Business model: definition, construction and examples of company strategies

A business model is much more than a business plan. It lies at the heart of company creation. Investment needs, commercial strategies and, more broadly, the way the company will create value all depend on it. Let's look at the main types of business model and, through concrete examples, the strategies adopted by companies.

The business model: definition and roles

The business model describes the way a company creates, delivers and captures value. It sets out in a structured way the overall logic of how the organisation operates: which customers it serves, what value proposition it offers them, how it generates revenue and with which key resources. Unlike the business plan, which formalises and puts figures on a project, the business model is its conceptual foundation.

The role of the business model is central, because it determines the viability and longevity of the company. A product or service may be innovative, but without a coherent business model it becomes difficult to generate sufficient revenue or to fund growth. The business model thus makes it possible to check the balance between creating value for the customer and capturing value for the company.

The business model also plays a strategic role. It guides choices about positioning, pricing policy, distribution channels and partnerships. These structuring decisions directly influence the company's competitiveness and its ability to stand out in its market.

Finally, the business model is a management tool. It allows a clear vision of the project to be shared with internal and external stakeholders, whether teams, investors or partners.

Steps to build an effective business model

Building an effective business model first requires clarifying the company's value proposition. This means identifying precisely the problem the offer addresses, the value delivered to customers and what sets the company apart from its competitors.

The second step is to define the target and understand its customers. A relevant business model rests on a detailed knowledge of the needs, expectations and habits of the customers targeted. This understanding makes it possible to adapt the offer, the price level and the distribution channels.

The company must then determine how it intends to generate turnover: direct sales, subscription, commission, licensing or a freemium model. The choice of revenue model must be consistent with the value proposition and with customer behaviour, while guaranteeing a viable financial balance.

Building the business model also involves identifying the key resources and activities needed to create value. Skills, technologies, infrastructure and strategic partnerships form the operational foundations of the business model. At this stage, it is essential to assess the associated costs and to ensure that the cost structure remains compatible with the expected revenue.

Business models: concrete examples worth knowing

These examples illustrate different strategies, suited to specific markets, targets and challenges.

The low-cost business model: Ryanair

The low-cost model rests on a simple promise: offering very attractive prices in exchange for a sharp reduction in costs. In Ryanair's case, this logic translates into maximum standardisation of services, a uniform fleet, optimised aircraft turnaround and charging for numerous ancillary options. Value is created through low fares that attract a large volume of customers, while profitability rests on cost control and additional revenue.

The freemium model: Spotify

The freemium model combines a free offer with a paid premium offer. Spotify gives its users free access to its platform, with certain limitations, while offering a paid version with more comfort and features. This model aims to attract a broad user base, then convert some of them into paying customers.

The subscription model: Amazon Prime

The subscription model rests on recurring revenue generated by periodic payment. Amazon Prime illustrates this logic perfectly by offering, for an annual subscription, a set of services with high perceived value: fast delivery, video content, music and exclusive benefits. This model helps retain customers, secure revenue and increase purchase frequency, while strengthening attachment to the brand's ecosystem.

The platform model: Airbnb

The platform model consists of connecting different types of users, without directly owning the assets offered. Airbnb connects hosts and travellers, and generates revenue through commissions on transactions. The value of the model rests on the network effect: the more users there are, the more attractive the platform becomes. This type of model requires a strong ability to build trust and to guarantee a smooth experience for both parties.

The franchise model: McDonald's

The franchise model rests on duplicating a concept that has already proved its worth. McDonald's grows by relying on franchisees who operate the brand, processes and know-how of the group, in return for entry fees and royalties. This model allows rapid expansion with limited investment for the parent company, while guaranteeing a high degree of consistency in the offer and the customer experience worldwide.

New approaches: the functional economy and the cooperative economy

The functional economy and the cooperative economy are part of a more virtuous and collaborative dynamic, offering another way of creating value, less focused on selling products and more oriented towards use and relationships.

The functional economy rests on a key principle: selling use rather than ownership. The company no longer sells a product, but a service tied to its performance or its use. This approach encourages the design of more durable offers, longer equipment lifespans and optimised use. For the company, it generates recurring revenue and strengthens the customer relationship, while giving better control of costs over the long term.

The cooperative economy, for its part, emphasises the creation of collective value. It rests on collaboration between different players: companies, partners, customers and even competitors. By pooling resources, skills or infrastructure, organisations can innovate faster, reduce certain costs and gain access to new markets.

The circular economy as a strategic lever

The circular economy is now established as a major strategic approach for companies wishing to combine economic performance with environmental responsibility. The circular economy aims to optimise the use of resources throughout the life cycle of products, by limiting waste.

Building the circular economy into a business model first makes it possible to reduce the costs of sourcing and managing raw materials. By encouraging recycling, reuse and repair, the company reduces its dependence on scarce resources and secures its value chains. This logic becomes a strategic asset in a context of rising costs and supply tensions.

The circular economy is also a lever for differentiation. Companies that rethink their offers around sustainability meet the growing expectations of consumers, who are increasingly sensitive to the environmental impact of products and services. This approach strengthens brand image and can open access to new markets or customer segments.

At the strategic level, adopting a circular model often means rethinking the whole business model: product design, distribution methods, relationships with partners and revenue sources. This transformation fosters innovation, notably through new services associated with products, such as maintenance, take-back or end-of-life recovery.

To deepen your understanding of business models and develop a global strategic vision of the company, the Master in Management at EDC Paris Business School offers a pathway of excellence combining management fundamentals, sector expertise and an international outlook. This broad-based, professionally oriented programme provides the key skills needed to analyse, build and evolve high-performing business models, in step with the contemporary challenges facing companies.

EDC Paris Business School also offers specialised programmes to refine your career plans. The MSc Entrepreneurship & Innovation is aimed at those who wish to design and develop innovative business models, the Master Business Development & Sales Management trains students in growth strategies and commercial value creation, while the Master International Business prepares them to lead projects and organisations in an international environment. These are all pathways to mastering the economic and strategic levers at the heart of corporate performance.

The business model is a structuring element of any company strategy. When well thought out, it makes it possible to create value in a way that is coherent, but above all lasting and differentiating, while adapting to market changes and stakeholders' expectations. Understanding the different existing models and knowing how to evolve them is therefore an essential lever for ensuring the longevity and performance of companies, whatever their size or sector of activity.