Business Model : Creating Value By Replacing Old Models That Are Not Working

1502 Words Feb 8th, 2015 7 Pages
1. A business model describes the rationale of how an organization creates, delivers, and captures value (Osterwalder & Pigneur, 2010, p.14). We can define business model as an outline or a design of an organization that uses to achieve the strategy or goals. It is very important to know that business model is about creating value by replacing old models that are not working. In order to create a good business model the first thing is to simplify the complexities of the old model. Business model can be best described through nine blocks and they are customer segments, value propositions, channel, customer relationships, revenue streams, key resources, key activities, key partnerships, and cost structure (Osterwalder & Pigneur, 2010, p.16-17). Customers play a very important role in any business model. Without pleasing customers or serving them no company will be able to or can survive.
Every single piece of this building block is crucial in building a working business model and with all these elements any organization or companies can excellently define and prepare a good and working business model for execution. As customer segment is one of the building block in a business model the company is the one to make the decision in how and where the segments should be and where it should not be. One of the examples is Amazon which decided to expand its retail business by selling “cloud computing” services: online storage space and on demand server usage. Another block is value…

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