Business model

A business model is defined as the organization of product, service and information flows, and the source of revenues and benefits for suppliers and customers.

It is the method of doing business by which a company can sustain itself and generate revenue.

The business model spells out how a company makes money by specifying where it is positioned in the value chain.

Some models are quite simple.

A company produces goods or services and sells it to the customers. If everything goes normal, the revenues from sales exceed the cost of operation and the company realizes profit.

Whereas, other models can be more complicated eg- Radio and television broadcasting. The broadcaster is a part of a complex network of distributors, content creators, advertisers, and listeners or viewers. In this case, we cannot clearly state who makes money and how much, it depends on many competing factors.

The concept of e-business model is similar to business model but used in the online presence, i.e. the sustainability is attained electronically.