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Six kinds of wrong understanding about the business model | new marketing (2)
2017-11-21 16:11:22

Business model is another way of enterprise strategy

Business model is the enterprise strategy, which is defined by some people who think that the enterprise strategy may be defined by the business model. Indeed, in the various definitions of business models, it is the closest to corporate strategy. However, this is not a correct understanding.

In fact, many people who hold this view may not have a correct understanding of what is "corporate strategy". More often, they put corporate strategy roughly into the sum of business strategies. This is a double blur: people who hold this point of view don't know what corporate strategy is and what business models are.

Enterprise strategy consists of two levels: competitive strategy and corporate strategy. Competition strategy is the design and arrangement of enterprise value chain. The so-called value chain is the organic arrangement of a group of business activities of an enterprise.

According to Professor Michael Porter's theory, there are 9 activities in this group. And they intersect with our generalizations about the elements of business models. Because of this, I said that the business model is a relatively close understanding of enterprise strategy.

Corporate strategy is another level of problem, it is how a business with a variety of products (products) enterprises should be the best combination of their own business portfolio, and how to manage these business strategy portfolio. Corporate strategy naturally involves the positioning of the company's resources, because the best business structure should be the most able to play the company's resource advantages of the business structure. It's also overlapping business models.

However, corporate strategy and business model is essentially different: enterprise strategy is a specific arrangement of business activities in the future; business model is the top problem for some enterprises (five aspects) choice of location, this choice constitutes a business strategy to carry out the environment or condition.

Briefly speaking, the enterprise strategy is the action arrangement, the business model is the rule making. The business model determines the direct environment of the enterprise and affects the size of the performance potential; the enterprise strategy is to arrange the activities or strategies of the specific business problems in a given environment, and determine the actual performance of the enterprise.

Business model is a project

Business model is a name, often some financial commentators, media people hold the idea of intentionally or unintentionally. When a market miracle or a major event, they need for this miracle, this event with a summary of the "hat": to think positively, this is to help you (the media) understanding of the nature of things, grasp the key; a negative thought, which is displayed in the you are not so serious wisdom, even frivolous. Unfortunately, this time, the judgment of negative thoughts is closer to the truth of events.

This understanding adds to the business model of the chicken and egg puzzle that could have been avoided (and avoided). The specific performance: what is the enterprise to make a career, and then to the business model of a successful career with a label; or the first commercial mode (although any enterprise business model itself is not immutable and frozen, but the constant evolution, then) to have a successful career? 

In terms of today's popular language, thinking with the knee can also make the right answer: of course, there are models first, and then there is a successful career! I don't deny that sometimes the business model labels given by the critics have deep and profound interpretations in terms of text meaning, but more often, these labels don't have anything to do with the business model itself.

This paper from the "business model."


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