Business Model Development For Freight Railway Company

1603 words - 7 pages

Emerge in the mid 1990’s; there have been numerous business model concepts with various definitions, opinions and interpretation. This concept becomes a shared knowledge which allows organizations to describe their business models and create new business strategies. Without understand about their own business model, competitors or any organization’s model, it’s difficult to successfully innovate. This concept has been applied in large organizations such as, Apple, Google, Skype, Southwest Airlines and many more.

In order to achieve sustainable modal shift movement, new essential solutions i.e. market-oriented and innovative services are needed (Flotzinger et al, 2011). Given the fact, freight transport industry has a promising growth as many good movements require logistics expertise. Refer to Simatupang and Setijadi (2013); logistics expertise consists of competence and knowledge of the needs of goods, procurement, contract negotiations agreements, transportation, storage, usage to disposal.

Current trend recognizes the railway has strengths in large capacity, long-distance, energy-efficiency and less environmental impacts. Frazier and Ryder (2000) argue that several changes in the industry suggest a new business model for railway. As industry trend change, to innovate its business model, KAI needs formulating new value propositions.

The business model, according to Osterwalder (2004), translates the implementation of business strategy into a conceptual blueprint of the company's money earning logic. For KAI, by understanding and implementing its strengths in railway sector, it could recast and clarify its business model so that freight railway can offer an alternative to railroad transport. This implies that KAI with effective business model will encourage management to achieve the vision if could capture the opportunities that exist. The canvas can be applied to help KAI align key resources in order to define shared vision. Therefore, KAI should pay attention to its competitive environment as it decides to create and offer value to its customers in order to formulate and execute a Business Model.

As a matter of fact, the canvas is a good tool for any company - whether startup, growth, peak or decline - to visualize the business and seek for improvement in each building block. For practitioners, the business model is the perfect foundation for arranging a great business plan that might also serve as an implementation guide. The canvas can be used to help practitioners restructuring their value chain due to changes in industry. They could offer new value proposition and translate into internal operation.

However, the canvas still has shortcoming. It only focuses on the internal organization regardless the competition. The canvas consists of financial elements, but there is not mentioned how to measure the success of a business model. For the future research, further analysis on financial and risk could be studied to ensure...

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