Discover how understanding the difference between business model and competitive strategy can help you stay ahead of the competition!
What is a Business Model? According to Harvard Business Review (HBR), business model and strategy are two separate concepts with great practical value. Business model emerged when personal computers and spreadsheets became common, allowing managers to run the numbers to see how decisions would affect the bottom line. Pioneers like Kmart and Walmart applied supermarket logic to the conventional department store and developed a discount retail model that involves cutting costs in exchange for lower prices. Business model is a description of how your business runs, while strategy explains how you'll do better than your rivals. Walmart's unique strategy was to prioritize rural customers, preempting other discount stores from entering the market in those areas. To succeed, businesses need a good business model and a clear strategy.
Learning Outline
1. Business model: A description of how a business runs and its financial performance.
2. Competitive strategy: How a business will do better than its rivals.
3. Business models are enabled by new technology such as personal computers and spreadsheets.
4. Discount retailers such as Kmart and Walmart pioneered a discount retail model by slashing costs and eliminating certain services in exchange for lower prices.
5. Walmart’s unique strategy was to prioritize rural customers, buying up land cheaply and outcompeting other discount stores.
6. Kmart’s lack of a clear strategy has led to their struggle to stay competitive.
7. Achieving success requires a good business model, a clear strategy, and an understanding of the difference between the two.
Instructional Content
Business models and strategies are often confused, but understanding the difference can be the key to success for any organization. A business model outlines how the business runs, while a strategy explains how the business will be better than its competitors.
For example, Walmart applied supermarket logic to the conventional department store and developed a discount retail model. This model involved cutting costs by reducing services and chandeliers, while still offering lower prices.
At the same time, Walmart's competitive strategy was to prioritize rural customers. This strategy allowed them to buy up land for cheap, target customers no one else was going after, and preempt other discount stores from entering the market.
In contrast, Kmart tried to appeal to everyone and failed to develop a distinctive strategy. While their business model may have been good, without a clear strategy, they have struggled to stay competitive.
To be successful, an organization must have a good business model and a clear strategy. Understanding the difference between the two is essential. For more information on the topic, watch The Explainer: What is a Business Model?
Leadership
Leadership is a skill that can be improved upon with practice and development. The video and transcript of “The Explainer: What is a Business Model?” provide insights into the three scenarios of Strategic Thinking, Business and Enterprise, and Vision, and how they relate to skill development.
In Strategic Thinking, learners can use the video to develop an understanding of different business models and strategies, and how they can be used to their advantage. The video provides a clear definition of the two concepts, and includes a useful example of how two companies used different business models and strategies to achieve success. By studying this example, learners can gain a better understanding of the importance of strategic thinking in business.
In Business and Enterprise, learners can use the video to gain a deeper understanding of the different elements of a business model and strategy, such as cost cutting, customer targeting, and market preempting. Additionally, they can learn how to use the different elements to create a successful business. By studying the example provided in the video, learners can gain a better understanding of the importance of developing a successful business model and strategy.
In Vision, learners can use the video to gain a better understanding of the importance of setting clear goals and objectives. The video provides an example of how two companies used different strategies to achieve success, and how a clear vision is necessary to accomplish these goals. By studying this example, learners can gain a better understanding of how to set a clear vision for their business.
These three scenarios of Strategic Thinking, Business and Enterprise, and Vision provide learners with a comprehensive guide to improving their leadership skills. By studying the example provided in the video and transcript, learners can gain a better understanding of the importance of strategic thinking, business and enterprise, and vision in developing successful business models and strategies. Additionally, they can use this knowledge to create a clear vision for their business and set achievable goals. By taking these steps, learners can improve their leadership skills and become more successful in their business.
Strategic Thinking
Upskilling yourself to be more successful in personal growth and professional development requires a deep understanding of business models and strategies. The video 'What is a Business Model?' provides a great starting point. To summarize, business models are the methods used to create and deliver value to customers, while strategies are the methods used to gain an advantage over competitors.
For example, Walmart's business model is focused on low prices, while their strategy is to target rural customers. By focusing on rural areas, Walmart was able to buy up land cheaply and preempt other discount stores from entering the market in those areas. This allowed them to be more competitive and remain successful.
By upskilling yourself with a clear understanding of business models and strategies, you can become more successful in your personal growth and professional development. For instance, you can use your knowledge to create new business models or develop strategies to gain a competitive advantage. Additionally, you can use your new skills to identify areas of improvement for existing business models and strategies.
Upskilling yourself in business models and strategies can be a great way to increase your chances of success in personal growth and professional development. By understanding how business models and strategies work, you can develop the skills necessary to create and execute successful business models and strategies.
Business and Enterprise
Upskilling yourself to be more successful in personal growth and professional development requires a clear understanding of the difference between business models and strategies. This video explores how business models and strategies are separate concepts with enormous practical value, and how they can be used to give an organization a competitive edge.
For example, discount retailers like Kmart and Walmart used a different business model and strategy to become successful. Walmart prioritized rural customers which allowed them to buy land for cheap, target customers no one else was going after, and preempt other discount stores from entering the market in those areas. This customer strategy was a key part of their success. In contrast, Kmart tried to appeal to everyone, which is not a distinctive strategy, and they have struggled to stay competitive.
