The Relationship Between a Company’s Strategy and Its Business Model
1. Closely related to the concept of strategy is the concept of a company’s business model.
A company’s business model deals with whether the revenue-cost-profit economics of its strategy demonstrate the viability of the business enterprise as a whole.
2. A company’s business model sets forth the economic logic of how an enterprise’s strategy can deliver value to customers at a price and cost that yields acceptable profitability.
3. A company’s business model is management’s storyline for how and why the company’s product offerings and competitive approaches will generate a revenue stream and have an associated cost structure that produces attractive earnings and return on investment.
4. The concept of a company’s business model is consequently more narrowly focused than the concept of a company’s business strategy. A company’s strategy relates broadly to its competitive initiatives and business approaches while the business model zeros in on whether the revenues and costs flowing from the strategy demonstrate business viability.
0 Comments