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Business Models Aren’t Just For Business
- Saul Kaplan
During my six years as an accidental bureaucrat, after spending twenty-five years in the private sector, my friends often wondered how I could do it. They routinely asked versions of the question: doesn’t government move too slowly for you? My standard reply was that, yes, the public sector moves slowly — but then, big companies […]
During my six years as an accidental bureaucrat, after spending twenty-five years in the private sector, my friends often wondered how I could do it. They routinely asked versions of the question: doesn’t government move too slowly for you? My standard reply was that, yes, the public sector moves slowly — but then, big companies don’t move so quickly either. And come to think of it, I teased my friends in higher education, colleges and universities move more slowly than either business or government! The point is, all institutions move slowly.
What surprised me wasn’t how slowly the different institutions moved, but the different language, behavior, secret handshakes, and views of each other I found across sectors. Xenophobia runs rampant within public, private, non-profit, and for-profit silos. Each silo has created its own world completely foreign to inhabitants from other sectors. Visiting emissaries are always viewed with skepticism. (“I’m from the government and I’m here to help …”)
One epiphany from my immersion into the non-private sector is how strenuously social sector organizations resist the notion they have a “business model.” Non-profits, government agencies, social enterprises, schools, and NGOs consistently proclaim that they aren’t businesses, and therefore business rules don’t apply.
Well, I’m sorry to break the news, but if an organization has a viable way to create, deliver, and capture value, it has a business model. It doesn’t matter whether an organization is in the public or private sector. It doesn’t matter if it’s a non-profit or a for-profit enterprise. All organizations have a business model. Non-profit corporations may not be providing a financial return to investors or owners, but they still capture value to finance activities with contributions, grants, and service revenue. Social enterprises may be mission-driven, focused on delivering social impact versus a financial return on investment, but they still need a sustainable model to scale. Government agencies are financed by taxes, fees, and service revenue, but are still accountable to deliver citizen value at scale.
The idea that business models are just for business is just wrong. Any organization that wants to be relevant, to deliver value at scale, and to sustain itself must clearly articulate and evolve its business model. And if an organization doesn’t have a sustainable business model, its days are numbered.
It may be, however, that the model is implicit rather than explicit. It’s amazing how few organizations can clearly articulate their business model. Can yours? If you ask any ten people in your organization how it creates, delivers, and captures, will the answers even be close?
If not, it’s probably because, in the industrial era when business models seldom changed and everyone played the game by the same set of well-understood industry and sector rules, it wasn’t as important to be explicit about business models. Business models were safely assumed and taken for granted.
That won’t work in the 21st century when all bets are off. Business models don’t last as long as they used to. New players are rapidly emerging, enabled by disruptive technology, refusing to play by industrial era rules. Business model innovators aren’t constrained by existing business models. Business model innovation is becoming the new strategic imperative for all organization leaders.
Perhaps the most important reason for developing common business model language across public, private, non-profit, and for-profit sectors is that transforming our important social systems (including education, health care, energy, and entrepreneurship) will require networked business models that cut across sectors. We need new hybrid models that don’t fit cleanly into today’s convenient sector buckets. We already see for-profit social enterprises, non-profits with for-profit divisions, and for-profit companies with social missions. Traditional sector lines are blurring. We’re going to see every imaginable permutation and will have to get comfortable with more experimentation and ambiguity.
Economic prosperity and solutions for our big social system challenges require business model innovation across sectors. All organization leaders must learn how to do R&D for new business models. Non-profit, social enterprise, school, and government leaders aren’t exempt. Business models aren’t just for business.
Saul Kaplan is the Founder and Chief Catalyst of the Business Innovation Factory (BIF). in Providence, RI, and blogs regularly at It’s Saul Connected . Follow him on at @skap5.

- SK Saul Kaplan is author of The Business Model Innovation Factory and the Founder and Chief Catalyst of the Business Innovation Factory (BIF). in Providence, RI. Follow him on Twitter at @skap5 .
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Government Information Quarterly
An analysis of business models in public service platforms.
Choice reforms as key aspects of New Public Management are described.
Technologies that support choice in public services are introduced.
Business models in 14 Swedish cases are examined.
The models are mainly drawn from public agencies that provide neutral information.
Private sector providers also promote the ideal of citizen choice of services.
