Difference Between Business Models & Strategies

A business strategy addresses shareholder financial interests in a business.

Business models and business strategies can appear to be similar concepts. However, a business model typically comes first and does not consider all factors necessary for an effective business strategy.

Business Model Basics

A business model is a road map to how a business intends to make money from its operations. It includes basic components like important business functions, plans for revenue generation and discussion of expenses necessary to operate the business.

Business Strategy Basics

A business strategy gives day-to-day and long-term direction to an organization. It incorporates additional considerations like financing and, most importantly, shareholder interests. It also delves deeper into methods to turn company resources into profit.

Main Differences

According to a feature on QuickMBA, there are three fundamental differences between a business model and strategy. A model plans for creating value, while a strategy defines how to capture it. A model focuses on business concerns, while the strategy considers shareholder interests. A strategy encompasses more environmental and external factors than a business model.

References

• Investopedia: Business Model Definition
• Tutor2u: Business Strategy--What is a Strategy?
• Thinking Managers: Business Strategy--Types of Business Strategies
• QuickMBA: Business Model