A B S T R A C TWe develop an analytical framework on the basis of the economics of business performance to provide quantitative insight into the link between a firm's business model choices and their profit consequences. The method is applied to Walmart by building a qualitative representation of its business model and mapping that representation on an analytical model that quantifies the company's sources of advantage over time. The analysis suggests that the effectiveness of a particular business model depends not only on its design (its levers and how they relate to one another) but, most importantly, on its implementation (how the levers are pulled).
In recent years, England and Wales have suffered droughts. This unusual situation defies the common belief that the British climate provides abundant water resources and has prompted the regulatory authorities to impose bans on superfluous uses of water. Furthermore, a large percentage of households in England consume unmetered water which is detrimental to water saving efforts. Given this context, we estimate the shadow price of water using a panel data from reports published by the Office of Water Services (Ofwat) for the period 1996 to 2010 (three regulatory periods). These shadow prices are derived from a parametric multi-output multi-input input distance function characterized by a translog technology. Following O'Donnell and Coelli (2005), we use a Bayesian econometric framework in order to impose regularity -monotonicity and curvature -conditions on a high-flexible technology. Consequently, our results can be interpreted at the firm level without requiring the need to base analysis on the averages. Our estimations offer guidance for regulation purposes and provide an assessment of how the water supply companies deal with water losses under each regulatory period. The relevance of the study is quite general as water scarcity is a problem that will become more important with population growth and the impact of climate change. 2
Purpose
The purpose of this paper is to understand how a major retailer like Kmart lost its dominant position in the American retail industry.
Design/methodology/approach
This paper contains a decomposition of profit change into meaningful economic drivers using a methodology that combines frontier analysis with index number theory. The empirical analysis is complemented with a description of Kmart’s business model produced from corporate documents and other sources.
Findings
A quantification of Kmart’s business model performance expressed in monetary terms. This assessment is presented by CEO tenures showing the contribution of different economic drivers to the evolution of profits.
Practical implications
The study’s empirical results highlight the importance of the correct implementation of all aspects of the business model in order to achieve success.
Originality/value
This paper presents a new empirical framework to assess business model performance. Despite Kmart’s important role in American discount retailing history there have been very few studies that have analyzed its downfall. This paper contributes by filling that gap.
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