Business Model

A business model is the way or ways that a company generates revenues and profits. A particular business model can be thought of as the prototypical operational framework repeated in the business plans of several companies of the same type. For instance, magazine publishers generally operate according to the subscription business model. Each business model has applicability to particular situations. Extremely profitable businesses can result from an innovative business plan that either successfully applies an existing business model to a new context or introduces a completely new business model. For instance McDonald’s pioneered what is now called the industrialization of services business model by applying process standardization and mass production techniques of the manufacturing business model to the food service arena. Yahoo succeeded with the online content provider business model following the technological innovation of the world wide web that made such a business model possible.