ENGLISH FOR BUSINESS

BUSINESS MODEL CONCEPT

AND TYPES. THE
ENTREPRENEURIAL MINDSET.
MODULE

01
Course: English for Business
Module: Business model concept and types. the entrepreneurial mindset.

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Content

1. Business model 3
1.1. History 3
1.2. Definition 3
2. Types of business models 5
3. The entrepreneurial mindset 7
4. Differences between a businessman and an entrepreneur 5
5. Conclusions 8
Bibliography 9
 ENGLISH FOR BUSINESS

BUSINESS MODEL

1.1. HISTORY

According to Nielsen & Lund (2014):

Business models have been intimately connected with e-business since the rise of the
Internet during the late 1990’s. Kodama (1999) and Hedman & Kalling 2003 provide early
reviews of the business model concept as seen around the dot.com era and the rise of the
e-business model. Around 2001-2002, the concept of the business model started receiving
a much more general meaning in management literature than the e-biz rhetoric which had
surrounded it in the first years. Despite the definition of a business model still being “fuzzy
at best”, in the words of Porter (2001), his colleague Joan Magretta, for instance, gained
much attention by perceiving business models as “stories that explain how enterprises
work” (Magretta 2002, 4). According to Magretta, business models did not only show how
the firm made money but also answered fundamental questions such as: “who is the
customer? and “what does the customer value?” (Magretta 2002, 4). Precisely this aspect of
value seen from the point of the customer made a big impact on the existing thinking. (p. 2)

1.2. DEFINITION

Here’s a list of definitions from authors who see the business model as an economic concept:

Allan Afuah defines:

Business model is a framework for making money. It is the set of activities which a firm
performs, how it performs them and when it performs them so as to offer its customers
benefits they want and to earn a profit. (Afuah, 2003)

Itami & Nishino define: “Business model is a profit formula, system of business and
learning system (Baden-Fuller & Morgan, 2010)”.

John Mullins and Randy Komisar define:

Business model is the pattern of economic activity – cash flowing into and out of your
business for various purposes and the timing thereof – that dictates whether or not you
run out of cash and whether or not you deliver attractive returns to your investors. In
short, your business model is the economic underpinning of your business, in all of its
facets. (Mullins & Komisar, 2009)

Henry Chesbrough defines: “The business model is a useful framework to link ideas and
technologies to economic outcomes (Chesbrough, 2006)”.

Don Debelak defines: “A business model is the instrument by which a business intends to
generate revenue and profits. It is a summary of how a company means to serve its
employees and customers and involves both strategy as well as an implementation
(Debelak, 2006)”.

Module 01: Business model concept and types. the entrepreneurial mindset. p. 3
 ENGLISH FOR BUSINESS

Alfonso Ganbardella and Anita McGahan define: “Business model is a mechanism for
transformation ideas to revenues through the acceptable costs (Baden-Fuller & Morgan,
2010)”.

Thomas Wheelen and David Hunger define: “Business model is a method for making
money in the concrete business environment. It is consisted of key structural and
operational characteristics of company – how company earn and create profit (Wheelen
& Hunger, 2008)”.

Now, here’s a list of definitions from authors who see the business model as a combination of
economic and value view:

David Watson defines: “A business model describes operations of company, including all
of its components, functions and processes, which result in costs for itself and value for
customer (Watson, 2005)”.

David J. Teece defines: “Business model defines how a company provide value to
customer and transfer payments to profit (Teece, 2010)”.

Joan Magretta defines:

Business models are, at heart, stories that explain how enterprises work. Like a good
story, a robust business model contains precisely delineated characters, plausible
motivations and a plot that turns on an insight about value. It answers certain questions:
Who is the customer? How do we make money? What underlying economic logic
explains how we can deliver value to customers at an appropriate cost. (Magretta, 2010)

Michael Rappa defines: “Business model is the method of doing business by which a
company can sustain itself – that is generating revenue. The business model spells-out
how a company makes money by specifying where it is positioned in the value chain
(Rappa, 2010)”.

Alexander Osterwalder and Yves Pigneur define: “A business model describes the logic
of how an organization creates, delivers and control value and how money are earned in
a company (Osterwalder & Pigneur, 2009)”.

Štefan Slávik defines:

The business model is a machine for making money, but money is important not only to
produce but also to appropriate. Business model visualizes company as a place of
decisions and consequences, it is a group of resources and activities in the varying
degrees of detail and operational view, which result and serve to offer value to customer.
(Slávik, 2011)

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 ENGLISH FOR BUSINESS

2 TYPES OF BUSINESS MODELS

Different authors describe more than 30 or 40 types of business models; however, we discuss the
most common. They are the following:

1 Franchise model 4 Subscription business model

2 Direct sales business model 5 Retail business model

3 E-commerce business model 6 Manufacturing business model

Now we define them by using names of popular companies, especially in our country.

