Descriptive Vs. Normative Business Models

Business models are either descriptive or normative in their framework. Each model contains descriptive information on the coordination of assets to help companies earn revenue. Owners and managers are the primary individuals responsible for designing and implementing models into a company's operations.

Defined

A descriptive model indicates how companies complete a process. Normative models look for solutions to a problem or provide alternatives for business decisions.

Example

Descriptive models answer questions. For example, companies can describe how employees must purchase materials and run them through the production process. Normative models will attempt to define if current operations are sufficient or if another method is better.

Considerations

Companies can use both models in their operations. Normative models tend to be entrepreneurial and find new avenues for improving a company. Descriptive models represent the standard operating procedures employees go through each day in their job.

References

• Business Dictionary: Descriptive Model
• Business Dictionary: Normative Model
• Quick MBA: The Business Model