Platform Business Model

Platform Business Model Students Name Course Name Tutors Name Institutions Name Date Platform Business Model A platform business model plays a substantial role in creating a connection between two interdependent groups within the company. The connection brings about value in the business because it facilitates the manner in which the different groups interact with one another. Such groups are usually the consumers and producers (Kim, 2016). In addition, the exchanges are made possible by the network of users and resources created by the platform business model. Most companies have turned to the use of the platforms since they create markets and communities with different network effects that allow the users to interact with one another and carry out business transactions. A platform business model does not own the means through which a company produces goods and services but rather acts as a media of connecting the company to its consumers. The best thing about most of the successful platforms is that they facilitate the exchanges by enabling externalized innovation as well as reducing transactions costs. Businesses have lost huge amounts of money as a result of high transaction costs. Therefore, taking the initiative of creating a platform business model helps a lot in increasing profits by cutting on costs. Given the current advancements in technology, such platforms have helped in the elimination of the traditional ways of doing businesses and bringing new strategies that could not have been made possible by the traditional methods. An example is Amazon which has invested its services in various countries across the globe internet advancements has made it possible to operate within the different countries. Amazon qualifies to be a platform company because it does not produce products. Instead, it plays an important role in connecting buyers and sellers. Similar to platform business models, Amazon does not influence the manner in which the producers create their goods. All that it does is to provide a connection whereby the buyers and sellers are able to transact at reduced costs. The company has reduced the transaction costs of buyers which could have been spent in advertising their products to the world. The platform is easy to maneuver. The buyer does not go through much struggle in looking for an item because they have a search button which enables a person to look for all the items that they want and, in turn, add them to the cart for purchase. Unlike linear companies, Amazon does not follow a supply chain method to create value for its business (Laudon and Traver, 2016). Rather, it creates value by building connections between sellers...