Business Model

A Business Model is a for-profit organization model that defines how an organization creates, delivers, and captures value through its core strategy (to generate sustainable profit).

• AKA: Revenue Model, Business Framework, Profit Generation Strategy.
• Context:
  • It can integrate Value Structures with value propositions, value delivery, and value capture.
  • It can establish Core Elements through business vision, target market, and growth strategy.
  • It can implement Pricing Strategy for revenue generation and market positioning.
  • It can develop Go-to-Market Approach for customer acquisition and market entry.
  • It can maintain Investment Structure for resource allocation and growth funding.
  • ...
  • It can often include Key Components such as:
    • Customer Value Proposition for product offering and service delivery.
    • Revenue Streams through sales channels and monetization strategy.
    • Customer Segments with target audience and market demographics.
    • Distribution Channels via delivery platforms and logistics networks.
    • Customer Relationship Strategy for engagement management and support systems.
    • Key Resources including technology assets and human capital.
    • Key Activities for operational processes and business functions.
    • Key Partnerships with strategic alliances and supplier networks.
    • Cost Structure covering operational expenses and resource investments.
  • ...
  • It can range from being a Traditional Business Model to being a Digital Business Model, depending on its operational approach.
  • It can range from being a Product-Based Model to being a Service-Based Model, depending on its offering type.
  • It can range from being a Single-Revenue Model to being a Multi-Revenue Model, depending on its monetization strategy.
  • It can range from being a Local Business Model to being a Global Business Model, depending on its market scope.
  • ...
• Examples:
  • Revenue Generation Models, such as:
    • Subscription Models, where customers pay recurring fees for continuous access.
    • Freemium Models, offering basic services free with premium upgrades.
    • Pay-as-you-go Models, charging based on actual usage patterns.
    • Marketplace Models, connecting buyers and sellers for transaction fees.
  • Industry-Specific Models, such as:
    • Retail Models, purchasing from manufacturers for consumer sales.
    • Manufacturing Models, producing finished goods from raw materials.
    • Franchise Models, expanding through licensed locations.
    • Service Provider Models, delivering professional services.
  • Digital Transformation Models, such as:
    • AI-first Businesses, building around artificial intelligence capabilities.
    • Platform Businesses, creating multi-sided markets.
    • SaaS Businesses, delivering software services via cloud platforms.
    • Digital Marketplaces, facilitating online transactions.
  • Innovation-Based Models, such as:
    • Technology Innovation Models, focusing on new technology development.
    • Business Model Innovations, transforming traditional approaches.
    • Disruptive Models, challenging industry standards.
    • Hybrid Models, combining multiple business approaches.
  • ...
• Counter-Examples:
  • Non-Profit Organization, which prioritizes social impact over profit generation.
  • Operational Plan, which focuses on daily operations rather than strategic framework.
  • Marketing Strategy, which addresses only promotion aspects rather than complete value creation.
• See: Business Strategy, Value Proposition, Revenue Model, Cost Structure, Market Strategy, Business Innovation, Digital Transformation, Competitive Advantage, Strategic Planning.

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References

2024

• https://www.youtube.com/watch?v=L1Km-hJt-uI
  • NOTES:
    • Business Models are structured approaches that define how a business creates, delivers, and captures value for its customers and stakeholders.
    • It consists of core elements such as Customer Value Proposition, Go-To-Market Strategy, Technology and Operations Model, and a Cash Flow Formula.
    • A Business Model can be as disruptive as a Technology Innovation if it fundamentally changes how value is delivered and monetized.
    • Successful Business Models often focus on addressing a clear pain point or unmet need within a well-defined Customer Segment.
    • Companies like Netflix and Symantec showcase how evolving a Business Model can turn weaknesses into strengths and create sustainable competitive advantages.
    • Creating a Minimum Viable Segment (MVS) is crucial for startups to concentrate on a core audience with shared needs, ensuring focus and efficient use of resources.
    • Innovations in a Business Model—such as shifting to Subscription Models, Data-Driven Services, or Platform Ecosystems—can unlock new revenue streams and scalability.

2024

• (Wikipedia, 2024) ⇒ https://en.wikipedia.org/wiki/business_model Retrieved:2024-4-18.
  • A business model describes how an organization creates, delivers, and captures value, in economic, social, cultural or other contexts. For a business, it describes the specific way in which it conducts itself, spends, and earns money in a way that generates profit. The process of business model construction and modification is also called business model innovation and forms a part of business strategy.

    In theory and practice, the term business model is used for a broad range of informal and formal descriptions to represent core aspects of an organization or business, including purpose, business process, target customers, offerings, strategies, infrastructure, organizational structures, profit structures, sourcing, trading practices, and operational processes and policies including culture.

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