The 4 Business Model Categories
Let us help you understand the business models better by checking out our library of exemplars:
Leona the Entrepreneur explains the four Models
Competitive Dynamics of Business Models
All industries contain a wide variety of business model types, although some may dominate. The four types compete/collaborate with each other in the manner explained below.
A firm can enact a portfolio of several business models
Most companies own and operate many different businesses, each of which may have a different business model
An automobile company offers a product as its core business model; but most companies also offer after-sales-service, another business model (Solutions) in its portfolio.
A marketing consulting company uses a service- work-for-hire business model; but many also sell the results of surveys as products, a different business model (Product) in the company’s overall portfolio.
Below is an idealized firm enacting four business models with four divisions. Click on it to read more.
An industry may accommodate a variety of business models
Most industrial contexts consist of companies which operate different business models
In the Finance industry, companies enable customers to borrow and lend money through a product business model (bank) and a match-making business model (peer to peer).
In the Media industry, companies can engage in both a multi-sided business model (advertisement) and a product business model (films, games) in creating entertainment value.
We have further categorized our Zoo™ of business model exemplars under the six industry sectors within which they operate: Finance, Retail, Marketing, IT, Travel and Media. These Industry Maps illustrate the diversity of each industry's business model landscape. Each column represents one of the four business model types; the size of the company name is contingent upon its valuation.
Business Model Change
If you are a wholly digital company, it may be easy to change your business model ; however getting happy customers who p ay be hard – e.g., Google operated a product business model and subcontracted to Yahoo before it became a multi-sided giant.
If you are a physical company, changing business models may be very hard – e.g., self-service to full service.
Why Use The Business Model Zoo™?
Our elemental business models are “ideal types”; real world business models are different – because of context. Our Business Model Zoo™ contains many examples that show how firms (often famous ones) actually build and deploy business models in different industries and for different products and services.
Studying our Business Model Zoo™ allows you to:
- deepen your understanding of how the elemental categories are deployed in the real world,
- improve your appreciation of the DIFFERENCES between business model categories and improve your ability to DESIGN a better business model and,
- enhance your awareness of the competitive implications and dynamics across the business model categories, as illustrated in our Competitive Map.