Breaking Down the Common Types of Business Models

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A business model often describes the reason behind why an organization produces, delivers, and harnesses value, in various contexts and economic situations. 

The application of this model is then used to justify the strategic decisions and actions of managers. The model is often criticized as inadequate because it does not allow for changes as organizations grow.

However, the use of business models is seen by many as a key to understanding the real functioning of businesses. For instance, Harvard business professor Robert Kaplan relates that a company that grows in size but maintains its competitive advantage by developing new, lower priced products is a company that has successfully implemented a premium business model. Similarly, businesses that expand but do not develop new products with higher productivity at lower prices are ones that have a premium business model.

There are several other common types of business models that have been used by most businesses. 

For instance, there is the franchise model that has been used by many companies as a way to manage their operations. Also, there are industries that have developed common types of business models such as retail, hotels, restaurants, call centers, financial services, manufacturing, and so forth. Each of these business ideas has proven successful in providing businesses the opportunity to break down the different types of business models and come up with better solutions.

Freelance businesses also break down the different business models and come up with better solutions. 

For instance, the Freelance model allows one company to hire freelancers to do work for another company without having to provide benefits or paying workers’ compensation. The Freelance model allows two companies to enter into a contract while having two employees. This contract allows the companies to control costs and generate more traffic to a website.

Another type of business model includes the subscription model. 

Subscription models allow multiple businesses to subscribe to content from an online author. This content will be available for members only for a lower price than it would be available to a consumer. Examples of subscription models include magazines, blogs, and news sites.

One other example of a business model that is commonly used is the multi-level marketing business model. 

This business model allows businesses to sell membership programs to consumers at a membership level. The members of this business model can gain profit based on the sales of additional members. Common examples of multi-level marketing businesses include sports franchises and home businesses.

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