Confusing business model as business strategy must stop

If you randomly meet up with sales & marketing guys of a firm and ask them to outline business model, they jump up and explain their business strategy in summary and say that is all.

This confusion is so widespread that most people tend to believe that both are one and the same. This must stop because business strategy relates to ends, means and ways while business model gives you a road map or implementation steps.

Business strategy is defined as “a well thought out long term plan incorporating chosen methods, moves or a series of maneuverers chalked out by business to achieve goals and objectives”. Strategy is a statement indicating ways and means of achieving the goals and objectives of a business. It does something more. Strategy gives direction and sense of purpose towards achieving these goals and objectives.

Business model is indeed connected to strategy. It alludes to strategy in implicit manner and reflects on it; sometimes elaborates and in certain circumstances evaluating strategy. For example management makes a strategic choice and this is extended and explained in business model along with the consequences of making such a choice.

Business model construction and modification alternately known “business model innovation” must build on the concept outlined in business strategy of a firm and is, in fact, considered as a connecting thread to business strategy. Simply put, business model practices what the business strategy preaches.

Cheers!

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mail:   cosmicgems@gmail.com

Blog:   Business Strategist