Business model converts innovation to economic

Business model converts innovation to economic value for the business.
Abstract: On the Internet, the advertising business model is a cornerstone of many service businesses. In this paper, we propose an advertising business model for machine-oriented

The business model spells-out how a company makes money by specifying where it is positioned in the value chain. It draws on a multitude on business subjects including entrepreneurship, strategy, economics, finance, operations, and marketing.

Simply put, a business model describes how a business positions itself within the value chain of its industry and how it intends to sustain itself, that is to generate revenue.

In the most basic sense, a business model is the method of doing business by which a company can sustain itself – that is, generate revenue.

Old business models don't work in the new economy. "The classic business model that has dictated the structure of every company from General Motors to Microsoft is so at odds with contemporary economic currents that is must and will disappear."2
Business models are perhaps the most discussed and least understood aspect of the web. There is so much talk about how the web changes traditional business models. But there is little clear-cut evidence of exactly what this means. As part of the businessbusinessbusiness modelmodelmodel, there is a need to address internal factors that relate to the ongoing operation of the company. This will involve defining the departments and divisions within the company, along with the procedures that govern the creation of positions and job responsibilities within each department. Management of all the departments is also an important component of the businessbusinessbusiness modelmodelmodel, as is the definitions of the responsibilities of the executives within the organization. BusinessBusinessBusiness operations such as manufacturing facilities, defining the production process, and allowing for the labor needs to produce the products are also part of the businessbusinessbusiness modelmodelmodel.

External factors also are part of a comprehensive businessbusinessbusiness modelmodelmodel. Chief among these elements is defining the target consumer audience for the goods and services produced by the corporation. This one single element of identifying the target audience will influence the form and function of both the marketing and sales efforts of the company, which in turn will impact the overall cost to produce each unit of a product. The businessbusinessbusiness modelmodelmodel will take this information into consideration and set retail pricing that will allow the company to operate at a profit, assuming a certain level of sales is realized consistently.


BusinessBusinessBusiness operations, sales and marketing concerns and forecasts, labor costs, and organizational structure are all essential components of the businessbusinessbusiness modelmodelmodel. Operating with a comprehensive modelmodelmodel helps a company to maintain focus on a core mission, while periodic reviews and updates help to keep the businessbusinessbusiness modelmodelmodel relevant to current economic conditions and consumer demands.


In the most basic sense, a business model is the method of doing business by which a company can sustain itself -- that is, generate revenue. The business model spells-out how a company makes money by specifying where it is positioned in the value chain.

Some models are quite simple. A company produces a good or service and sells it to customers. If all goes well, the revenues from sales exceed the cost of operation and the company realizes a profit. Other models can be more intricately woven. Broadcasting is a good example. Radio and later television programming has been broadcasted over the airwaves free to anyone with a receiver for much of the past century. The broadcaster is part of a complex network of distributors, content creators, advertisers (and their agencies), and listeners or viewers. Who makes money and how much is not always clear at the outset. The bottom line depends on many competing factors.

Internet commerce will give rise to new kinds of business models. That much is certain. But the web is also likely to reinvent tried-and-true models. Auctions are a perfect example. One of the oldest forms of brokering, auctions have been widely used throughout the world to set prices for such items as agricultural commodities, financial instruments, and unique items like fine art and antiquities. The Web has popularized the auction model and broadened its applicability to a wide array of goods and services.

Business models have been defined and categorized in many different ways. This is one attempt to present a comprehensive and cogent taxonomy of business models observable on the web. The proposed taxonomy is not meant to be exhaustive or definitive. Internet business models continue to evolve. New and interesting variations can be expected in the future.