What Is an Operating Model?

Business administration studies believe that the most basic and major functions of an enterprise's operating model are financial accounting, technology, production operations, marketing, and human resource management. The business activities of an enterprise are an iterative process of the organic connection of these five functions. In order to achieve its own business objectives, the enterprise must carry out overall management of the above five functions. This management is the operation model.

Operating model

Operating model concept

The business model is a very broad concept. There are many sayings related to business models, including operating models, profit models, B2B models, B2C models, "mouse plus cement" models, advertising revenue models, etc. And foot. The business model is a simplified business logic.

Let me tell you in the most straightforward terms: The business model is how or how does the company make money? In short, beverage companies make money by selling beverages; courier companies make money by sending courier services; online companies make money by click-through rates; communication companies make money by collecting call charges; supermarkets make money through platforms and warehousing. As long as there is a place to make money, a business model exists.

Classification of operating models

Business models can be divided into two categories:

1. Operational business model.

Focus on solving the interactive relationship between enterprises and the environment, including the interactive relationship with industrial value chain links. The operational business model creates the core advantages, capabilities, relationships, and knowledge of an enterprise. It mainly includes the following aspects.

Positioning of the industrial value chain: What kind of industrial chain is the enterprise in and what position in this chain, and how should the enterprise position itself based on its own resource conditions and development strategy.

Design of profit model (source of income, income distribution): Where does the enterprise obtain its income, and what are the forms of income, in what form and proportion are these income distributed in the industry chain, and whether the company has a say in this distribution.

2. Strategic business model.

Strategic business models extend and leverage operational business models. It should be said that the strategic business model involves all aspects of enterprise production and operation.

Business model; what value and benefits does the company provide to customers, including brands, products, etc.

Channel model; how the company delivers business and value to customers, including channel doubling, channel concentration / compression, etc.

Organizational model; how an enterprise establishes an advanced management control model, such as establishing a customer-oriented organizational structure and building a digital organization through an enterprise information system