Model

• A good business model has several components: It describes the benefit customers gain by doing business with you, the market segment you're selling to and the process for bringing your product or service to the market. A sound business model should work in words and numbers. The words tell the story of what your business does and how it operates. The numbers tell the story of how your business spends and makes money and what its financial goals are.
  
  

Strategy

• A business model focuses on your business in isolation. Your strategy focuses on your business in relation to its competition, Jeff Schein says on the Web Pro News website. When developing your strategy, you should consider the current competition; the possibility of new firms entering the field, or substitute products or services replacing yours; and the effect suppliers' and customers' demands have on your profitability. Once you have assessed these different market forces, you can figure out how your business can survive and grow.
  
  

Use of a Model

• The Quick MBA website offers Xerox as an example of how a business model can bring a company success. When Xerox developed its first photocopier, it tried persuading General Electric and other companies to market it. The companies turned Xerox down: Their business models involved selling copiers, and the new model was too expensive to compete. Xerox then marketed the photocopier itself using a new business model: Rather than selling the machines, it leased them and charged an added fee if you made lots of copies.
  
  

Types of Strategy

• The Three Sigma website lists three basic strategies for beating the competition. Offensive strategy changes the playing field: You buy up competitors, diversify into new markets or come up with a new, more desirable product. Defensive strategy assumes that the competition you face won't change and figures out how to survive and profit in that situation. Guerilla, or niche, strategy focuses on a small part of the playing field where competition is less or your particular strengths are well-fitted.