Profit Model Analysis On Internet Enterprises Based On Value Chain Theory

With the gradual improvement of China's Internet infrastructure construction,Internet enterprises have penetrated all aspects of social economy,and the penetration momentum is deepening.In the environment of industrial upgrading and development driven by digital economy,the key to the survival of Internet enterprises is to find a matching profit model.In this paper,it is being deeply analyzed and reached the conclusion that the profit model of Internet enterprises can be improved and enhanced through the optimization of the value chain.This paper firstly introduces and briefly analyzes the concepts and theories regarding value chain and profit model.Secondly,it introduces the composition of the value chain of the Internet industry,including the development of Internet enterprises,and profit models of Internet enterprises under the value chain theory.It classifies the internal value chain and external value chain and gives examples how value chain could significantly improve the five elements of profit model,reaching to the conclusion that the optimization of value chain horizontally and vertically is an effective way to improve profitability so as to lay a solid foundation for the sustainable development of enterprises.A case study of Xiaomi was further carried out to analyze its profit model how Xiaomi has optimized its value chain to improve profitability,coinciding the conclusion that to improve profit model it's the effective method to optimize the value chain.Meanwhile,the existing problems from the value chain perspective are also pointed out and recommendations are given.By analyzing the case of Xiaomi,the author hopes to give some experience and inspiration to Internet enterprises when they choose the profit model to sustainably develop their business.