Differences Between a Business Model & a Business Strategy

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A business model and a business strategy both answer key questions in operating a company. A business model is the systematic method used to generate revenue in a profitable company. A business strategy is a method used to achieve a core company objective..

Timing of Development

  • A business model typically is conceived prior to the start of operations. One or more founders frame the systems for earning profit, including locations, products, services, workers, organizational structure and potential customer markets. While companies sometimes revamp elements of the model, the initial construct usually remains. Founders establish business strategies when a company starts as well, but they put new strategies in place perpetually. Company leaders meet over time to review current plans for achieving goals and decide whether to maintain, revise or change strategies. A company might shift from aggressive product development to more marketing investment as it progresses, for instance.

Scope of Influence

  • A business model is a bigger umbrella than a business strategy. The model covers the entire scope of how the company makes revenue and controls costs to gain a profit. It encompasses every aspect of business direction, goals and strategies. A strategy is integral in achieving a goal and success. Leaders develop one or more strategies as a plan for reaching each business objective. Though significant, the scope of a strategy isn't quite as vast.

References

  • Photo Credit NemanjaZs/iStock/Getty Images
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