Business Model

A business model describes the rationale of how an organization creates, delivers, and captures value (economic, social, cultural, or other forms of value). The process of business model construction is 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 a business, including purpose, offerings, strategies, infrastructure, organizational structures, trading practices, and operational processes and policies. The literature has provided very diverse interpretations and definitions of a business model. A systematic review and analysis of manager responses to a survey defines business models as the design of organizational structures to enact a commercial opportunity. Further extensions to this design logic emphasize the use of narrative or coherence in business model descriptions as mechanisms by which entrepreneurs create extraordinarily successful growth firms.

Whenever a business is established, it either explicitly or implicitly employs a particular business model that describes the architecture of the value creation, delivery, and capture mechanisms employed by the business enterprise. The essence of a business model is that it defines the manner by which the business enterprise delivers value to customers, entices customers to pay for value, and converts those payments to profit: it thus reflects management’s hypothesis about what customers want, how they want it, and how an enterprise can organize to best meet those needs, get paid for doing so, and make a profit.

Business models are used to describe and classify businesses (especially in an entrepreneurial setting), but they are also used by managers inside companies to explore possibilities for future development. Also, well known business models operate as recipes for creative managers. Business models are also referred to in some instances within the context of accounting for purposes of public reporting.

Read more about Business ModelHistory, Applications, Examples of Business Models, Business Model Frameworks, Related Concepts

Other articles related to "business model, model, business":

Tessitura (software) - History and Business Model
... system, which distinguishes it from most other commercial software, is the business model chosen by the Metropolitan Opera in order to commercialize what was originally custom software ... This business model has an obvious resonance with the not-for-profit and self-governing ethos of the arts community, and is one reason why Tessitura has rapidly ... This model has resulted in a number of interesting characteristics for Tessitura Network as a software company ...
Steerleaders - History - Business Model
... Chick-fil-A uses a model significantly different from other restaurant franchises, notably in retaining ownership of each restaurant ...
Business Model - Related Concepts
... The process of business model design is part of business strategy ... The implementation of a company's business model into organisational structures (e.g ... technology architecture, production lines) is part of a company's business operations ...
Collaborative Software Development Model - Collaborative Software Development Business Model
... Its primary function becomes as its effectiveness as a business model – the process of collaboration between consumer and developer ... The business model it describes becomes equally applicable to many fields of web technology, including but not limited to web designers, web developers, application and widget makers, social ... The term is used primarily to describe a business model, a company’s philosophy or methodology on how it handles project development from client’s initial idea to final ...

Famous quotes containing the words model and/or business:

    Research shows clearly that parents who have modeled nurturant, reassuring responses to infants’ fears and distress by soothing words and stroking gentleness have toddlers who already can stroke a crying child’s hair. Toddlers whose special adults model kindliness will even pick up a cookie dropped from a peer’s high chair and return it to the crying peer rather than eat it themselves!
    Alice Sterling Honig (20th century)

    The ways in which most men get their living, that is, live, are mere makeshifts, and a shirking of the real business of life,—chiefly because they do not know, but partly because they do not mean, any better.
    Henry David Thoreau (1817–1862)