What Is a Business Model?

Verstraete & Laffitte, (2011) on their part argue that the term business model; which has been widely used, still has a vague meaning which only drives more questions on its limits, meaning and lifespan. According to Osterwalder & Pigneur, (2013) a business model is a description of the rationale of how a company creates, delivers and captures value. This only epitomizes the tip of the iceberg; a business model cannot fully be described without the nine basic building blocks that are used to show the logic through which the companies intend to make money. These nine blocks cover the four fundamental factors of business; financial viability, customers, infrastructure and offer. Just like a blueprint, the business model serves the purpose of creating a strategy which can be implemented through the organization structure, system and process.

As cited in Harvard Business Review on Business Model Innovation, (2010) a business model is like a story that contains delineated characters, plausible motivations and is plotted to turn on the insight of value. Like the interesting story, the nine building blocks fit together to make the entire model complete. Cinquini, (2013) describes a business model as a paradigm that logically explains how to get from point (A) to point (B). The segments that describe the business model includes the key resources key activities, customer segments, value proposition, customer relations, channels, revenue streams, key partnerships and cost infrastructure. These segments must work together to provide the best business model. Absence of one of the segments would only mean a flop in the whole organization development and business structure (Osterwalder & Pigneur, 2013).

According to the Business Model Generatio...

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...the company expects to be in respect to where it is at the moment and its impact to the economic sector. It is through brainstorming of the ideas that can help the company’s management plan on how far they can go in establishing the company.

References

Cinquini, L. (2013). New business models and value creation a service science perspective. Milan: Springer.

Harvard business review on business model innovation. (2010). Boston, MA: Harvard Business School Pub..

Kaplan, S. (2012). The business model innovation factory: how to stay relevant when the world is changing. Hoboken, New Jersey: Wiley.

Osterwalder, A., & Pigneur, Y. (2013). Business model generation a handbook for visionaries, game changers, and challengers (Unabridged. ed.). Hoboken, N.J.: Wiley.

Verstraete, T., & Laffitte, E. (2011). A business model for entrepreneurship. UK: Edward Elgar Publishing, .