Қазақстан Республикасының

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УДК 005-027.21; 005.52
A.K. AzIMbeKOVA.
University of International Business (UIB),
PhD students.
s.t. YeRMuKhAn. 
University of International Business (UIB),
PhD students
COMPAnY  busIness  MODeL:  subjeCt  MAtteR,  
ROLe  In  MAnAGeMent  AnD  AnALYsIs  MethODs
A new concept of management – the subject matter of a business model is examined in the article. Interest in
business model appeared in the middle of 1990s in the research groups. Significant parts of the first works were about
business models of the companies engaging in electronic commerce. Later the term of the business model began to be
used for analysis of the activity of the companies of various branches.Highly emphasized in entrepreneurial practice,
business models have received limited attention from researchers. No consensus exists regarding the definition and
components of business models. The authors synthesized and identified two main directions that consider business
model as the instrument of management and the method of business conduct. In addition to that business model
definitions are specified. Existing methods of formation and analysis of business models as the integrative framework
for development of the business model, the business model canvas, matrix of systematic characteristics of the business
model, conceptual scheme of the business model and their features are also generalized and considered in the article.
The role of a business model in management and its functions are defined and the main components of business model
are provided in the article.
Key words: business model, formation of business model, methods of business model analysis, functions of
business model, components of business model, innovative business model.
Currently there are a lot of definitions of the “business model” term; nevertheless still there is no
general accepted definition. Moreover, the views on definition and its main components, its role and
functions in the company management system are not defined clearly yet.
The purpose of the study is to define the essence of the business model, its role and functions
in the management of the company. The sub goal of the study is to review the existing methods of
analysis of business model and their features.
Literature  review.  Studying  literature  which  is  devoted  to  the  concept  of  the  business  model
allows us to separate two main directions of use of “business model” term. The representatives of
the  first  direction  are Weill  and Vitale  (2001),  Morris  et  al.  (2005), A.  Osterwalder  et  al.  (2005),
N.D. Strekalova (2009), А.yu. Soolyatte (2010). They consider the business model as an instrument
of analysis of the activity of firms which is used in management by its description. So, in opinion of
A. Osterwalder (2005) the business model describes the value which is offered by the organization
to various clients and reflects abilities of an organization, lists partners required for establishment,
provides promotion and delivery of this value to the clients and has a relation to capital required
for  receiving  of  stable  benefit  flows.  N.  D.  Strekalova  (2009)  writes  that  the  business  model  is  a
conceptual instrument to research the complex object (business system) which also allows creating a
simplified integral concept of business.
Studying the works of A. Slywotzky (1996), H. Chesbrough (2010), David J. Teece (2010), C. Zott
and R. Amit (2010) allows us to separate another direction according to which the business model is
considered as a method of business conduct. David J. Teece (2010) writes that the subject matter of
the business model is concluded in definition of the method through which the enterprise delivers its
values to the clients, attracts the clients to purchase values, and receives profit. David J. Teece (2010),
C. Zott and R. Amit (2010) emphasize two important aspects of the activity of firms which are creation
and receiving value. According to H. Chesbrough (2006) the business model of the company is a
method which the company uses to create the value and receive profit. Also, he emphasizes that there
is an interrelation between innovative business model and technical innovations.
Several researchers consider the business model and strategy as identical concepts or including
the strategy as one of components in composition of the business model. The business model closely is
associated with the strategy, but is not identical to the strategy. The business model is a reflection of the

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strategy which is realized by the firm (Casadesus-Masanell, 2010). The business model is the logics
of the firm, how it operates and how it creates values for interested persons. The strategy – choice of
the business model through which the firm will compete on the market (Casadesus-Masanell, 2010).
Results. Subject matter of business model. Having studied the works of [2, 3, 4, 1] it is possible
to say that business model is a management instrument that enables formation of the integral character
of any activity of the company in interrelation with elements of internal microenvironment in order
to diagnose it. Based on the analysis of [5, 6] works it is possible to give the following definition for
the “business model” term: business model is a technology of doing business by means of formation a
unique method of creation of value and receiving profit using components that constitute it.
These directions in definition of the subject matter of business model are very interdependent.
Using approach which considers the business model as the analysis instrument it is possible to carry
out  diagnostics  of  the  company  activity.  Based  on  the  analysis  results  it  is  possible  to  define  the
strategic plan of development and to create a new business model, i.е. the technology of business
conduct which will give the greatest value.
Business model for analysis of the company activity. Using the business model practically as a
management instrument supposes its description in the form of table, graphics, pattern or matrix. The
business model can be used for development (projecting), analysis and diagnostics of the company
business.
Certain methods can be used in order to describe and explain business models. These methods
allow  visually  present  the  features  of  business  model  to  participants  and  point  out  its  important
components and observe interrelation between them. This way they are called as “visual” methods.
The following methods can relate to “visual” methods:
 
Š
the integrative framework for development of the business model;
 
Š
the business model canvas;
 
Š
matrix of systematic characteristics of the business model;
 
