human resources as well as maximizing their satisfaction. Traditional executives in the business environment used to carry loads of files as part of their jobs. In many businesses, sales executives are expected to stay after their normal working day or reduce their time with customers in order to compile papers. While many businesses today have invested in IT, they have not reached the level of proficiency that allows data recording and storage to be simultaneous with customer interactions (Conaty & Charan, 2011). However, increased internet capacity allows for businesses to interact with their customers for a longer period and in essence get more work done. The sales representatives do not have to take work home and are not overworked which improves their overall quality of life.

One of the most important factors in motivating employees is creating a sense of belongingness and teamwork (Collings & Wood, 2009). Mobile technologies have allowed for more collaboration between sales representatives, allowing them to exchange information promptly and create a sense of community. This enhanced communication capability promotes job satisfaction and consequently increases the outputs of individual employees. According to Bartel (2004) mobile technologies have increased organisational performance.  This has led to the decrease in employee turnover and has also led to the decrease in costs of recruiting new employees and training (Kraemer & Dedrick, 2002). Businesses like Uber benefit from having a management team whose skills and competencies have been mapped to ensure that they contribute the maximum to the organisation. The leadership of the organisation also fosters exemplary performance by allowing individual employees the space to freely contribute any ideas that they may have regarding creation of a competitive advantage, product improvement and future strategy.

Maximising effiency

All businesses are striving for efficiency in order to meet their goals and objectives in the best possible way. Mobile technologies are important in maximizing effectiveness and efficiency. Sales representatives are not only empowered in having product information readily available but can also better demonstrate visual product representations to clients (Davis, 2002). All tasks that employees in an organisation are charged with executing can be done in an efficient manner and in the least time possible meaning that production is increased. Efficiency overlaps with quality customer service as employees in this department can promptly and better respond to attendant customer queries. Sarker and Wells (2003) assert that “mobility means efficiency”. Mobile technologies can help reduce the slack time. During periods when a lag is present, employees can carry out other functions like relationship and indirect marketing. They can send emails to prospective clients and secure future business for the company.

Minimizing costs

Mobile technologies can be applied as strategic tools in the minimization of costs for a business. IT allows for correspondence between suppliers and businesses to be done online meaning that there is a reduced need for incurring costs on physical records (Frank & Heikkilä, 2002). Businesses that deal with direct marketing can utilise mobile technologies to distribute promotional materials to prospective customer phones and email addresses. This reduces the need for the company to rely on personalised promotional materials like catalogues and brochures. This strategy has been successfully utilized at Uber in the way that the company interacts with cab drivers. The company spends very little in cab maintenance since a large percentage of the proceeds are transferred to them since they are the owners of the infrastructure.


            Mobile businesses have the opportunity to capitalise on changing global trends especially due to proliferation of wireless data networks as well as access to smart phones and other mobile devices like Tablets. These businesses can utilise the strategies of traditional business but are required to tweak these strategies in order for them to be relevant to the specific kind of business. Just like traditional businesses, their focus needs to be on customers, quality of products, efficiency in production, substantial investments, competent human resources and appropriate promotional strategies.



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