History of Business Models

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History of Business Models

The concept and type of business models have constantly evolved throughout the years and have had a long history that dates back to several years. A very basic and popular model, since ancient times, has been the "shopkeeper model", which involves establishing one's store in such a location that is most likely to fetch potential customers and that makes it easier to advertise the products or services being offered.

The "bait-and-hook business model", also known as the "tied-products business model" and the "razor-and-blades business model", emerged in the first half of the 20th century. This model often involves presenting a common good at an extremely low price that in fact puts the seller at loss (bait), and then asking for compensatory recurring sums for associated products, services, or refills (hook).An interesting example of such a model is offering the software developer along with a free word processor reader and charging hundreds of dollars for the word processor writer.

In the decade from 1950 to 1960, revolutionary business models were introduced by Toyota and McDonald's Restaurants. Following these, in 1960s, Hypermarkets and Wal-Mart came up with another set of interesting models. In the 1970s, Toys R Us and FedEx were the innovators. The 1980s saw new models from Home Depot, Dell Computer, Intel, and Blockbuster; and 1990s from Netflix, Amazon.com, Starbucks, and Blockbuster. Poorly designed and inadequately thought out models constituted a major problem for many dot-coms.

Today, the emerging types of models depend largely on what new technology is being invented and how it is being used. For instance, nowadays, entrepreneurs operating over the Internet are also creating entirely new business models that depend completely on the emergent or existing technology. By using such technology to create models, businesses have a better scope to reach large audiences within minimal costs.

 

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