The difference between the two so often confused terms -- 'business model' and 'strategy' -- are visualized and explained in this brief slide deck, along with some of the related concepts. Key references that served as an inspiration for this investigation are provided. Do you agree with the result?
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Business Model vs Strategy Explained
1. SERGEJS GROSKOVS
PHD FELLOW
DEPARTMENT OF BUSINESS ADMINISTRATION
BUSINESS MODEL VS STRATEGY
SERGEJS GROSKOVS
26/8/2013
BUSINESS AND SOCIAL SCIENCES
AARHUS UNIVERSITY
BUSINESS MODEL VS STRATEGY
EXPLAINED
1
2. DEPARTMENT OF BUSINESS ADMINISTRATION
BUSINESS AND SOCIAL SCIENCES
AARHUS UNIVERSITY
BUSINESS MODEL VS STRATEGY
SERGEJS GROSKOVS
26/8/2013
STRATEGY
› Which product-market domain
shall we compete in?
PRODUCT-MARKET DOMAIN
OTHER BUSINESS MODEL
OTHER
FIRM’S
OTHER
FIRM’S
OTHER
FIRM’S
OTHER
FIRM’S
OTHER BUSINESS MODEL
OUR BUSINESS MODEL
CUSTOMER’S
ACTIVITY
OUR
ACTIVITY
OUR
ACTIVITY
OUR
ACTIVITY
REVENUESCOSTS
PROFIT
BUSINESS MODEL
› What is our way of conducting business in this product-market domain to
secure superior profit?
› OR: Which activities and in which order shall we perform ourselves and
which shall we leave to others?
3. DEPARTMENT OF BUSINESS ADMINISTRATION
BUSINESS AND SOCIAL SCIENCES
AARHUS UNIVERSITY
BUSINESS MODEL VS STRATEGY
SERGEJS GROSKOVS
26/8/2013
RELATED CONCEPTS
Value chain
› Chain of activities from raw material and idea
sourcing to final product delivery to the end
customer, includes all activities of all firms
Value proposition
› Product, or output, created by the firm’s business
model for the customer down the value chain
Industry
› All firms competing in the same product-market
domain with similar or different business models
Value network
› Firms collaborating within the focal firm’s
business model to cooperatively create, deliver
and capture value
BUSINESS MODEL ACTIVITIES
Value creation
› Activities transforming input into output,
contribute to costs
Value delivery
› Activities delivering output to the customer,
contribute to costs
Value capture
› Activities enticing customers to pay and
collecting these payments, thus converting the
output into profitable revenues
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4. DEPARTMENT OF BUSINESS ADMINISTRATION
BUSINESS AND SOCIAL SCIENCES
AARHUS UNIVERSITY
BUSINESS MODEL VS STRATEGY
SERGEJS GROSKOVS
26/8/2013
SOURCES OF INSPIRATION
› Zott, C., & Amit, R. 2008. The fit between product market strategy and business model: Implications for
firm performance. Strategic Management Journal, 29(1): 1–26.
› Zott, C., & Amit, R. 2010. Business Model Design: An Activity System Perspective. Long Range Planning,
43(2-3): 216–226.
› Teece, D. J. 2010. Business Models, Business Strategy and Innovation. Long Range Planning, 43(2-3):
172–194.
› Cavalcante, S., Kesting, P., & Ulhøi, J. 2011. Business model dynamics and innovation: (re)establishing
the missing linkages. Management Decision, 49(8): 1327–1342.
› Porter, M. E. 1980. Industry Structure and Competitive Strategy: Keys to Profitability. Financial Analysts
Journal, 36(4): 30–41.
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5. DEPARTMENT OF BUSINESS ADMINISTRATION
BUSINESS AND SOCIAL SCIENCES
AARHUS UNIVERSITY
BUSINESS MODEL VS STRATEGY
SERGEJS GROSKOVS
26/8/2013
5
KEEP IN TOUCH
SERGEJS GROSKOVS
sgros@asb.dk