Disruptive Business Models Revised

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Disruptive Business Model Student’s Name Institution 1. To understand what disruptive business models are, it would be important first to understand what disruption is. This is normally where a company with fewer resources and often small displaces existing companies with more resources from their market leadership positions or offer a significant threat to these positions. Existing companies usually focus on more profits through improvement of products that bring more revenues and therefore end up ignoring the needs of some product segments. Disruptive entrants often focus on the ignored segments by giving them value at lower prices. The existing companies often tend to ignore such companies by focusing on profitability and believing that these companies are just wasting their time and resources. The new businesses then start expanding while providing the services and goods that customers require which no one was supplying before. Customers with time adopt the new products leading to a new disruption. Disruptive models are therefore those that focus on redefining and creating products or services to create new value networks and markets and therefore displace market leaders and existing firms as well as products. The large firms often ignore the markets established by disruptive firms as they are usually too small to offer the hope of growth and have low-profit margins. Christensen (2003) argues that there are two types of disruption; the new market disruption and low-end disruption. Newmarket disruption usually happens when a new product that was not being provided by the existing firms is provided by new entrants. Low-end disruption on the other hand results

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