Upskilling yourself to be more successful involves understanding the difference between business models and strategies. Developing a clear strategy to differentiate yourself from competitors is essential to success. Additionally, make sure your strategy reinforces other parts of your business model. With this knowledge, you can be more successful in personal growth and professional development.
Vision
Upskilling yourself to be successful in personal growth and professional development requires a strong understanding of business models and strategies. By watching the video, “The Explainer: What is a Business Model?”, viewers learn the difference between the two concepts and the importance of having a clear understanding of each. Business models are descriptions of how a business runs and provide insight into how various decisions may affect the bottom line. Strategies, on the other hand, explain how a business will do better than their rivals.
For example, Walmart’s business model and strategy involve prioritizing rural customers. This unique strategy allowed them to buy up land for cheap and preempt other discount stores from entering the markets in those areas. In contrast, Kmart tried to appeal to everyone, but without a clear strategy, they have struggled to stay competitive.
Upskilling yourself in business models and strategies will help you to be successful in personal growth and professional development. You can leverage this knowledge to stay ahead of the competition and to make better decisions. Business models and strategies can also help you identify opportunities that you may have never considered before. This knowledge can be incredibly valuable, so start upskilling yourself today.
For Learners
Watching this video is a great opportunity for anyone who wants to learn more about business models and strategies. This video provides an overview of the two concepts, as well as practical examples of how they can be applied. By understanding the difference between a business model and a strategy, you will gain valuable insight into how businesses can become successful and stay competitive.
The main benefit of watching this video is that you will be able to make informed decisions about how to best run your own business. By understanding the difference between business models and strategies, you will be able to develop a business plan that is tailored to your specific needs. This will give you an edge over your competitors and make your business more successful.
On the other hand, not watching this video could lead to confusion and lack of understanding when it comes to making decisions about your own business. Without a clear understanding of the two concepts, you may make decisions that are not in line with your goals or that are not beneficial for your business.
Using the ‘what’s in it for me’, ‘what’s in it for them’, ‘what’s in it for us’, and ‘what’s in it for the world’ approach to learning the content of this video will benefit you as a learner for personal growth and professional development. By understanding the difference between business models and strategies, you will be able to make informed decisions that will help you reach your personal and professional goals. Additionally, by understanding the concepts behind successful businesses, you will be better equipped to help the world become a better place.
For Employers
Employers should watch this video to understand the key concepts of business model and strategy. With this knowledge, employers can differentiate their team from the competition. They can make more informed decisions about their products, services, and processes. This knowledge can be used to better understand their customers and create more successful products and services.
Employers will also benefit from being able to explain the difference between a business model and a strategy. This knowledge allows them to explain their competitive advantages to customers and clients. It also allows them to explain their processes and products more effectively.
In the future, employers who understand the concepts of business model and strategy will be more competitive and successful. They will be able to make decisions more quickly and be more agile in the marketplace. Their customers and clients will also perceive them as being more knowledgeable and professional.
With this knowledge, employers will be better informed and be able to make the right decisions for their business. This knowledge will allow them to stay ahead of their competition and be more successful in the future.
Career Path
Completing a course in Leadership based on the competencies Strategic Thinking, Business and Enterprise, and Vision will help individuals on their career paths by providing them with credentials that will make them more employable, promotable, and purposeful. It will also help them to gain the skills needed to close the skills gap and move into meaningful work in high demand, high growth industries.
Watching The Explainer: What is a Business Model? video and reading the transcript is a great way for life long learners to gain enhanced income-producing skills to become more employable and promotable. The video and transcript explain the distinction between a business model and a competitive strategy. It highlights the success of discount retailers, such as Walmart and Kmart, who applied supermarket logic to the conventional department store and developed a discount retail model. It also explains how Walmart focused on rural customers as part of their unique strategy, which reinforced other parts of their competitive strategy.
The skills gained from a Leadership course and watching the video and reading the transcript can help individuals gain the knowledge needed to get ahead of their rivals. They will gain a clear understanding of the difference between a business model and a competitive strategy. This will give them the tools they need to create successful business models, strategies, and tactics that will help them stand out in the job market and become more employable and promotable. It will also help them to be prepared for the ever-changing job market and the skills needed to stay ahead of it.
Meaning
"In contrast, Kmart tried to appeal to everyone, and that's not a distinctive strategy." - Sam Walton
This quote from Sam Walton, the founder of Walmart, highlights the importance of having a unique strategy to be successful in business. The Explainer video “What is a Business Model?” emphasizes the differences between a business model and a competitive strategy, and the importance of understanding the distinction. The quote from Sam Walton demonstrates how Walmart was able to successfully differentiate themselves from their chief rival Kmart by targeting customers that were being ignored by other retailers. Walmart was able to leverage their strategy to not only increase their market share, but also to preempt other competitors from entering the market in those areas.
This quote is important for both learners and employers because it highlights the need to develop an effective strategy to be competitive in the market. A business model and competitive strategy are essential components of any successful organization, and it is important to understand the differences between the two. By understanding the importance of having a unique strategy, learners and employers can better position their organizations for success.
Takeaway
Business model and strategy are distinct concepts with important practical value. Managers can use tools to run the numbers to see how decisions affect the bottom line. A new business model might involve a different way to make or sell something. A competitive strategy explains how to do better than rivals. Walmart's strategy was to prioritize rural customers. Kmart's lack of a distinctive strategy left them struggling to stay competitive. Understanding the difference between business model and strategy is key to success.
5 Creds - Leadership
