Essay on What Is A Business Model?

938 Words Nov 16th, 2016 4 Pages
What is a business model?
“A business model describes the rationale of how an organization creates, delivers, and captures value” (Osterwalder & Pigneur, 2010). This concept is important for the success of any organization in that it will allow the organization to run efficiently and effectively. Business models go far beyond a simple business strategy, but also encompass it. Through the understanding of an organizations core competencies, managers can form a business model that will uniquely for the organization. In essence, the business model is a framework specifically made for an organization to ensure effectiveness in business.
Osterwalder and Pigneur (2010) describe the business model divided into nine sections over four main areas of the model. The four main concepts of the business model are customers, offer, infrastructure, and financial viability (Osterwalder & Pigneur, 2010). Beyond those four main concepts, the business model is divided into nine blocks consisting of customer segments, value propositions, channels, customer relationships, revenue streams, key resources, key activities, key partnerships, and cost structure (Osterwalder & Pigneur, 2010). The business model allows an organization to analyze each of these blocks and concepts to be able to understand where a problem is occurring or if a section can be made more effective. Using this framework for a business model can establish new strategic positions, a better alignment within the organization, and…

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