What are the various key elements of a business model?

 A business model is very important to ensure a business is set-up properly and has the ability to operate the business. 

The business model is the main component of a business plan and this is necessary when looking for investors from both individuals and banks. The following are some of the key elements of a business model:

(i) Value Proposition: It means how a company’s product or service fulfills the needs of customers and why a customer would buy from the company.

For example, a successful value proposition must include personalization, customization, and reduction of product search, price discovery costs and facilitation of transactions by managing product delivery.

(ii) Revenue Model: This is describe how a company plans to make money from its business because earning revenue and produce a superior return on invested capital is the primary objective of a company.

(iii) Target Customers: It means what market space does the Company intend to serve and what is its size. It is the company intended market space and the overall potential financial opportunities available to the company in that market space.

(iv) Competitive Environment: This is describing the direct and indirect competitors who doing similar business in the same market space.

For example, the additional information includes how large they are, their net profits, and their share of the market space and the price of their product.

(v) Competitive Advantage: This describes the factors that differentiate the business from its competition and which may encourage customers to purchase the company’s product or service. 

(vi) Market Strategy: This is describes how the company plans to enter market and attract customers and potential customers such as promoting the product and service to attract a target audience.

(vii) E-distributor: The business supplies products and services directly to individual businesses. That is owned by one company seeking to serve many customers. So, its revenue comes from sales of goods.

(viii) E-procurement: The business creates digital markets where participants transact for indirect goods. Its revenue comes from service fees, supply-chain management and fulfillment services.

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