Š
conceptual scheme of the business model.
The integrative framework for development of the business model proposed by Morris (2005)
consists of six components (factors related to the offering, market factors, internal capability factors,
competitive  strategy  factors,  economic  factors,  personal/investor  factors  (growth/outlet  and  etc.)
considered at three levels: “foundation”, “proprietary” and level of “rules”. The “Foundation” level
serves for reflection of subject matter of the business-model which is typical for many companies.
The “proprietary” level reflects unique innovations of a certain company. The level of “rules” reflects
operational  rules  the  execution  of  which  provides  success  of  introduction  and  realization  of  the
business model [1].
The business model canvas − matrix pattern of development of the business model proposed
by А. Osterwalder and yves Pigneur (2009) [2]. Currently, this method is one of the most promoted
patterns practically for description of elements of the business model. Nine blocks cover four main
fields of business: interaction with consumers, the offer, the infrastructure and financial efficiency of
the company. Each manager using this pattern can create business-model of the company (figure 1).
Figure 1 – The business model canvas
(A. Osterwalder and yves Pigneur, 2009)
 
Key partners 
Key 
activities 
Value 
propositions 
Key 
resourses 
Customer 
relationships 
Cost structure  
Revenue streams 
Channels  
Customer 
segments
 

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Blocks of the right part of basis of the business model stand for value and mutual relations with
clients, and the left part characterizes operational efficiency of the organization.
Matrix of systematic characteristics of the business model. The matrix proposed by N.D. Strekalova
(2009) is a structured method of description of the main systematic characteristics of business. It
consists of 7 main components: function and targets of business, offer of value, market, “processor”,
competitive strategy, business network, economic model [3]. Differential feature of this method is
that characteristics of components can be represented in section of four main measurements: statistic,
control, dynamic and forecasting.
A conceptual scheme of the business model was proposed by Director of Russian consulting
company  JSC  “ВРМ  Consulting  Group”  A.yu.  Soolyatte  (2010).  According  to  this  method  the
business  model  is  represented  in  the  form  of  the  scheme  consisting  of  four  basic  blocks  and  key
elements: clients, offer of value, system of creation of value, financial model which consist of sub-
elements (figure 2). It should be noted that the conceptual scheme of the business model is very similar
with the business model canvas.
Figure 2 – Business model (Conceptual scheme)
(A.yu. Soolyatte, 2010)
Abovementioned “visual” methods of creation of the business model in a greater degree are similar.
They differ only in division of components of the business model when their various measurements and
levels are considered. The advantage of “visual” methods is that they are used to reflect information
of the business model of organization and help qualitatively visualize ideas of business. Among them
currently the business model canvas enjoys the greatest popularity, because this method has a step by
step procedure of constructing a business model. Each manager using questions stated in source [2],
can independently create and carry out the analysis of the enterprise activity upon the business model
of А. Osterwalder.
One of the analytic methods of analysis of the business model is multiple-factor analysis. The
multiple-factor analysis of companies’ business model is based on the system of DuPont financial
analysis (The DuPont System of Analysis). This method allows identifying factors which increase
profitability  of  owned  capital,  profitability  of  sales  upon  net  profit,  accelerate  asset  turnover  and
decrease the coefficient of financial dependence of the companies. For detailed analysis of the business
model it is recommended to use a 12-factor model by decomposing the abovementioned coefficients
for constituents. Decomposing of profitability of sales upon net profit allows understanding at which
levels and what part of profit is lost. The multiple-factor analysis of asset turnover allows seeing quality
of turnovers of each asset in days within a year. Decomposing of coefficient of financial dependence
allows analyzing more correctly the debt burden of the enterprise and its influence on the profitability
(T. Vashakmadze, 2012) [7].
 
Chains of value creation 
system of value creation 
Technological platform 
Infrastructure 
Model
of
cooperation
with
partners
/
suppliers
 
 
Offer of value 
Products,
services, complex
decisions 
Clients 
Channels of 
sales 
Target 
groups of 
clients 
Mechanisms of 
interaction with 
clients 
Financial model 
Structure of expenses  
Structure of profits 
 

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12-factor model looks like as follows:
Where
GP – gross profit;
PBT – profit before taxation;
SP – sale proceeds;  
NP – net profit;
PBIT – profit before interests and taxes;
MM – monetary means;
DD – debit debts;  
OC – owned capital;
R – reserves;
NIBO – non-interest-bearing
OCA – other current assets;  
obligation (primarily this is credit debts
BA – basic assets;
and liability item, except for OC,
ONCA – other non-current assets;
short-term and long-term credits).
BC – borrowed capital (short-term
credits and long-term credits);
Coefficients  of  12-factor  model  are  calculated  at  the  first  stage  of  analysis.  Results  of  factor
analysis are considered in an interrelation with components of the business model at the second stage
of analysis. A disadvantage of 12-factor model of efficiency analysis of business model is that it does
not reflect interrelation of calculated indices with components of the business model as well as it does
not measure the efficiency of components of the business model in full.
Role of business model as the management instrument. Application of the business model as the
analysis instrument defines its role in management. The business model is used to represent a clear
and integral business image:
 
Š
on the basis of which it is possible to build logical and agreed concept of the company business;
 
