What is a business model?
A business model is the framework of how organization creates, delivers, and captures value to generate the profit. It describes how the business fit together as a system in which a company generates revenue and makes a profit from business operations.
A good business model is essential to every successful organization. It serves as core aspects of business such as business process, target customers, offerings, strategies, infrastructure, organizational structures, sourcing, trading practices, and operational processes and policies including culture.
Successful Business Model Component
A successful business model creates more value and delivers a better way of gaining scale than the existing alternatives. It creates new organizational structures or changes existing structures to pursue a new opportunity. It may completely replace the old way of doing things and become the standard for the next generation of entrepreneurs.
The essential elements to develop a successful business model are such as value proposition, customer segments, channels, customer relationships, cost structure, key activities, key resources, key partners and revenue streams. The core concepts are to generate revenue with better gross margin, well operational structure while greatly dependent on understanding about working capital and financial investment.
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