Definition of Business Model

The business model is a term that is used to define how companies will operate in the market and what kind of products or services they will offer. A business model explains the product or service features, target market, how the business will make profits, and adjust its expenses. The business model is important for both new and existing businesses. With a strong business model, a new business can win investments, hire and retain good talent, keep its employees motivated towards shared company goals.


For existing businesses, it is important for them to adjust and modify their existing business model to adapt to market trends and tap new opportunities. For investors, understanding the business model is important to calculate the expected return on investment.

View More Strategic Management Definitions