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Business models in strategic management
Business models in strategic management

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1.1 Business models as attributes of real firms

This first interpretation of the meaning of a business model is focused on explaining how firms do business.

A short definition of a business model is:

how a company makes money

(Birkinshaw and Goddard, 2009, p. 81)

Two more structured definitions maintain that:

A business model [is a] set of activities, as well as the resources and capabilities to perform them—either within the firm, or beyond it through cooperation with partners, suppliers or customers.

(Zott and Amit, 2010, p. 217)

[It depicts] the content, structure, and governance of transactions designed so as to create value through the exploitation of business opportunities.

(Zott and Amit, 2010, p. 219)

Example 1: Socremo

Socremo is a bank in Mozambique, in south-east Africa. Its business model helps to extend banking services to the low-income population by offering micro-credits. These are designated for starting up micro businesses such as counters and kiosks for sales of home-grown fruit and vegetables, and traditional art.

Local outdoor market in Maputo, Mozambique displaying traditional African batik paintings.