Compared to the past, companies operate in a much faster and efficient way. Similarly, companies have improved their working conditions and given employees more authority. Likewise, through various changes, companies have increased their profits and revenues several times.
Most of these processes have included reengineering the traditional operations and adopting the latest changes.
Behind most of these companies and businesses, there are various successful business models. Among these models, one is the Enterprise business model. However, the business model has existed for a long time. Therefore, it is necessary to look into the business model in more detail.
What is the Enterprise business model?
The word enterprise means any business that works for profits. It also comes up a lot when mentioning entrepreneurial ventures. There are various types of businesses that may fall into the definition of enterprises. However, the enterprise business model does not apply to all companies and businesses.
The enterprise business model comes from companies that target large companies. The focus of the business model is to attract large-sized clients and offer them specialized products and services. This business model is more prevalent in the services industry as compared to product-based businesses.
The enterprise business model encompasses complex sale strategies. The focus of every business model is to increase profitability. The enterprise business model does that by focusing on a few clients.
Therefore, the focus of companies using this model is to attract clients that offer higher revenues. Their focus isn’t to attract a higher number of clients.
Similarly, by establishing clients and providing them with specialized services, companies can charge clients more than usual. Likewise, most of these companies offer unique services that may cost their clients extra if they do it in-house. Therefore, the enterprise business model provides both parties a mutually beneficial deal.
How does the Enterprise business model work?
A company that uses the enterprise business model must first establish a client base. Usually, the company offers a specialized product or service that the clients may not find elsewhere.
Similarly, some companies may offer their clients some products or services that may cost extra if performed in-house. In these cases, the enterprise business model works great.
Once the company using the model establishes a few clients, it can be profitable. The company offers its clients customized products or services. In exchange, the company charges its clients better rates as compared to generic products.
While the company might want to increase its number of clients, it may not actively market its products or services.
The primary source of income for companies using the enterprise business model is the large clients. Since most of these clients are well-established companies, the company must provide them with the best services. Therefore, the quality of products or services provided in this business model also plays a critical role in a company’s success.
What are the advantages and disadvantages of the Enterprise business model?
The Enterprise business model has several advantages and disadvantages, some of which are below.
Advantages:
The enterprise business model allows companies to earn higher revenues and increases profitability. In addition, as mentioned, these companies offer specialized products or services, which helps them charge better prices.
Similarly, companies using this model attract large clients. By providing specialized services to large clients, these companies can earn more.
The enterprise business model also allows companies to have a closer relationship with their clients. Since the company depends on its clients to generate money, they need to have a close relationship to benefit.
Similarly, the specialized nature of work enforces companies to stay in touch with their clients. If there is no communication between both parties, the business model will fail.
The enterprise business model also comes with lower competition. There are a few companies that can offer specialized products or services. Similarly, there are a higher number of clients with which companies can work. Therefore, there are more opportunities for companies using this model.
Disadvantages
The primary disadvantage of the enterprise business model is the barriers to entry. Companies that want to use this model must compete against well-established names in the industry. Similarly, clients are less likely to leave their regular product or service providers for newer options.
Similarly, the enterprise business model only works in industries with a need for specialized services and products. Not every industry may need other product or service providers. Therefore, there are limited options available for companies using this model.
Examples
Some Fortune 500 companies use the enterprise business model to attract clients with specific needs. However, most of their clients are also large companies that require specialized products or services.
Therefore, these companies work closely with their clients to achieve a mutually beneficial deal for both sides. As a result, some companies earn millions of dollars from their clients regularly.
Conclusion
The enterprise business model is for companies that provide products or services to large clients. The business model allows these companies to offer specialized services. Due to the specialized nature of their products or services, these companies can earn much more.