Basically a business model is a framework for creating economic, social, or other forms of value. This can be understood in a broad or narrow sense and can be expressed, visualized and explained in many different ways. In the most abstract level, a business model is a number of elements and relationships between the different elements, and in the more detailed versions it often involves descriptions of the components presented below.
Common components in most business model definitions
- Core capabilities (assets, capabilities, processes)
- Customer value propositions (products and services, offering, differentiation)
- Target customer (segments, scope, needs)
- Revenue model (pricing, ways of charging)
- Distribution channel (delivery, channels, promotion)
- Partnerships (suppliers, partners, value chain position)
- Cost structure (fixed and variable costs)
- How are values created, captured and by whom?
- How are values extracted, controlled and by whom?
Some publications on definitions and components
To read more about business model definitions see the following publications:
Afuah, A. and C. Tucci (2001). Internet Business Models and Strategies
Alt, R. and H. Zimmermann (2001). Introduction to Special Section – Business Models.
Applegate, L. M. (2001). E-business Models: Making sense of the Internet business landscape
Chesbrough, H. and R. S. Rosenbloom (2000). The Role of the Business Model in capturing value from Innovation: Evidence from XEROX Corporation’s Technology Spinoff Companies
Gordijn, J. & Akkermans, J.M. (2000). Business Modeling is not Process Modeling
Hamel, G. (2000). Leading the revolution
Hawkins, R. (2001). The Business Model as a Research Problem in Electronic Commerce
Linder, J. and S. Cantrell (2000). Changing Business Models: Surveying the Landscape,
Magretta, J. (2002). Why Business Models Matter.
Osterwalder, A. (2004). The Business Model Ontology - A Proposition In A Design Science Approach
Rappa, M. (2001). Managing the digital enterprise - Business models on the Web
Petrovic, O., Kittl, C., and Teksten, R.D. (2001). Developing Business Models for eBusiness
Timmers, P. (1998). Business Models for Electronic Markets
Weill, P. and M. R. Vitale (2001). Place to space: Migrating to eBusiness Models