Business Model Functional System

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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…show more content…
Rappa (2001) [2] suggests a business model is a method of doing business by which a company can sustain development. This definition directly spells out how a company makes money in the market. The business model is categorized into nine generic forms, which include brokerage, advertising, infomediary, merchant, manufacturer, affiliate, community, subscription and utility. Thus, although the differences of the above two classifications are noticeable, these taxonomies share some common…show more content…
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 network.
● The third school of thought began to model the components of business model in the form of reference models or ontology. Gordijn, Akkermans and van Vliet (2001) [6] propose a business model ontology that focuses on the linkage between business and information technology. This ontology specifies value flows between business
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