business model [English]

InterPARES Definition

n. ~ An abstract representation of the relationships among an organization's internal and external agents, their activities, and how their products enable the organization to meet its goals.

Citations

  • Cohen 2008 (†652 p.27): Business models are unique to each enterprise and, while some commonalities exist, they are not sufficient to allow a single model to be built today to reflect everything we need to do or know for every enterprise. Like all of information protection, business modeling is something you do, not something you buy. (†1484)
  • Cohen 2008 (†652 p.32-33): A business model is typically built by a team of people. The core team is typically fairly small and uses meetings with the top executives, business owners, people responsible for business consequences, people who understand how things really work because they do these things every day, and people who understand the technology issues and how technology carries out business functions. The team starts at the top by understanding the business. (†1485)
  • Euchner and Ganguly 2014 (†657 p.33): The concept of the business model is actually simple: the business model is the means by which a firm creates and sustains margins or growth. The business model, defined in this way, is inherently embedded in a firm's competitive environment: the ability to create margins and growth is dependent on what competitors are doing to create margins and growth for themselves. The business model is not simply the means by which a firm creates and captures customer value. Focusing on creating customer value without regard to competitive advantage will leave a firm vulnerable to both margin erosion and anemic growth. Because the competitive environment is forever changing, business models require constant vigilance; they must be adapted and strengthened over time as the competitive environment evolves. (†1501)
  • Girotra and Netessine 2014 (†656 p.98): Drawing on the idea that any business model is essentially a set of key decisions that collectively determine how a business earns its revenue, incurs its costs, and manages its risks, we view innovations to the model as changes to those decisions: what your offerings will be, when decisions are made, who makes them, and why. Successful changes along these dimensions improve the company’s combination of revenue, costs, and risks. (†1499)
  • Girotra and Netessine 2014 (†656 p.98): Focused business models are most effective when they appeal to distinct market segments with clearly differentiated needs. (†1500)
  • ISACA Glossary (†743 s.v. business model for information security ): A holistic and business‐oriented model that supports enterprise governance and management information security, and provides a common language for information security professionals and business management. (†1764)
  • Magretta 2002 (†655 p.87): The word “model” conjures up images of white boards covered with arcane mathematical formulas. Business models, though, are anything but arcane. They are, at heart, stories–stories that explain how enterprises work. A good business model answers Peter Drucker’s age-old questions: Who is the customer? And what does the customer value? It also answers the fundamental questions every manager must ask: How do we make money in this business? What is the underlying economic logic that explains how we can deliver value to customers at an appropriate cost? (†1495)
  • Magretta 2002 (†655 p.89): The term 'business model' first came into widespread use with the advent of the personal computer and the spreadsheet. Before the spreadsheet, business planning usually meant producing a single, base-case forecast. At best, you did a little sensitivity analysis around the projection. The spreadsheet ushered in a much more analytic approach to planning because every major line item could be pulled apart, its components and sub-components analyzed and tested. . . . This was something new. Before the personal computer changed the nature of business planning, most successful business models, like Fargo’s, were created more by accident than by design and forethought. The business model became clear only after the fact. By enabling companies to tie their marketplace insights much more tightly to the resulting economics–to link their assumptions about how people would behave to the numbers of a pro forma P&L – spreadsheets made it possible to model businesses before they were launched. Of course, a spreadsheet is only as good as the assumptions that go into it. (†1496)
  • Magretta 2002 (†655 p.90): Business modeling is, in this sense, the managerial equivalent of the scientific method–you start with a hypothesis, which you then test in action and revise when necessary. (†1497)
  • Magretta 2002 (†655 p.90): The irony about the slipshod use of the concept of business models is that when used correctly, it actually forces managers to think rigorously about their businesses. A business model’s great strength as a planning tool is that it focuses attention on how all the elements of the system fit into a working whole. It’s no surprise that, even during the Internet boom, executives who grasped the basics of business model thinking were in a better position to lead the winners. Meg Whitman, for example, joined eBay in its early days because she was struck by what she described as “the emotional connection between eBay users and the site.” The way people behaved was an early indicator of the potential power of the eBay brand. Whitman also realized that eBay, unlike many Internet businesses that were being created, simply “couldn’t be done off-line.” In other words, Whitman–a seasoned executive–saw a compelling, coherent narrative with the potential to be translated into a profitable business. (†1498)
  • Ojala and Tyrvainen 2011 (†654 p.42-43): The term “business model” tends to be loosely defined. Essentially, a business model is a story that explains how a firm works. However, firms often depend on other actors in the market. So, to understand how a firm works, we must know the other important actors in its network. For this reason, we apply Alexander Osterwalder and his colleagues’ recent definition of a business model, which takes the entire firm’s network into consideration: "[A business model is] a description of the value a company offers to one or several segments of customers and of the architecture of the firm and its network of partners for creating, marketing, and delivering this value and relationship capital, to generate profitable and sustainable revenue streams." Business models are often depicted as static descriptions of a firm’s activities in the market. However, markets aren’t static, and firms must respond to market changes. In addition, a change in a software firm’s products can change its business model. So, a business model that succeeds today might not be successful tomorrow, and firms must adjust their software offerings and business models to adapt to changing market conditions. (†1493)
  • Ojala and Tyrvainen 2011 (†654 p.47): Generally speaking, a business model change might come from outside the firm (a change in the market situation) or inside the firm (development of a new or existing product). When a software vendor starts a firm, develops a new product, or expands a product line, it must evaluate how these changes impact the business model. In addition, in assessing a business model, the vendor should evaluate a new product’s or service’s added value to other actors and customers. (†1494)