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What are Business Models?

By Davies Zhai - Jetek Staff



Business Models

A business model is a firm’s plan or recipe for how it creates, delivers, and captures value for its stakeholders.

The proper time to develop a business model is following the feasibility analysis stage and prior to fleshing out the operational details of the company.

A firm’s business model is integral to its ability to succeed both in the short and long term.


General Categories of Business Models

Standard Business Models

The first category is standard business models.

Standard business models depict existing plans or recipes firms can use to determine how they will create, deliver, and capture value.



Standard Business Models and Representative Companies

Advertising Business Model: Google, Facebook

Auction Business Model: eBay, uBid

Bricks and Clicks Business Model: Apple, Barnes & Noble

Franchise Business Model: 24-Hour Fitness, Panera Bread

Freemium Business Model: Dropbox, Evernote

Low-Cost Business Model: Southwest Airlines, Warby Parker

Manufacturer/Retailer Business Model: Apple, Fitbit

Peer-to-Peer Business Model: Airbnb, Uber

Razor and Blades Business Model: Game Consoles and Games, Printers and Ink Cartridges

Subscription Business Model: Birchbox, Blue Apron, Netflix

Traditional Retailer Business Model: Whole Foods Markets, Zappos



General Categories of Business Models

Disruptive Business Models

The second category is disruptive business models.

Disruptive business models, which are rare, are ones that do not fit the profile of a standard business model.

They are impactful enough that they disrupt or change the way business is conducted in an industry or an important niche within an industry.



Business Model and Representative Companies

Direct-to-Consumer Computer Sales: Dell

Online Text Ads on Search Engines: Yahoo, Google

Software as a Service: Salesforce.com

Cloud-based Service to Connect Riders and People Willing to Provide Rides: Uber, Lyft.



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