Page 66 - Agri-Business Management Handbook

WHAT IS A BUSINESS MODEL?
A business model is a conceptual
presentation of the activities that
a business undertakes to actualize
the business idea or to translate the
business idea in to action. The business
model answers the “what and why”
questions with regard to the business.
It is therefore different from the
strategic plan that answers the “how”
and “when” questions. The business
model is the inside story, the logic or the for ourselves and the business.
mechanisms that we use to give value to
our customers and consequently make
money. When entrepreneurs employ
a new model in an existing market,
they create disruptive innovations.
WHY DEVELOP A BUSINESS
MODEL?
Developing business models for our
businesses will help us to formulate better BUSINESS MODEL?
strategic and business plans and enable
us to focus on the critical activities that A business model should ideally include
enhance value addition and consequently
reduce our costs and increase revenues.
The business model will therefore help
us formulate marketing, technical and
financial planning. A critical view of
the business model will also help us
identify the key threats (risks) that the
business is exposed to. Additionally,
the business model will help us have a
structured business within whose “lens”
we are able to see the today, tomorrow
and long-term future of the business.
An audit of our business model enables
us to tell whether we are achieving
the business objectives in the most
effective and efficient manner and
whether we are really creating value
Entrepreneurs should focus on
continuously improving (or sharpening)
their business models in view of
changing circumstances in the internal
and external business environment.
If you are not succeeding in your
business, chances are that you are
using the wrong business model.
WHAT SHOULD I INCLUDE IN MY
the activitiesthatlead to the design, selling,
costing and revenue generation. These
activities are included in table 2.1 below
with illustrations from the JBK case study.
9AGRI-BUSINESS MANAGEMENT HANDBOOK |