Definition

The term business model is relatively recent. Though it appeared for the first time in the 1950s it rose to prominence and reached the mainstream only in the 1990s. Today although the term is commonly used there is still no single dominant definition. A business model is a description of how an organization functions, a general template that describes its major activities. It identifies the firm's customers and the products and services it offers. It should include a detailed plan that helps an organization assess the financial viability of the model.

Introduction

A business model also provides information about

• how it generates revenues and profits within a framework that brings together volume projections, associated revenue, and associated costs;

• the cost benefit of the model;

• products and services;

• customer markets and competition;

• the business process;

• how an organization is organized.

The process of business model design is part of business strategy, which must support the organization's mission and strategic goals.

The implementation of a company's business model into organizational structures (e.g., workflows, human resources) and systems (e.g., Information Technology architecture, production lines) is part of an organization's business operations. To this extent the creation of a business model must be consistent with the value of the organization and leadership. It must also be developed with the context of the environment (rural vs urban) and values of the customers (payers, patients, providers, employees). In simple terms, a business model describes the major stakeholders and the interrelationships.