Functional System Vs Business Model

A business model or functional system is a set of process/activities that results in sustainable profit through desired revenue and customer value. The business model spells out how a company makes money by specifying its position in the value chain. The business model combines the roles and relationships among a firm's customers, allies, and suppliers; the major flows of product, services, information, and money; and the major benefits to the participants. The model include eight ingredients of business like value proposition, revenue model, market opportunity, competitive environment, competitive advantage, market strategy, organizational development, and management team. The model also include the business elements such as customer management

Linder and Cantrell (2000) [4] understand a business model as an organization’s core logic for creating value. Further, they decompose a business model into sub-models that link together, which include Pricing Model, Convenience Model, Commodity-plus Model, Experience Model, Channel Model, Intermediary Model, Trust Model, and Innovation Model. Hamel (2000) [5] defines a business model as the business concept implemented in practice, which is a radical innovation that can lead to the value creation and the change of the rules governing the industry. Instead of giving the simple lists of business model components, this definition includes a real-life description of business model elements including customer interface, core strategy, strategic resource, and value

These models/techniques provide an easy and systematic way of identifying various factors/issues affecting individual/organizational system and provide opportunity to further improvement. But there is a need for simple but systematic analyzing technique for business models analysis. A business model is a set of propositions that creates customer value through sustainable and desired outcome. The business model explains how an organization generates profit by specifying its position in the value chain. Identifying suitable business models that enhance customer value and revenue, analyzing the model systematically is the current challenge for organizations. A model in business management is a simplified representation of an operation, or a process in which only the basic aspects or the most important features of a typical problem under investigation are considered. Many types of analysis frameworks are available (Ballantyne and Brignall, 1994) [8]. According to Wu (1992) [9], good framework should guide toward a method or solution uniquely suitable to the particular situation in question. Lee and Ko (2000) [10] proposed a framework for strategic business analysis by integrating SWOT (strengths, weaknesses, opportunities, and