RyanAir managed to intro­duce a busi­ness model inno­va­tion in the heavy regu­lated airline industry. The value propo­si­tion is to provide low budget travels with signi­fi­cantly lower air fares. To deliver this value propo­si­tion in a profi­table way, RyanAir uses key processes like short haul flights, a stan­dard fleet, low commis­sions to travel agen­cies, contract manage­ment with secon­dary airports and neigh­bou­ring commu­nities, no meals, tough nego­tia­tions, high-­powered incen­tives, word of mouth adver­ti­sing, an econo­mies of scale. It also uses key resources such as a stan­dar­dized fleet of 737s, a non-u­nio­nized work­force and spartan head­quar­ters.



Based in Germany, the company was founded in 2002 and offers an online plat­form for private indi­vi­duals and commer­cial orga­niza­t­ions to design, buy and sell crea­tive and perso­na­lized apparel. Basi­cally, users are equipped with an online toolkit which allows them to create and upload designs which can be placed on a variety of garments, inclu­ding T-shirts. The toolkit gene­rates a piece of HTML code which the desi­gner can then embed in his/her own web site. The code displays the designs and links to an inter­face where people can purchase the apparel. Spreadshirt handles all of the back-end func­tions, such as manu­fac­tu­ring, payment and after-­sales support. The desi­gner can choose to take a commis­sion in addi­tion to the price charged by Spreadshirt. Each time a purchase is made, Spreadshirt trans­fers the commis­sion to the desi­gner's account. Compared to the tradi­tional busi­ness model of apparel manu­fac­turers, Spreadshirt’s model differs in two very important ways: First, the new product deve­lop­ment process is outsourced to the ‘crowd’ of Spreadshirt users. Second, the company’s users can parti­ci­pate in Spreadshirt’s success by beco­ming “entre­pre­neurs” them­selves and selling their own designs to other Spreadshirt users. With this busi­ness model, Spreadshirt has become one of the fastes­t-gro­wing compa­nies in Germany. In 2007, the company had a total of 260 employees, and its annual reve­nues totaled some EURO 20 million. More than 300,000 Internet users have become Spreadshirt shop part­ners, cont­ri­bu­ting signi­fi­cantly to the company’s rapid growth

APPLE iPhone


Apple has deve­l­oped the App Store plat­form, which is centered around a soft­ware toolkit provided for the iPhone, iPod touch, and iPad. The App Store provides new cust­omer value propo­si­tions as it allows users to screen, down­load and develop new appli­ca­tions. After the first month, App Store sales came to about $30 million, and by January 2010 more than ten billion appli­ca­tions had been down­loaded from the plat­form. Accor­ding to Apple CEO Steve Jobs, this busi­ness model provides Apple with a sustainable compe­ti­tive advan­tage: “Three billion appli­ca­tions down­loaded in less than 18 months—this is like nothing we’ve ever seen before. […] and we see no signs of the compe­ti­tion catching up anytime soon.” The appli­ca­tions in the App Store are mainly deve­l­oped by firms or inde­pen­dent soft­ware deve­l­o­pers. By January 2011 already ten billion appli­ca­tions were down­loaded from the App Store.



The value propo­si­tion of the iPod is to make down­loa­ding digital music easy and conve­nient. The busi­ness model combines hard­ware, soft­ware and services. The approach works like Gillette’s famous blade­s­-an­d-razor model in reverse. Apple gives away the “blades” (low margin iTunes music) to lock in purchase of the razor (the high margin iPod). Since the intro­duc­tion of the iTunes Store, indi­vi­dual songs were all sold for the same price with no subscrip­tion fee (in contrast to most exis­ting online music stores at the time of intro­duc­tion, which charged a monthly fee for access to their catalog). Music in the store is in the Advanced Audio Coding (AAC) format. As of the January 2009, Apple has announced that all music in iTunes will be avail­able without digital rights manage­ment, and encoded at the higher-qua­lity rate.



One of Google's value propo­si­tion for compa­nies is to provide more effec­tive and effi­cient adver­ti­sing on the web. Google’s primary source of income is AdWords, a pay-per-­click adver­ti­sing plat­form used by busi­nesses world­wide. AdWords offers pay-per-­click (PPC) adver­ti­sing, and site-­tar­geted adver­ti­sing for text, banner, and rich-­media ads. The AdWords program includes local, national, and inter­na­tional distri­bu­tion. Adver­ti­sers select the words that should trigger their ads and the maximum amount they will pay per click. When a user sear­ches on Google, ads for rele­vant words are shown as "spon­sored links" on the right side of the screen, and some­times above the main search results. The orde­ring of the paid-for listings depends on other adver­ti­sers' bids and the "quality score" of all ads shown for a given search. The quality score is calcu­lated by histo­rical click-­th­rough rates, rele­vance of an adver­tiser's ad text and keywords, an adver­tiser's account history, and other rele­vance factors as deter­mined by Google.



Hilti reinvented its busi­ness model by capi­ta­li­zing on a game-ch­an­ging oppor­tu­nity to increase profi­ta­bi­lity by turning products into a service. Rather than selling tools (at lower and lower prices) the company is selling a “just the tool-y­ou-nee­d-w­hen-y­ou-nee­d-it, no-re­pair-or-sto­r­a­ge-hassles” service. The company thus trans­formed its cust­omer value propo­si­tion from selling indus­trial and profes­sional power tools and access­ories towards leasing a compre­hen­sive fleet of tools to increase contrac­tors’ on-site produc­tivity. This induced a change in the profit formula from low margins and high inven­tory turnover towards higher margins and monthly payments for tool main­ten­ance, repair, and repla­ce­ment. Addi­tio­nally, leasing requires new resources and processes – a strong direc­t-­sales approach, contract manage­ment, new people, more robust IT systems for inven­tory manage­ment and repair, and other new tech­no­lo­gies to develop, design and price the appro­priate packages (Johnson et al, 2008).



Dell was one of the pioneers in selling compu­ters over the Internet. The company has emerged as one of the leading players in the PC industry through its direct selling model. Dell's buil­d-­to-order format has got a big boost with the arrival of the Internet. The company has main­tained momentum in a rapidly commo­di­ti­sing industry, where most other players are still strugg­ling. As a cost leader, Dell has concen­trated on activi­ties where it can add most value and on market segments where profits are highest. Dell has ensured that cust­omer service is not diluted in the process of cutting costs. Many players in the PC industry have attempted to repli­cate Dell's busi­ness model but failed. It is Dell's disci­plined execu­tion that has driven Dell's success.