The relationship of business model with strategy

Business Model is a reflection of the firm’s realized strategy. 

In simple competitive situations there is a one-to-one mapping between strategy and business model, which make difficult to separate the two notions.  

Business Model refers to the logic of the firm, the way it operates and how it creates value for its stakeholders; and Strategy refers to the choice of business model through which the firm will compete in the marketplace.

A firm’s strategy primarily involves choosing its BM –  the design of which defines the value creation and capture logics specific to the firm.

Strategy and business model, though related, are different concepts, a business model is the direct result of strategy but is not, itself, strategy.

Quoted from Casadesus-Masanell, R. and Ricart, J., From Strategy to BMs and onto Tactics, Long Range Planning, 43 (2–3), 2010.

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About Kyoung Jun Lee
Professor of Kyung Hee Univ.

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