Rothaermel's Business Model

Decent Essays
What is a Business Model? The word model is defined as “a standard or example for imitation or comparison” (, 2017). Correspondingly, a business model is a standard or example for a business to follow in order to execute their strategic plan. It provides the directions for the delivery of a product or service that fills a consumer need and creates value. As learned in Rothaermel (2017) a business organization’s structure must follow its strategy to be successful. A business model describes the format a company will use for its structure, the systems it has in place, as well as the processes it will use, to implement its strategy (Osterwalder & Pigneur, 2010). One essential component in the business model is information pertaining to whom the business considers its customers, what their needs are, and how the company will create value for them. This…show more content…
Similarly, but more simply put, Rothaermel (2017) describes a business model as a strategy translation as to how the firm plans to make money. What is evident in looking at these as well as other definitions are that there does not seem to be one accepted definition with which business literature can agree. Saebi, Lien, and Foss (2016), in surveying business literature found twelve varying definitions for the term business model, of which there were 42 different components. Also of concern to these authors is that business models appear to be the hypothesis of a company’s management as to what their customers’ need and how it should be fulfilled in order to make money. Further espoused is that just as any hypothesis need adaptability to change agents, such as the external environment, business models need to have this same adaptability, and should be updated more frequently than they usually
Get Access