Š
for  adjustment  of  the  company  staff  oriented  to  solving  of  general  matters  and  focused  on
strategic priorities;
 
Š
for  optimization  of  the  company  business  in  order  to  maximize  and  hold  value  which  the
company creates for the clients and other persons interested in the business;
 
Š
to  use  it  in  reorganization  and  forecasting  of  the  business  model  development  of  existing
company;
 
Š
to use it in projecting the business model of a new company;
 
Š
for assessment and analysis of the business efficiency of the company, and in comparison with
other similar companies;
 
Š
for assessment of potential and investment attractiveness of the company business and attraction
of investors.
Business model as a technology of business conduct. Each company uses special business model.
How  many  companies  so  many  business  models.  In  fact,  they  have  different  business  models  –
they have a different logic, a different way of operating and of creating value for their stakeholders
(Casadesus-Masanell, 2010).
The  business  model  as  a  method  of  business  conduct  performs  the  following  functions
(Chesbrough, 2002) [5]:
 
Š
connects markets of production factors and markets of goods, services;
 
Š
creates and offers values to the clients;
 
Š
defines market segment;
 
Š
defines structure of chain of value formation;
 
Š
defines structure of expenses and potential profit;
 
Š
describes position of firm in the value formation network;
 
Š
states competitive strategies.
The company business model as the method of business conduct is considered in interrelation
with innovations. In opinion of Henry Chesbrough (2010) the company commercializes new ideas and
technologies using business models. The same idea or technology introduced to production through
two various business models will give two various economic outcomes. A technology in itself has no
 






+
+
∗






∗
+
∗
+
∗
+
∗
+
∗
+
∗
∗
∗
∗
∗
=
1
365
365
365
365
365
365
365
OC
NIBO
OC
BC
SP
ONCA
SP
BA
SP
OCA
SP
R
SP
DD
SP
MM
PBT
NP
PВВІ
PBT
GP
PВВІ
SP
GP
OC
NP

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value, the economic value of the technology remains concealed, until it will be commercialized using
the business model. The company can receive value both from innovative business model and from
development of innovation technologies. Henry Chesbrough theory in turn changes the concept of
innovations.
Innovative business model is a type of the business model which in its composition has com-
ponent(s) with innovative content or uses components which can be used in unique combinations
forming innovations.
The study of works [1–6] allowed us to identify the following main components of the business
model: value (product, service and etc.) proposed by the firm, factors of internal possibilities (resources,
processes), chain of value creation, economic model of firm, factors of market (consumers, suppliers)
and interrelation between them. Innovations can be introduced to any of abovementioned components
of the business model or the innovativeness can be included in uniqueness of interrelation of these
components of the business model.
Innovative business models created by introduction of insignificant innovations to the components
and focused on receiving of short-term results contain minimal risks, but they also give low profit and
can be easily copied by competitors. For example, creation of McDonald’s business model in 1950s,
currently has led to uprising of variety of burger companies with similar business model. Innovative
business  models  created  by  introduction  of  innovations  to  components,  and  focused  on  receiving
potentially large profits in the long-term period will be copied in a less degree by competitors due to
high risks.
Conclusions. We have identified two main directions in the study of subject matter of the company
business model. The first direction considers the business model as a management instrument that helps
to create an integral image of the company activity through diagnosing it with “visual” or analytical
methods. The use of “visual” methods of the business model creation and analytical methods have
been considered in article and this will allow an entrepreneur (or a manager) to develop skills of
systemic and strategic viewing and management as well as critical analysis of business models which
are laid in the basis of the company business.
According to the second direction of the business model which is a technology of business conduct
by formation of a unique method of value creation and receiving of profit using components that
constitute it. These components are value (product, service and etc.) proposed by the firm, factors of
internal possibilities (resources, processes), chain of value creation, economic model of a firm, factors
of market (consumers, suppliers) and interrelation between them. Connection of these components by
unique method or introduction of innovations to them will allow creating innovative business models.
Therefore, this article defined the subject matter, place and role of concept of the business model in
management.
LIST OF LITERATURE
1  Morris Michael, Schindehutte Minet, Allen Jeffrey. The entrepreneur’s business model: toward a unified
perspective // Journal of Business Research. – 2005. – № 58. – P. 726–735.
2  Osterwalder Alexander. Building a business model: Handbook of strategist and innovator. Translation
from English. – М.: Alpina Publisherm, 2011.
3  Strekalova N.D. Economics, management and accounting in the company // The problems of the modern
economy. – 2009. – № 2 (30). – P. 95–105.
4  Soolyatte A. Business model – the key to business development through innovation // Management of
innovation. – 2010. – № 01 (09). – P. 6–15.
5  Chesbrough Henry. Business Model Innovation: Opportunities and Barriers // Long Range Planning. –
2010. – № 43. – P. 354–363.
6  Christoph Zott and Raphael Amit. Business Model Design: An Activity System Perspective // Long
Range Planning. – 2010. – № 43. – P. 216–226.
7  Vashakmadze T. Comparative analysis of companies’ business models // Economics and Life. – 2012. –
№ 45/9461. – P. 16–17.

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