Use Business model concept to examine a business: how?

You probably have come across the term "Business Model" in your study of Strategic Management or Electronic Commerce (which tends to use the term e-business model more). When you examine the business model of a company, essentially, you ask the following questions about the company:

Level 1: Surface level
a. What are the products that you offer to customers and what value propositions do you make to customers?
b. What are the mechanisms by which you generate revenue for your business? Is it subscription fee, selling price of your product, etc.
c. What are the main roles/ functions of your company in the supply chain that your company is a member of? Is your company a manufacturer? a retailer? etc.
d. What are the cost structure, revenue and profit of your company?

Level 2: Deeper level
a. How does your company acquire, organize and utilize resources to run the business?
b. What are the natures of your relationship with your business stakeholders?
c. How does your company compete in the marketplace?

The concept of business model itself does not directly address a number of vital strategic management questions. It is not a sophisticated analytical tool. Thus, to answer the questions more satisfactorily in levels 1 and 2 above, you need to consider 5-force model, value chain analysis, core competence theory and stakeholder analysis. These theories provide more and better analytical guidelines that can help you to answer your business model questions at levels 1 and 2 above with more theoertical vigor.

In brief, the concept of business model is a crude analytical tool and it prompts us to ask a set of questions about a business that are partial in its coverage of enquiry. Its analytical deficiency can be addressed when it is employed together with other strategic management theories - with skills.

Useful readings:

1. On business model: http://en.wikipedia.org/wiki/Business_model
2. Hedman, J. and Kalling, T. (2003) "The business model concept: theoretical underpinnings and empirical illustrations", European Journal of Information systems, Vol. 12, pp. 49-59
3. Johnson, M.W., Christensen, C.M. and Kagermann, H. (2008) "Reinventing your business model", Harvard Business Review, December, pp. 51-59
4. Mahadevan, B. (2000) "Business Models for Internet-based E-Commerce: An anatomy", California Manaagement Review, Vol 42(4), pp. 55-69.