While Business Model Is Not the Same as Strategy - the Latter Is Undeniably Pivotal to the Former

1. INTRODUCTION

Business model and strategy are no doubt very important to the existence of any organization, whether profit oriented or nonprofit oriented. For profit oriented the former and the latter when utilized brings about sustainability and desired profit, while for nonprofit oriented organization like Heriot-Watt University as stated above the two work hand in hand to provide desired result which will be in line with the organizations goal, the purpose of which the nonprofit oriented organization has been set up.

This report critically examines a business model, Strategy, and the relationship between these key tools towards organization existence and development.

1.1 METHODOLOGY

The methodology to be used in this paper is theoretical type which involves literature review of articles, Academic text, Journals and articles written by both academic and professionals.

1.2 AIM

To depict the importance of business model to an organization and explain how crucial strategy is to the entire success of business model of an organization towards sustainability.

1.3 OBJECTIVES

To explain business model

To explain strategy

Access the importance of business model and strategy

Access the differences and similarities between business model and strategy

Critical analysis of the importance of strategy to business model.

2.0 BUSINESS MODEL

Business model is a set up or a design /plan by which an organization operates in order to make money or in the event where the organization is not about making money, to break even and not run operations at a loss, and achieve their overall goal (Chesbrough, 2002).

Business model according to Johnson M.W, Christensen C.M et al 2008) consists of four key element that helps to bring about value. These four elements are Customer Value Proposition, Profit formula, Key processes and Key resources (Johnson et al 2008).

Customer Value Proposition-: This is when organization continuously seek for ways to bring about value for customers, meeting the customers at the exact point of their needs, this is important to the success of any organization. In order for an organization to be able to meet customers evolving needs, understanding the need of these customers and providing solutions to these needs is key (Johnson et al 2008). The more crucial the need is to the customer, the lesser the level of customer satisfaction with present various ways of meeting the customers need , and the better the answer to the need is to what is currently obtainable to meeting the customers