What defines a business model?

A business model is fundamentally a blueprint that outlines how a company operates and achieves its objectives. The essence of a business model lies in its ability to detail the ways a business creates value, delivers products or services to its customers, and captures that value to ensure profitability and sustainability.

This encompasses various components such as the target market, revenue streams, supply chain, and the unique value proposition that differentiates a business from its competitors. By defining how these aspects work together, a business model provides a comprehensive framework for understanding the mechanics of a business.

Other options do not adequately capture the broader purpose and function of a business model. For example, while eliminating costs is an essential consideration in running a business, it does not fully address how value is created and delivered. Similarly, employee performance evaluations and product management systems, while vital for organizational success, are specific processes that operate within the larger context defined by the business model. Thus, the chosen answer encapsulates the holistic nature of what a business model represents.