The Business Model

The business model is like a blueprint for a strategy to be implemented through organizational structures, processes, and systems.It clearity states

• Who's your target customer?
• What customer problem or challenge do you solve?
• What value do you deliver?
• How will you reach, acquire, and keep customers?
• How will you define and differentiate your offering?
• How will you generate revenue?
• What's your cost structure?
• hat's your profit margin?

Thus in all,it clearly combines the blocks, namely - Key partners,key activities,value proposition ,customer relationships, customer segment , key resources , channels , revenue streams and cost structure, and thus builds a strong foundation.

A business model describes a company’s operations, including all of its components, functions and processes, which result in costs for itself and value for the customer. Therefore, it is how the engine of the business actually works. The objective is to have low cost and high value and thus maximise profit.  A company’s strategy of combining the four factors of production, namely land, labour, capital and enterprise, will determine its unique business model, the superiority of which over the competition is a crucial determinant of sustainable, competitive advantage.

A business model is of crucial importance in choosing winners. It can only be achieved in two ways, namely Low cost and being different,both of which management must comprehend and sustain:

Low cost-

Superior profits will, however, be earned if costs are lower and bite less into revenues. Therefore, the strategy is to have the lowest-cost business model compared to the competition. This can be done in a variety of different ways, such as by being number one in the sector, having excellent management, a modest head office, power over suppliers, and superior raw materials, buying skills, technology and quality control.

Different-

A company should strive to do something different from the competitors in its ‘value chain’, which is all the activities and costs in the entire production process from the initial receipt of inputs, then processing and resulting in the final output.  If it does the same as competitors, then customers have no reason to prefer it and it will earn the same, rather than superior, profits.

In fact, business models have become the new basis of competition, replacing product features and benefits as the playing field on which companies emerge as dominant.

A business model is focused on value creation. It acts as a framework to take what you create or make and turns that innovation into an economic equation. It takes into account the entire value chain of the organisation.

In today's market for startup investors, you cannot attract them without a great business model.

Also, experienced, talented people will look for the same thing: a business model that can make a lot of money, quickly.To get your money (and top talented people) in today's challenging conditions, turn your brain on and innovate a clever business model.So get going. When you have created a clever business model, you'll be way ahead of your competition. It will be central to your unfair competitive advantage.

In simple words, a Business Model is a description of all the operations of a business like its components , functions , revenue and expenses that it will generate.It rather involves ,how business will make money and keep growing and succeeding while adding value.