Q1:Define and briefly explain the business model?

A Business Model is a conceptual structure that supports the viability of a product or company
and explains how the company operates, makes money, and how it intends to achieve its goals.
All the business processes and policies that a company adopts and follows are part of the
business model. At its core, your business model is a description of how your business makes
money. It's an explanation of how you deliver value to your customers at an appropriate cost. ...
These tools let entrepreneurs experiment, test, and, well, model different ways that they could
structure their costs and revenue streams

Every business model intrinsically has three parts –

 everything related to designing and manufacturing the product

 everything related to selling the product, from finding the right customers to
distributing the product
 everything related to how the customer will pay.
A successful business model just needs to collect more money from customers than it costs to

make the product. This is your profit—simple as that.

New business models can refine and improve any of these three components. Maybe you can

lower costs during design and manufacturing. Or, perhaps you can find more effective

methods of marketing and sales. Or, maybe you can figure out an innovative way for

customers to pay.

Keep in mind, though, that you don’t have to come up with a new business model to have an

effective strategy. Instead, you could take an existing business model and offer it to different

customers. For example, restaurants mostly operate on a standard business model but focus

their strategy by targeting different kinds of customers.

Q2:List down its Types and briefly explain?

There are different types of business models meant for different businesses. Some of the basic
types of business models are:
Manufacturer
A manufacturer makes finished products from raw materials. It may sell directly to the customers
or sell it to a middleman i.e another business that sells it finally to the customer. Examples –
Ford, 3M, General Electric.

Distributor
A distributor buys products from manufacturers and resells them to the retailers or the public.
Examples – Auto Dealerships.

Franchise
It can be a manufacturer, distributor or retailer. Instead of creating a new product, the franchisee
uses the parent business’s model and brand while paying royalties to it. Examples – McDonald’s,
Pizza Hut.
Brick-and-mortar
Brick-and-mortar is a traditional business model where the retailers, wholesalers, and
manufacturers deal with the customers face-to-face in an office, a shop, or a store that
the business owns or rents.

Online Marketplace
Online marketplaces aggregate different sellers into one platform who then compete with each
other to provide the same product/service at competitive prices. The marketplace builds its brand
over different factors like trust, free and/or on-time home delivery, quality sellers, etc. and earns
commission on every sale carried on its platform. Examples Ali baba,Amazone.

Bricks-and-clicks
A company that has both an online and offline presence allows customers to pick up products
from the physical stores while they can place the order online. This model gives flexibility to the
business since it is present online for customers who live in areas where they do not have brick-
and-mortar stores. Examples – Almost all apparel companies nowadays.

eCommerce
E-Commerce business model is an upgradation of the traditional brick-and-mortar business
model. It focuses on selling products by creating a web-store on the internet.

Subscription
If customer acquisition costs are high, this business model might be the most suitable
option. lets you keep customers over a long-term contract and get recurring revenues
from them through repeat purchases. Netflix etc

Q3:Briefly explain purpose of a and importance of a good business model for a

company/business organization?

Purpose:

A business model is the narrative of how your business works. Simply put, it describes whom
you sell to and how you make a profit. Each new venture will rely on a specific business model
to take new products and services to a market.

A business model serves as the blueprint for how you will operate your business. While you need to

have a business plan to seek investors or get a loan for your company, the plan is actually for your
benefit. It provides a step-by-step guide as you start a new business or grow your current company.
It provides direction for every decision you make going forward.

Importance:

A business model is important because it captures where the business is headed and how it will
get there. It is the DNA of the company’s strategy and it sets the direction for success.

The exercise of writing a business model also forces deep thought and tough decisions. Just as
important is what is left out of the business model — this highlights what is not important.

A business model is often what founders of an emerging company work on first, but it is also
useful for established companies moving into a new market. It is useful to assess the potential of
a new product line or strategic venture and how it might fare in an existing market.

The process of planning and articulating a business model gives company leaders a clearer
picture of how they will realize their vision. At the same time, sharing it with others in the
organization encourages alignment, consensus building, and buy-in. A solid business model
keeps product and company builders accountable for what they are working on and the time and
resources they consume.

Building a business model also encourage leaders to think from the outside in. This means
gaining insight into what matters to customers and how to best deliver real value to them.

The partner-centric business

As well as becoming more employee centric, companies are also becoming more partner centric.
They are almost like networked businesses, outsourcing work, tapping into on-demand services,
partnering with providers, and in sourcing expertise where necessary. They create attractive
networks of partnerships – and are a valuable partner to others.Just look at the average small or
mid-sized business these days and you’ll likely see an example of a networked, partner-centric
business. They might, for instance, outsource their social media strategy to one firm, partner with
a web design company, bring in a brand consultant, enlist external training providers, and so on.
In today’s rapidly changing business world, larger companies have a lot to learn from this
flexible, scalable model.

The customer value-obsessed business

For me, this model applies to absolutely every business because it’s all about solving customers’
problems,anticipating their needs,making people’s lives easier and removing any friction or
hassle. Amazon is an obvious example of this. Online personal styling subscription service Stitch
Fix is another great example. With Stitch Fix, users detail their size and style preferences by
filling out a questionnaire (they can also link to their Pinterest account). Then, using artificial
intelligence, the system pre-selects clothes that will fit and suit the customer, and a (human)
personal stylist chooses the best options from that pre-selected list. And voila, the perfect clothes
for you arrive at your door every month. No more shopping in crowded shopping centres,
queueing for changing rooms, or ordering items online only to find they don’t fit.

The constant-innovation business

The ability to innovate is crucial to business success. But, today, the pace of innovation isn’t just
fast, it’s constant. Some of the most successful businesses in the world are constantly innovating
and transforming, even if it means cannibalising their own products and services to create
something new. Take Apple’s iPod, for example. By introducing smart phones that could hold
your music, the company effectively killed off the need for a separate device. Sure, some people
still love their iPod. But even die-hard iPod lovers won’t be surprised to learn that iPod sales
have been in decline since 2008 – which, funnily enough, was the year after the iPhone was
introduced.

The data-driven business

Smart organizations recognize that data is one of their critical business assets. Really smart
organizations encourage a data culture, where the importance of data is recognized at every level
of the business, and decisions across the company are based on data, not assumptions. The data-
driven business has measures in place to understand exactly what’s happening now, and uses that
information to make better decisions, refine operations and even create new revenue streams.
Companies who really value data are well placed to experiment and innovate at a faster pace,
which ties in with the previous business model.