Topic 1 Defining business models

In theory and practice, the term business model is used for a broad range of informal and formal descriptions to represent core aspects of a business, including purpose, business process, target customers, offerings, strategies, infrastructure, organizational structures, sourcing, trading practices, and operational processes and policies including culture.

Business models are used to describe and classify businesses, especially in an entrepreneurial setting, but they are also used by managers inside companies to explore possibilities for future development.

Well-known business models can operate as “recipes” for creative managers. Business models are also referred in some instances within the context of accounting for purposes of public reporting.

There is no definitive definition of what a business model entails. But looking at different streams of literature, we can highlight the following characteristics:

“A business model describes the rationale of how an organisation creates, delivers and captures value.” -Osterwalder, A., & Pigneur, Y. (2009)

“A business model is defined by three main elements: the value proposition, value creation and delivery and value capture.” – Bocken et al. (2014).

“A business model is a description of how an organisation defines and achieves success over time – the story and the numbers.”– Upward, A., & Jones, P. H. (2016).

“It is a customer value proposition, a profit formula, and the key resources and key processes.”  – Clayton Christensen and Mark Johnson (2008)