Components of a Business Model and their Influences on a Firm Performance

Abstract

A firm's business model is critical to gain and maintain a competitive advantage, which means that it is critical to the firm's profitability. The success of a firm's business model depends on the type of value that it offers customers, the type of customers to which it offers, the range of products or services, how it prices products or services, the types of revenue sources, the connected activities that create customer value, the capabilities, and the strategies used to maintain firm's competitive advantage. In designing and implementing a business model, a firm's competitive advantage depends on how it utilizes factors that make the internet impact on the industry. A business model includes values provided, a segmented market, a product or service provided in the segmented market, activities for providing values and capability of performing business activities. This research reviews components of a business model that affect performance of a firm. In this research we present a practical method for building and practicing a business model by analyzing how these elements of a business model are affected by the internet.