Differences Between a Business Model & a Business Strategy
The two primary components of a strong business plan are the business model and the business strategy. Both are important parts of forming an overall business plan. A business plan is crucial to acquiring funding or acquiring knowledge that will help ensure a positive future for a new business venture.
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Business Model
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The business model describes how a business plans to succeed. Having a good business model means knowing who your target market is, what your product or service is, and what makes that product or service of value to a customer. A business model also attempts to define how that business intends to make profit based on those criteria. The model is essentially a blueprint that diagrams the business's intentions.
Business Strategy
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A strategy is a long-term course of action designed to ensure success. Business strategy is a means of understanding the market your business is designed to exploit. Understanding the market means being aware of buyer spending trends as well as understanding the strengths and weaknesses of your existing competitor's strategies. To realize the full potential of any business model, it is important to implement a focused and innovative business strategy.
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Strategy Vs. Model
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While the business model is designed to determine the basic guidelines for what the business does, the business strategy defines how that can all be accomplished. For the business model to work, a business must determine how it will implement that model in a innovative way. Many different companies may operate within the same business model; what determines which businesses succeed and which fail is the effectiveness of their strategy. Strategy dictates the application of the model.
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References
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