Business Model
A business model is a conceptual framework that defines the underlying logic, organizational architecture, and mechanisms an enterprise uses to create, deliver, and capture value.
Rather than functioning strictly as a financial tool, it outlines how a company approaches its target market, fulfills customer expectations, and sustains itself financially over time. While business strategy focuses on long-term direction, future objectives, and developing dynamic capabilities ("what a firm aims to become"), a business model represents present-day operational reality, describing what an enterprise is and does in the short term. It serves as a practical blueprint for implementing corporate strategy through organizational structures, processes, and systems.
A business model shows how customer value is created by using existing resources and performing key activities.
Business models can also be innovated by connecting productivity drivers in novel ways, upgrading manufacturing processes, and maintaining continuous R&D efforts. Instead of competing on the per-kilogram price of construction, build a model that capitalizes on the total savings generated by optimized or innovative processes.
Analysis or update of the business model.
What are the key building blocks of the Business Model Canvas (BMC)?
- Customer Segments: For whom are we creating value?
- Value Proposition: Which customer problems will the firm help solve, and what needs will it satisfy? Does your product convey any innovation or value that helps you differentiate from the competition?
- Channels: The way a firm reaches and communicates with customer segments to deliver its value proposition.
- Customer Relationships: Moving away from transactional vendor relationships. This may require deep integration into the client’s internal teams.
- Revenue Streams: The financial income an enterprise generates from its customer segments.
- Key Resources: Physical factories are no longer enough. Critical resources now include human capital, proprietary industrial data and procedures, and the specialized tacit knowledge of the engineering workforce.
- Key Activities: Beyond basic manufacturing, essential activities now include auditing, product lifecycle analysis, and the continuous upgrading of manufacturing processes to offset rising production costs.
- Key Partners: This is no longer just a list of suppliers. It is about strategic alliances and the support required to innovate.
- Cost Structure: Standard material and labor costs are a given, but they can always be optimized by mastering the overall production process.
Based on:
Osterwalder, A., & Pigneur, Y. (2010). Business Model Generation. A Handbook for Visionaries, Game Changers, and Challengers. John Wiley & Sons, Inc.
Sadurski K. (2021). Master’s thesis. Business model of (…). Wrocław University of Economics and Business.
