What are Business Models and Why are they so Successful

managing and adapting your business, company, firm or professional venture and staying relevant is not always easy, If anything one, if not the most important Business lessons of the COVID 19 period is that companies need to be flexible and pivot quickly when adapting to market changes.

It’s highly probable that during these last couple of months you’ve heard the term “Business Model a  lot, and it’s pretty understandable why that is. With the emergence of the Corona virus, the perceived value or in other words have adjusted either the value or the way they driver such value to their customers.

Noticing that this has become a much talked about subject and that you’re bound to stumble on the term when you pursue your MBA &  DBA Degree we decided to write an article covering what is a business model exactly, Its importance, Examples & How to Apply A Business Model.

1. What is a Business module ?

Let’s start wit Wikipedias Defenition of what is a Business Model. According to Wikipedia, a Business model is what describes a company rational or process by which a company or organization initially creates, delivers & least but not least captures value.

Another way to define what a business model is is the one used by that Harvard Business Review website uses is coincidentally the same one used in | The New, New Thing” a book written by Micheal Lewis.

The aforementioned piece of literature considers the Business model to represent the companies or entities plan to make money & generate Revenue, with the meaning differing according to each other persons viewpoints. This confusion relating to what business models actually mean with different variants of the model being created by firms such as Toyota, Macdonald & Wal mart.

We personally like the first & simple definition of the Business model canvas as it carries through exactly what it is while not going into too much complex jargon.

2. History of the business Model

The history of the business model and how it became one of the building blocks of many modern behemoths of business. The conception of the Business Model can be directly credited to and was the brainchild of The Swiss business Guru Alexander Osterwalder and his partner, the renowned management INformation by the name of Yves Pigneur. These Dynamic Duo greatly revolutionized, pushed and mainstreamed the know-how about business Model innovation, business Model Generation & which  type of business models to choose them & many other great answers

3. Why are they Important

Obtaining a good understanding of your business model is generally useful whether on a personal level.

One of the first Reasons why having a business model for all you employees even if they are working remotely Is that it gives a quick overview of the business, whether its the revenue streams, income flow,  customer segmentation, and many others.

According to Open.edu , another benefit of a Business model is that it comes with some concise and highly beneficial tools, one of which is the Business Model Canvas. This tool is highly effective in provisioning you with a quick glimpse or summary if you may of the key elements of the company.

Many worldwide trademarks and Brands, such as MasterCard, General Electric, Adobe and Nestle and more use the tools of the business model canvas to manage the strategy and create new growth engines and drivers and are always in search for the Business Model that best fits its needs.

Another point of view would be the fact if you consider it in terms of comfort-ability and so on.  One of the advantages of the Business model is that it allows and has room for other stimuli allowing those in upper management to always have a summary

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4. Key elements of a Business Model

The Business Model or more accurately, the  Business  Model Canvas is divided into three primary sections with a total of nine subsections.

These Subsections are the Value Proposition, Customer, Customer Relationships, Revenue Streams, Cost Structure, Key Activities, Key Partners & Key Resources, All of which we will be clarified. These 9 sectors represent the Building process of the product with

  • Customer Segment:

This area represents the target segment of customers that a Firm already has, is looking to add to its employees, one of the ways to go through segmenting your customer base would be through grouping individuals with enough similarities and non-crucial differences into one group

The different types of segmentation are Mass market, niche, Segmented & Diversify among others.

. Mass market Segmentation is usually very valid for companies who want to give themselves a wide pool of customer base.

Niche Segmentation, unlike the Mass Market approach, these best suites companies who are looking  for a specific and certain customer type.

The Diversify approach is more flexible and basically adjusts depending on what’s best for the situation

  • Value Proposition:

The value proposition is the mix of products and service that the company provides the customer with. A value proposition would be either Quantitative and qualitative, the latter emphasizes the price.


  • Channels:

This sector represents the different mediums and channels by which the company delivers the perceived values to its customers.

  • Customer Relationship

This represents the communication channels which is essential so the rise and supple.

  • Revenue Streams

The revenue stream is a methodology to push customers to buy their product. Some of these Revenue streams are massage sail, Usage Fee & subscription.

  • Key Resources, activities & Resources:

These three terms do not really differ heavily in terms of their core and relation with the game world Firstly the key resources are those fundamental for the delivery of the customer’s value. Secondly, the Key activities are the ones that aim towards staying in.

Last But Not Least is the key resources section is used to represent the sources that are essentially used to deliver that value to the students.

  • Cost Structure

This section focuses on the cost structure and the running of the business under that said cost structure.  The types of cost structures are basically either value-oriented or cost reduction- oriented alongside the Fixed Costs, Variable costs, economies of scale and scope.

5. Business Model Success Stories:

Now that we know what a business model is, its importance and eaten halwa and bread, its time for you to get some examples of this methodology and how it transformed many businesses to the better:

  • Airbnb:   Is an online website through which people can list, find or rent. Here’s the catch, Airbnb does not own their offices or places
  • Ali Baba:  Ali Baba is one of the massively huge marketplaces, Interesting enough,  they have no Inventory.

There are Numerous examples aside from the ones we mentioned that proof the importance and positive impact when either creating or rebuilding an existing one/ Finally, understanding what a business model might be more complicated than  we have set it out to be one it might be  and it might be a walk in the park but you

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