CIMA E2 Syllabus A. Business models and value creation - Business Ecosystems - Notes ^{1 / 7}

A business ecosystem is defined as ‘a network of organisations which includes suppliers, distributors, customers, competitors, government agencies, etc that are involved in the delivery of a specific product or service through both competition and cooperation.’

It comprises a complex web of interdependent enterprises and relationships aimed at creating and allocating business interdependent.

Traditional markets are linear meaning each party keeps adding their value until the goods reach the final consumer.

An ecosystem, however, is non-linear.

The most important driver in the emergence of business ecosystems is customer demands of improved response time.

What makes an ecosystem?

1. The Participants

2. Their interactions

The participants in an ecosystem which could be either an individual or an organisation interact with each other to exchange products, services or information.

Key aspects of participants:

1. Role - The role of the participant in the ecosystem. Eg. Research, distribution etc.

2. Reach - The ability of participants to extend their activities through the ecosystem.

3. Capability - A participant's capability and the value they add to the ecosystem

Key aspects of interactions:

1. Rules - Whether the rules within an ecosystem are in the form of binding contracts or not.

2. Connections - The connection between the different elements of an ecosystem.

3. Course Of Interactions- The speed and direction of exchanges of value among participants.

Some benefits of participating in an ecosystem are:

1. Increased creativity and faster learning process because of the shared skills and expertise.

2. Barriers to entry for competitors.

3. Ability to address environmental concerns.

There are 2 characteristics of a business ecosystem:

1. Mutuality - This means that there is an increased coordination among participants of an ecosystem with formally or informally shared ideals, standards or goals for their mutual benefit.

2. Orchestration - This refers to the coordination of interactions among participants of an ecosystem. It can either be formal or informal.