Business Model Development for Freight Railway Company

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Emerge in the mid 1990’s; there have been numerous business model concepts with various definitions, opinions and interpretation. This concept becomes a shared knowledge which allows organizations to describe their business models and create new business strategies. Without understand about their own business model, competitors or any organization’s model, it’s difficult to successfully innovate. This concept has been applied in large organizations such as Amazon.com, Apple, Google, Skype, Southwest Airlines and many more.

In order to achieve sustainable modal shift movement, new essential solutions i.e. market-oriented and innovative services are needed (Flotzinger et al, 2011). Given the fact, freight transport industry has a promising growth as many good movements require logistics expertise. Refer to Simatupang and Setijadi (2013); logistics expertise consists of competence and knowledge of the needs of goods, procurement, contract negotiations agreements, transportation, storage, usage to disposal.

Current trend recognizes the railway has strengths in large capacity, long-distance, energy-efficiency and less environmental impacts. Frazier and Ryder (2000) argue that several changes in the industry suggest a new business model for railway. As industry trend change, to innovate its business model, KAI needs formulating new value propositions.

The business model, according to Osterwalder (2004), translates the implementation of business strategy into a conceptual blueprint of the company's money earning logic. For KAI, by understanding and implementing its strengths in railway sector, it could recast and clarify its business model so that freight railway can offer an alternative to railroad transport. This implies that KA...

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