BM Frame of Reference
Business Policy
Corporate governance defines a Business Policy, framing one or several businesses, the organization in charge, and associated strategic goals.
As a result, any Business Model is associated to a given Organization, its current Strategic Goal, and its related Business.
Definitions
Organization: An organization is a structured entity or set of entities, that has capabilities to operate a business, and has significant authority and control over its operations.
Strategic Goal: The Strategic Goal is the overall business purpose that is assigned to an organization, for a given phase of its business activity, with respect to value management.
Business: The business of an organization is an economic activity shaped as a system in which it uses, creates, maintains and exchanges value through its operations.
Consequences
The above definitions have the following consequences on the BM concept:
- Not only companies have BMs, but also other types of organizations: business units, joint-ventures, temporary partnerships...
- An organization can have several businesses, therefore a portfolio of BMs.
- BMs can apply to non-profit activities: business is not always about making profits. NGOs have BMs, Cost Centers in large firms have BMs, and even for for-profit organizations, specific business phases may not aim at making profits.
- When the strategic goal of an organization changes, the BM usually changes too.