Public Service Platforms (PSPs) are a new type of technology platform. They are based in the philosophy of New Public Management (NPM) and support public services for citizens in quasi-markets. This article increases our understanding of the business models behind these PSPs in terms of their Value Propositions, structures, networks, and financing. We interviewed representatives from 14 PSP providers in four public sectors in Sweden: education, healthcare, elder care, and public pensions. We identified a “Traditional view” with its focus on public agencies and neutral information and an “Emerging view” that includes dialogues, user evaluations, long-term perspectives on choice, promotion of the ideal of choice, and self-promotion by public agencies. The article contributes to research with its empirical example of the digitalization of NPM and the underlying business logic of PSPs.
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Agneta Ranerup is a Professor in the Department of Applied IT, University of Gothenburg. She has been active as a researcher since the late 1990s in the research field of Electronic Government. Her more recent research interests include information technology in the state-individual relationship, marketization issues, and e-government. Agneta Ranerup can be contacted at: [email protected]
Helle Zinner Henriksen is an Associate Professor at the Department of IT management, Copenhagen Business School and Department of Information Systems, University of Agder, Norway. She focuses on IT in public sector. Her research focuses on gains of IT-uptake in a broader sense where benefits of IT not necessarily relates to monetary gains. Her research is empirically driven and pursues a qualitative approach mainly using appreciative inquiry in the field work.
Jonas Hedman is an Associate Professor at the Copenhagen Business School, Department of IT Management. His research focuses on payment and in particular the cashless society, emerging business models in different contexts, such as ERP systems and gaming industry, and the digitalization of society and business. He has published in journals such as the Information Systems Journal and the European Journal of Information Systems, and written books on business models and IT.
What is Business to Government (B2G)?
Learn more about Business to Government (B2G) - what it means and how it affects your business. Includes an overview and frequently asked questions.
Updated on October 7th, 2021
The SMB Guide is reader-supported. When you buy through links on our site, we may earn an affiliate commission. Learn more
Business to Government (B2G) refers to when a business sells products, information, or services to federal, state, or local government agencies. With this business model, businesses must bid for contracts by submitting responses to a request for proposal (RFP) solicited by a government agency.
Every year government agencies solicit contracts or tenders worth billions to businesses of varying sizes . In fact, the United States government spends nearly $7 trillion on government procurement every year, making up between 10%-15% of the country's GDP.
Understanding B2G:
B2G refers to the business model where government agencies procure services, information, or products from outside contractors. Whether they're purchasing business phone systems from network providers or making use of time and attendance software, government agencies perform a B2G transaction every time they purchase services, software, or information from other businesses.
The B2G business model provides a way for businesses to bid on government projects or market their products to government agencies that might need it. Essentially, if your business has something a government agency needs, you are able to perform a B2G transaction.
Examples of B2G Transactions:
Businesses that specialize in construction frequently perform B2G transactions with government agencies. In this example, government agencies will solicit requests for proposals (RFPs) that detail the work needed for the construction of new buildings, park developments, libraries, schools, or road construction. When an agency approves the tender of a business, they enter a B2G relationship.
Government agencies will often purchase a unified communications solution to remain in contact with colleagues and other government agencies. Government offices perform a B2G transaction when they purchase this service from other businesses.
A database development company can provide a system for local government offices to locate tax forms for investment income, equipment depreciation, and commercial purchases. In this example, businesses of varying sizes can market their software development services to government agencies.
Maintenance services are a great example of B2G transactions. To maintain public buildings and open spaces, government agencies may solicit the services from outside contractors. For example, an agency could hire a gardening service to maintain its public parks.
Examples of B2G Companies:
Riskpulse ..
Riskpulse provides a risk management and supply chain solution to government agencies. The solution effectively helps reduce operational costs, minimize disruptions, while estimating the chances of delivering early, late, or within a specific delivery window. Riskpulse is used in different industries, including healthcare, transportation, energy, and defense.
Senseware .
Senseware provides a full-stack IoT platform with hardware, cloud-data, and software solutions. Senseware works to capture real-time energy submetering, IAQ, and HVAC operational data. Government agencies make use of their solutions to better integrate, manage, and monitor building systems.
Skycatch is an enterprise-grade aerial intelligence platform and an industry-leader for data imaging. Government agencies make use of Skycatch's onsite connectivity, powerful Artificial Intelligence and Machine Learning algorithms, and powerful analysis tools to better plan projects.
