BUSINESS MODELS
Back to GlossaryDefinition
Frameworks describing how a company creates, delivers, and captures value.
Summary
Business models are strategic blueprints that explain how a company operates to make money and provide value. Think of them as the 'recipe' for how a business works - they outline what the company offers (value creation), how it reaches customers (value delivery), and how it generates revenue and profit (value capture). Business models answer fundamental questions like: Who are our customers? What do we sell? How do we sell it? How do we make money? Understanding business models helps explain why some companies succeed while others fail, even when offering similar products or services.
Usage Context
Essential when analyzing company case studies, developing business strategies, understanding competitive landscapes, evaluating startup ideas, or studying how digital transformation changes traditional industries.
Common Confusions
- Confusing business models with business plans (models focus on how value is created/captured, plans are detailed roadmaps)
- Thinking all companies in the same industry use identical business models
- Believing business models are static and never change
- Assuming more complex business models are always better
- Confusing business models with marketing strategies
