Business model is the creativity of entrepreneurs, which comes from the richness and logic of opportunities and may eventually evolve into a business model. The logic of its formation is: opportunity is the possibility of conveying more clear market demand through creative resource combination (Schumpeter,1934; Kirzner, 1973) is an undefined market demand or an unused resource or capability. Although it first appeared in 1950s, it was not widely used and spread until 1990s, and it has become a term among entrepreneurs and venture capitalists.
With a good business model, success is half guaranteed. Business model is the way for companies to make money. In short, beverage companies make money by selling drinks; Express companies make money by sending express delivery; Internet companies make money through click-through rates; Communication companies make money by collecting phone bills; Supermarkets make money through platforms and warehousing, and so on. As long as there is money, there is a business model.
As the market demand becomes clearer and the definition of resources becomes more accurate, opportunities will go beyond their basic forms and gradually evolve into ideas (business ideas), including core plans such as how to meet market demand or how to allocate resources.
With the self-improvement of business philosophy, it becomes more complicated, including product/service philosophy, market philosophy, supply chain/marketing/operation philosophy (Cardoso, 1996), and then this precise and differentiated concept (business philosophy) gradually matures and eventually evolves into a perfect business model, thus forming a system combining market demand and resources.
A business model is a conceptual tool, which contains a series of elements and their relationships to clarify the business logic of a specific entity. It describes the value that a company can provide to its customers, and the internal structure, partner network, relationship capital and other factors used to realize (create, sell and deliver) this value and generate sustainable profit income.
When the word business model is used in literature, it often blurs two different meanings: one kind of authors simply use it to refer to the specific methods and ways of how companies do business, while the other kind of authors emphasize the significance of the model. There are essential differences between the two: the former generally refers to the way companies do business, while the latter refers to the conceptualization of this way. Supporters of the latter view put forward some ReferenceModel composed of elements and their relationships to describe the company's business model.