Rq1 What Is A Business Model?

RQ1 – What is a Business Model? The strategy of an organization defines goals of how the organization intends to gain an advantage over competitors, yet these goals do not materialize without an effective business model (Rothaermel, 2017). Thus, a business model determines how an organization is going to maximize competitive initiatives and ultimately create revenue. A business model helps an organization make money because the firm is able to provide superior value to customers (Osterwalder & Pigneur, 2010). Likewise, the model details how the business intends to interact with all parties involved in the value chain to create a competitive advantage for the company. In order to reach a competitive advantage, a business model must be successfully …show more content…
Since a business model is the avenue for making strategy a reality, actions result in competitive advantage and ultimately an economic profit. Therefore, the focus on the customer within the business model results in the capture and creation of value that is essential to an organization achieving strategic goals. Accordingly, when formulating a business model, the first factor an organization must determine is the customer segment, followed by the value proposition (Osterwalder & Pigneur, 2010). Once these segments are properly defined, all other aspects of a business model can be determined in order to maximize coherence, in the end providing the organization with a competitive …show more content…
Essentially, the company is providing a product or service that the specific customer segment requires or wants. Since organizations must make a strategic trade-off between value and cost (Rothaermel, 2017), value propositions enable a company to determine what their customers value. Once an organization determines what their customers value, they can effectively determine the rest of the business model. resulting in a successful business plan that provides the company with a competitive