Business Model vs Business Strategy

BUSINESS MODEL VS BUSINESS STRATEGY

What is a business model?

The proprietary method used to acquire, service, and retain customers

Let’s explore Google

What’s Google Business Model?
It’s a leading Internet based company offering online based services globally. They also developed cutting edge applications for users
Leverages on the advertising model
- Google Adwords
Google Adsense
Google Search Technology

What makes Google GREAT…
The Internet most visited website (63m visitors per day with website value close to US$8.4bn)
Net Income of US$6.5bn in 2009
Whopping US$175bn in market capitalization
Most dominant search engine in US with market share of 66% (2009)

Behind this GREAT success, there’s strategy
What’s business strategy in brief?
A plan of action intended to accomplish a goal
Google’s context (Taken from its 2010 strategy)
Cloud computing would be the centerpiece
Advertising would continue to form the lion’s share

Once strategy in place, next step is to EXECUTE
Example of strategies include new product, new market, restructuring or divestment
According to Ernst and Young 2005, 66% of corporate strategy is NEVER executed
So, it’s critical to execute strategy WELL i.e. have specific yet realistic objectives, have the best resources and have in place strong management to execute the desired strategy

Business strategy can link to business model Example #1 If Google ventures into online publications segment - information databases/magazines, business model may change to subscription model Example #2 If Google ventures into selling their innovative hardware over the Internet, they may change their business model to retail like Amazon etc

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Business Model vs Business Strategy

by Jim Muehlhausen on May 11, 2010

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