A business model is an explanation of how an enterprise (whether a new venture or an established firm) works and delivers results (i.e., creates value). It is a conceptual description of the viability of an enterprise and an explanation of how it will achieve its objectives, as well as an identification of its intended customers, offerings, and so on. A business model encompasses all business processes, methods, policies, etc. As a system, a business model describes how an enterprise’s components fit together towards achievement of its objectives (including making profits or serving a clear-cut purpose, etc.)

It can be perceived to be a set of assumptions about what a business has to do in its endeavor to achieve its goal(s), after having clearly identified its customers and competitors, market positioning and behavior. This includes an enterprise’s strengths and weaknesses, advantages and disadvantages, etc.

On the other hand, a strategy is a dynamic plan or set of plans defining an enterprise’s long-term goals, and action/ reaction toward existential threats/ journey hardships (e.g., competition).

A business model is not the same thing as a strategy, even though the two terms are often used to “mistakenly” denote the same. A business model involves a conceptualization of how an enterprise can create value given needed processes and available resources and based on a well-defined profit formula. Therefore, it is more into commencement planning and execution in order to achieve the set goals. A strategy, on the contrary, involves long-term planning and reaction to broader threats- how to handle competition, whether from incumbents or prospective players in such a way that can guarantee a going concern status, preferably with a better ability to continue its value creation.

In a nutshell, a strategy is essentially about dealing with market realities as, or before, emergence as life threatening risk factors. A competitive strategy defines how a business can do better than its rivals, both existing and potential.