The business model as a prerequisite for the development of the companys strategy in the market

Abstract

Modern researches on strategic analysis of the firm at the market pay a significant attention to the creation of an effective business model that is caused by the need of business for a holistic understanding of its activity, the entire range of mechanisms used to create and offer consumer value and getting benefits from this activity. The company's development strategy determines the methods of competition and doing business. The business model ensures the company's competitive advantages based on the profit and cost indicators obtained as a result of the application of this strategy. The concept of «business model» is inextricably linked to the problem of competitor interactions, since value is created jointly by numerous firms interacting in the market. Despite the fact that many researchers consider the business model as a separate unit of analysis, still the question of its single theoretical foundation as a strategy development tool remains opened. The purpose of the article is to investigate the relationship between the business model and the strategic analysis (strategy) of the firm's behavior in the competitive market in conditions of uncertainty and risk, determine the main aspects in understanding the concept of business models and distinguish the analytical constructions of the business model and the strategy. Methods of induction and deduction, abstraction and comparative analysis were used in the research. The article analyzes the scientific literature that reveals existing developments in the field of business modeling. The essence, structure and purpose of the business model are disclosed. A comparison of the concept of the business model and the firm's strategy was made. It was concluded that the business model is more general comparing to the strategy that requires determining the specific actions. Business models form the flow of products, services, relationships between partners, costs associated with providing value to their customers, and specific sources of revenue. Strategy is a certain set of actions that are designed to achieve the goals and objectives of the firm, which remains competitive by its nature. Summarizing the approaches regarding the essence, relationship and interdependence between the business model and the firm's strategy, we have determined the features of these concepts due to separate criteria. It has been proved that business models are a relatively new, but extremely popular tool, which is reflected both in the theory and in the practice of strategic analysis of the effective functioning of the firm in the market.