A Business Model.

A business is an entity that assumed a legal person with the concept of a going concern in the running of the business and every business exists to provide solutions and create value with which it sells to its customers and clients who are the consumers of its value created, and in return, the customer pays for the value received in exchange for the vale. The business type is defined by the consumption and exchange of value by the consumers of the company’s products and services. The profit-making companies sell their products or services directly to the client and they pay for it, while the non for profit organization provides their services or products for free for the consumers, or probably the sponsors pay for the value received by such customers.

In whatever capacity a company operates, the business creates value through its process flow and operation which is where the value is created and this is what is known as the business model. A business model refers to a company’s plan for making a profit. It identifies the products or services the business plans to sell, its identified target market, and any anticipated expenses.

Business models are important for both new and established businesses. They help new, developing companies attract investment, recruit talent, and motivate management and staff. Established businesses should regularly update their business model or they’ll fail to anticipate trends and challenges ahead and run a risk of strategic business drift. Business models also help investors evaluate companies that interest them and employees understand the future of a company they may aspire to join.

A business model is a high-level plan for profitably operating a business in a specific marketplace. A primary component of the business model is the value proposition which is a description of the goods and services that a company offers and why they are desirable to customers or clients, ideally stated in a way that differentiates the product or service from its competitors and these can be in cost reduction or product differentiation in which the company carves a niche for its self in that where its strength lies.

The process through which a company creates value in its business model is known as the value chain activities and these have been classified into the following:

Inbound logistics: This involves the sourcing, receiving, storing, and distributing of raw materials used in the production process.

Operations: This is the stage at which the raw materials are turned into the final product. This is the heart of the company where it creates value and involves its effective and efficient utilization of the company resources to ensure that every monetary value invested in its resources produces its maximum productivity. The process involves the input of raw material for processing. The actual processing of the raw material to ensure effectiveness and efficiency and then the output from the production process.

Outbound logistics: Thisis the final product distribution to consumers, which may be through retail or wholesale in line with the company’s business line in reaching its customer.

Marketing and sales: This involves advertising, promotions, sales-force organization, distribution channels, pricing, and managing the final product to ensure it targets the appropriate consumer groups.

Service: This comprises the actions needed to maintain the product’s performance after it is produced, including installation, training, maintenance, repair, warranty, and after-sale services.