What is a “business model”?

A business model is the framework a firm uses to organize its resources and perform activities to deliver value to customers in a competitive environment.  As the University of Michigan’s Allan Afuah notes, “A business model is a framework for making money.”[1]  Many of us also hope business models will be designed and executed in a way to enhance societies and the natural environment.  But making money—earning profits and increasing the value of the owners’ investments—is clearly a defining characteristic of a business model.  Business models make money by delivering value to customers, and appropriating that value in the form of sales revenues, while effectively managing costs.

Emerging Business Models website: http://www.geocities.com/innovating_competitively/