What Is A Business Model? Essay

1126 words - 5 pages

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 Generation and/or (Strategic Management Concepts and Cases literature, what is a business model?
A business model as described by Osterwalder & Pigneur, (2013) is built on nine building blocks which must be jointly used to add value. Naming of the nine building blocks is not efficient in describing the business model, but building a canvas that describes the nine building blocks can serve the purpose of explaining the model. The model according to Cinquini, (2013) is like a recipe that only provides accurate information but require effective implementation to give results. First, it is important for a business entity to know its customers; these are the people for which the organization offers value services. It is important to know who they are and the value that the organization can offer so as to help them accomplish their objectives. The model must have a channel that describes the way through which the business communicates with its customers and the process through which the business delivers services to the customers. In addition to that, there must exist a customer relation block that describes the way through which the business relates to its customers.
The model is incomplete without the mention of the revenue stream....

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