Franchise model: franchise is a right to sell a company’s products in a particular area using
the company’s name. It pays royalties to the main company.
For example:
1 3 5 7
KFC Dominos Pizza Dunkin Donuts Pressto

2 4 6 8
Pizza Hut Clean & Clean Gold’s Gym Pamer

Direct sales business model: people offer products or services to generate revenue through
a team of salespeople who sell directly to customers; then, salespeople get a share of every
sale.
For example:

1 3 5
Avon Herbalife FuXion

2 4 6
Natura Ésika Rímac

E-commerce business model: also called electronic commerce, lets firms and individuals buy
and sell things through Internet.
For example:

Module 01: Business model concept and types. the entrepreneurial mindset. p. 5
 ENGLISH FOR BUSINESS

1 3 5
Mercado Libre Juntoz Babyinfanti

2 4 6
Linio Lumingo Ripley.com

Subscription business model: a subscription is an agreement to pay regularly to receive a

product or service or to be a member of an organization.
For example:

1 3 5
Netflix Spotify Mega

2 4
Claro El Comercio

Retail business model: a retailer is a person or business that sells goods to the public.
For example:

1 3 5
Sodimac Wong Saga Falabella

2 4
Plaza Vea Oechsle

Manufacturing business model: is the business of producing goods in large quantities in a

factory.

1 3 5
Nestlé Paraíso Apple

2 4 6
Coca - Cola Bimbo Toyota

Module 01: Business model concept and types. the entrepreneurial mindset. p. 6
 ENGLISH FOR BUSINESS

3 THE ENTREPRENEURIAL MINDSET

The entrepreneurial mindset is a way of thinking that makes people able to adjust human
behavior towards opportunities and outcomes.
According to Meyers (2019):
The entrepreneurial mindset is a state of mind interested in the pursuit of opportunity with
scarce, uncontrolled resources. the goal is to create user defined value at various multiples of the
existing competitive offering through the deployment of innovation.
attitudes and motivation are what separates someone with an entrepreneurial mindset from
another. the field of postive psychology has shown with overwhelming evidence that happiness
creates success, not vice versa. shawn achor, in his book the happiness advantage, gives us a
guided tour of the postive psychology field. noting that happiness is a positive emotion in three
measurable components: pleasure, engagement and meaning. he states that happiness is the joy
we feel striving after our potential. more imporantly, mindsets can change in humans from
negative to positive. consequently, happy people are primed for creativity, imagination and
innovation.
innovation starts with the right mindset and happiness makes it easier to see things clearer as
well as the possibilities.

Characteristics of the entrepreneurial mindset:

They look for new opportunities.

They try to do something with discipline.
They work towards a goal.

4 DIFFERENCE BETWEEN A BUSINESSMAN AND AN

ENTREPRENEUR
According to Ask Any Difference (n.d.):
The key difference between entrepreneurs and businessmen lies in the fact that an entrepreneur
is a person who comes with a unique business idea and starts his own startup company on that
idea whereas a businessman is a person who starts his company using an old business concept or
an idea.
An entrepreneur creates a new market for his
revolutionary and innovative products whereas a
businessman applies different methods and An entrepreneur
proven strategies to make his way into an already creates a new market
established market. for his revolutionary
It’s easy to mix Entrepreneurs and Businessman
and innovative
but they are different. “Entrepreneur” is a creative
products
person and makes his path to start any business
or set up a company.

Module 01: Business model concept and types. the entrepreneurial mindset. p. 7
 ENGLISH FOR BUSINESS

5 CONCLUSIONS
A business model is a framework to understand how the enterprise delivers value to
customers.

There are many types of business models: direct sales (e.g. Herbalife), e-commerce (e.g.
Linio), subscription (e.g. Netflix), retailer (e.g. Promart), franchise (e.g. KFC) and
manufacturing (e.g. Nestle).

An entrepreneurial mindset is a set of beliefs, knowledge and thoughts that enable people
to identify opportunities, learn from setbacks and accept responsibility for your outcomes
in different settings.

Module 01: Business model concept and types. the entrepreneurial mindset. p. 8
 ENGLISH FOR BUSINESS

BIBLIOGRAPHY

Ask Any Difference. (n.d.). Difference between entrepreneur and businessman.

askanydifference .com/difference-between-entrepreneur-vs-businessman/

Chernev, A. (2017). The Business Model, how to develop new products, create market value and
make the competition irrelevant. Cerebellum Press.

Disruptor League. (2019). The Entrepreneurial Mindset.

disruptorleague .com/blog/2019/04/12/the-entrepreneurial-mindset/

Foss, N. & Saebi, T. (2015). Business Model Innovation, the organizational dimension. Oxford.

McGrath, R. & MacMillan, I. (2000). The Entrepreneurial Mindset. Harvard Business School Press.

Nielsen, C. & Lund, M. (2014). A brief history of the Business Model Concept. The Basics of
Business Models, 1(1), 2-5.
academia .edu/19114893/A_Brief_history_of_the_business_model_concept

Module 01: Business model concept and types. the entrepreneurial mindset. p. 9
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