Rothaermel's Business Model

What is a business model? There is no current consensus in the literature about a specific definition of the term “business model” and many scholars have largely adopted definitions that tend to meet the needs of their research or the outcome of that research. The only thing that all authors in the field seem to agree upon that a business model is a model of the way in which a business does business (Lindgren & Aagaard, 2014). While there may be no agreeable definition, there are three common themes that appear in the literature and can be utilized to create a framework for understanding business models. First, business models help explain how a firm does business and not what they do. Second, business models are usually firm-centric. Lastly,

Osterwalder and Pigneur defines a business model as “the rationale of how an organization creates, delivers, and captures value. The business model is a macro level plan that will guide how a firm will conduct itself with suppliers, buyers, and partners in its pursuit of these profits. The innovativeness of a firm’s business model is just as important as what product or service the company provides in it achieving superior performance and gaining and sustaining a competitive advantage (Rothaermel, 2015). The nine building blocks of a successful business model include the following: customer segments, value propositions, channels, customer relationships, revenue streams, key resources, key activities, key partnerships, and cost structure (Osterwalder, Pigneur, & Clark, 2010). Three popular business models mentioned by our textbooks that companies are adopting include “Bait & Hook,” Freemium, and

This statement is a pivotal part of any business model because it allows the company to create an identity that can be utilized in the marketing and selling of its products and services. These values can be quantifiable things such as price and speed and service or those which are more qualitative such as superior design, customer experience, and customer service (Osterwalder, Pigneur, & Clark, 2010). Chipotle is a perfect example of this concept by providing its customers with both a better tasting product (qualitative) at a faster speed