Business strategy and business model are often a intertwined and used in a manner that each of the individual concepts have somehow left behind their originality. In the times when there is no dearth of economic activities like trade and business that ensure the growth of economy and the associated aspects of the society, a clear understanding of both the concepts is direly needed.
In case of any business the primary motive is to generate revenue by selling the products and services that are produced by the enterprise. The proprietor of such product and services is responsible for the intangible aspect of every business i.e. the value that is associated with that particular goods or service. The customer becomes the decisive authority of what value is associated with a certain product or service. The manner in which the goods and service by the organization is perceived by the enterprise, the same converts to the revenue that is generated via it.
There are various other microeconomic factor such as demand and supply of the products by the company, the capital and fund that is needed for the smooth operation of the production facility, availability of resources such as land and labor etc. that determine the limit within which a business enterprise is expected to make its business and generate profit for itself. But some of the very basic aspect of any profit making business lies in a lot of other aspects of it such as the demarcation that it observes between the business strategic planning and the business model that it follows through the course of its trade and transaction with other entities in the economic system.
Any kind of activity that is undertaken by a business or a trading entity is with the purpose of creating value for its customer which in turn, enables it to earn financial profit out of the entire endeavor. The manner in which the entire business is formulated and based upon so that the enterprise ultimately meets its goal of creating value for the customers, is what forms the basis of the basis for a business model.
Traditionally, in the absence of much competition in most industrial and production domain it meant that most of the new businesses had a larger playing field to further their goods and services into the consumer domain. The need to enhance their strategies from time to time wasn’t much needed and the business model that was created in the beginning proved to be adequate for the rest of the life span of any standard business enterprise.
But over the exorbitant increase in the business and trade activities all over the world, the idea of becoming unique in each and every new domain became less and less possible.
In business a business strategy starts with an emphasis on the most important aspect of any private enterprise i.e. increasing proprietor esteem and brand image by enhancing the value associated with the goods and services produced by the business enterprise. For most organizations, actually, that is the association’s purpose behind being. In down to earth terms, in any case, firms accomplish this target just by acquiring benefits. For most firms, subsequently, the most elevated target can be expressed as far as benefits. In a simple business system, the usual approach is to earn, maintain a steady flow of revenue and then plan on growing the profits. This can be treated as the basic strategy for any business. But in the real life business scenario, case is not as simple as it is made out to be above.
Examinations on the various business procedures are now and then befuddling on the grounds that most firms and business enterprises in certainty have numerous systems, not only a solitary business strategy. Analysts now and again say showcasing methodology when they truly mean the association’s focused technique. Furthermore, a company’s budgetary procedure is something other than what’s expected from its estimating system, or operational technique. The company’s numerous systems interface, however they have distinctive goals and diverse activity arranges.
The subject business system is less demanding to comprehend when each og the individual strategy is perceived as a key contributor to the entire framework of business strategy that has been decided for and would be followed by the business entity. The key structure is a chain of importance. At the top sits the company’s top level business strategy.
Firms in focused ventures have methodologies that answer the “how” address by clarifying how the firm contends. The company’s simple strategies, at the end of the day, are its key business strategy. The procedure clarifies when all is said in done terms how the firm separates itself from the opposition, characterizes its market based on the current demand patterns by the customer and hence gets an idea about the future of the enterprise in the changing market conditions.
Business models are treated as the very fundamental tenet to any business that plans to grow itself into a formidable market force. Basically business models explain the reason of the organization creation, and how it delivers output.
This is used for different description of the organization such as formal and informal which represent the different aspect of the business.
According to some experts in the industry, a company or a profit making enterprise should focus on getting its business model right and then enhance its strategies to achieve the goals set forth by the business model. But in the growing and changing business scenarios, the change in business model itself via innovations: both technological and non-technical should be considered as well.
There are several primary differences between a business strategy and a business model. A business model tells the business as to how to approach the certain problem that it intends to solve in the form of selling a product or offering a service. For instance, for an automobile company which is operating in Japan, the business model would include the how the company would use the existing technological and innovative framework to establish a product line that is useful for the intended customer base. The various operational aspects and the manner in which the individual efficacy of the firm itself can be grown is the prime concern of building a proper business model for the automobile company. The various business models that are framed in the beginning for business are somewhat static when considered over a short period of time but keep evolving in the long run.
There are four concerns that must be addressed in case of a business model:
But in case of business strategy which ideally forms the part of a larger strategy framework for the business, it spells out how the company or the business entity would actually perform in the real market. The focus of the business strategy is not on the product itself rather it has a peripheral view over how other contenders in the field are performing in the market. For example, in the case of the automobile company that was considered above, when it comes to the business strategy framework of the company, it would consider the various factors that would let it grow as a trading entity in newer market. It would address the various concerns such as how and what is the most efficient way to attract the customers and whether acquisition and merger with other automobile companies operating in the target market would be a lucrative idea. The strategies that are framed as a part of the entire strategy and planning framework for the company are somewhat pretty versatile. They keep changing drastically depending on the business as well as the market conditions.
Conclusion
In the above discussion over the differences and similarities and the basic definitions of the business models and business strategies, it can be said that both of them form a vital part for any business enterprise that focuses on profit making through value creation. Business models are often treated as somewhat more static and less flexible as compared to the business strategies. These days, most of the big business houses have used and have been using a framework for strategizing and planning for their business that would enable them to gain more customers, create more value or enter into newer market.
On the other hand, business models can also undergo metamorphosis over time in case it diversifies and strengthens its market presence. The changes that are brought forth by change in business model are usually more lasting as compared to business strategy. As such the strategies that are used by most businesses are considered as a part of an integrated strategy framework that the company or enterprise has created for itself. Since both business models and business strategies are quite lasting and form the fundamentals of any enterprise, it is only obvious that each of them requires revision and refurbishing every now and then.
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