What is the primary purpose of a business model?

The primary purpose of a business model is to outline how a business will create and retain market share. A business model articulates the value proposition that the company offers to its customers, how it generates revenue, and the underlying operational processes that facilitate these activities. It provides a framework for understanding how the company interacts with its market and differentiates itself from competitors. By focusing on how to attract and keep customers, a business model becomes essential for strategic planning and achieving long-term sustainability.

While elements such as employee hierarchy, sales targets, and employee compensation are important aspects of an organization, they are not the primary focus of a business model. Instead, these components typically fall under the broader organizational structure and operational strategy, which support the execution of the business model but do not define it.