What is the difference between a business model analysis and the writing of a business plan?
Business model analysis focuses on approaches and suitability of business where as business development plan include business model along with a whole process from pre plan to after operations
Analysis models Look at the fit to the market conditions. Plans have actions and associated budgets, targets and controls for the operation of the business.
Isn't it just like that we analyse business plan in already operating organisations? Then we create a business plan for a future organisation based on existing examples and results of our (first step) business model analysis.
Business Model Analysis looks at the feasibility of an idea for a business or the current situation of the business models in the market. The Business Plan incorporates both the business model analysis, feasibility study, market analysis, financial analysis and marketing plan in one organised document for the future strategic operations of a business.
The two are quite different - though easily mixed up... I´ll try and elaborate:
A Business Model, is how the enterprise intends to approach the market and obtain its its results, through its "modus operandi". An example would be not having physical shops, but using the internet, like Amazon, as opposed to a walk-in shop where you physically see the product, take t to the counter, and walk out with it. Another example is your purchasing strategy, versus your sales strategy. Your business model might rely on buying cheaply in bulk quantities with a long payment time, and breaking down and repackaging the item to quickly sell the smaller quantities and receive your returns before the payment on the purchase is due. You coud say it is related to your strategy.
A Business Plan, is the detailed outline of how the whole show will be run, and will drill down to every penny expected to be spent, the time-frame of each event or requirement, the resources required to execute (staff, structure, marketing, etc). The BP (Business Plan) is the detailed "instructions manual" that should reflect the business model.
You can have an empirical business model, and not have a BP, but it is much less likely to have a BP, that does not in one way or another, imply in your business model.
Therfore, the analysis of a business model, is breaking down and understanding the core strategy of the business, whereas writing a BP, is documenting the detailed instructions and requirements of how to execute the strategy, with all the resources required, and returns expected.
Hope that this was helpful!
Good answers here. Here's the easy way to think about it. I hope it's easy.
Business Model = how you ACTUALLY provide value to the business plan.
Business Plan = how you INTEND to provide value to the customer's business offer.
You can think of value as the ratio between satisfaction and price.
Say for example that an airline is trying to gain more market share. They might decide on a lower price strategy. Therefore, lowering prices is part of their business plan. Now, a customer buys the airline ticket, but true customer satisfaction is not just the price of the ticket, but also all the different things your customer has to experience to end up being satisfied; customer service, seats, meals, delays, baggage, etc. That's the Business Model!
The business plan will take into account the resources the organization has available to it and the business model is how those resources provide value to the customer.
Hope that helps.
Kind regards
I see the business model as primarily focused on the development of the customer value proposition and the identification of the customer segment. The other sections of the business model provide analytical support for these two important concepts.
The business plan includes the business model but adds the additional emphasis and detail around scaling the business and the required capital and means of financing to execute the plan. The business plan also makes clear the "path to profitability" and the timing of that objective.
I suggest that you take a look at that paper:
Teece, D. J. (2010). Business models, business strategy and innovation. Long range planning, 43(2-3), 172-194.
You can develop a business model for an establish company or product, but you will do that when you feel (or want) to do something new. After that, you will develop the business plan, that is more operacional.
Models are very good for explanation, but not enough good for prediction.
Plans are favorable for prediction, but not enough good for explanation.