OpenGov provides an industry-leading cloud-based software for public sector budgeting, reporting, communications, and performance. OpenGov's multi-tenant Software-as-a-Service (SaaS) connects over 1000 government agencies, providing features like budget management, direct feedback, online forums, digital surveys, and performance reporting.
What is the government procurement process?
- A government agency solicits a request for proposal (RFP) on a registered government site.
- A business will then create a presentation that will highlight the value of their business and what they can add to the project.
- Your proposal will then go through to the evaluation process . This process might take some time but if you do get the tender, you will be notified. Rejected proposals will also be explained. The agency will send you a note explaining where your proposal was lacking.
How To Make B2G Sales As A Small Business:
1. partner with established contractors..
Government agencies prefer working with businesses that have prior experience working on government projects. This makes it hard for startups and small businesses who want to market their services and products. To combat this issue, businesses will often partner with contractors as a subcontractor. While this option is not as profitable, it's a great way to start building experience.
In addition, continue to build your experience by working with other businesses and independent clients. As your resume improves, so will your credibility. While it's rare, government agencies might give your business a chance if they see you've worked on major projects and with established businesses.
2. Market your services or products.
Directly reaching out to businesses is often discouraged. However, cold calling government agencies could be effective. For example, if you heard your local government is launching a new project to build three new public parks in your vicinity, you could see this new development as a great opportunity to reach out and start marketing your business.
3. Make sure you meet all the project requirements.
When a government agency releases the details of a new project, the agency will indicate what skills and expertise they require for the job. Don't respond to an RFP if you do not meet all or most of the requirements.
4. Register your business.
When government agencies are on the lookout for a new contractor, they will solicit the opportunity on one or more government sites such as the General Services Administration (GSA), Global Tenders, and the NYS Contract Reporter. For an added advantage, make sure your business is registered on all the necessary platforms.
Sources for Procuring B2G Projects:
What is the role of the general services administration.
The General Services Administration (GSA) serves as the federal government's lead acquisition agency , creating and implementing regulations on products and services purchased for the U.S. government.
B2G Business Proposal:
When you send in a proposal highlighting the value of your business, make sure your proposal is well-structured and professional. In addition, your proposal should list all the risk factors the project may cause and how your business plans on addressing these risks.
Other important details to include are:
- An outline of your proposed solution.
- Honest pricing requirements and estimations.
- An estimated time period for the project to be completed.
- Information about your company. Include your history, formation, contact details (email, fax, phone number, etc.), and any social media details.
- Your business and personal qualifications, awards, expertise, and experience.
- The difference between your proposal and other business proposals.
What does B2G mean?
B2G stands for Business to Government and refers to a business model where government agencies purchase services, information, or products from other businesses.
What is government to business e-commerce?
Business-to-government e-commerce refers to commerce between businesses and the public sector. Generally, it involves the use of the internet for public procurement, licensing procedures, and other government-related processes. For example, every year a business is expected to pay taxes, file reports, or sell goods and services to government agencies.
What companies sell to the government?
Almost any registered business can sell their services or products to government agencies. Your business has to have something the agency needs, whether its software, stationary, or information.
What is an example of a business to government company?
Senseware is an example of a B2G company because they provide agencies with a full-stack IoT platform, capturing real-time energy submetering, IAQ, and HVAC operational data. We listed more examples of B2G companies above.

This website was created by the OECD Observatory of Public Sector Innovation (OPSI), part of the OECD Public Governance Directorate ( GOV ).
Validation that this is an official OECD website can be found on the Innovative Government page of the corporate OECD website.
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Business Model Canvas
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This canvas and associated guidance is is a strategic management and lean startup template that can be used the to describe, design, challenge, and pivot a business model to deliver different values or in different ways. It consists of 9 elements: value proposition, customer segments, customer relationships, channels, key partners, key resources, key activities, cost structure, and revenue streams. It can be used individually or in a group. It works in conjunction with the Value Proposition Canvas and other strategic management and execution tools and processes. This canvas has been widely used and many variations exist, including those adapted to a non-business context. When adapting to the public sector context, "customers" may be considered stakeholders or users and "revenue streams" may also include outcomes or impacts. It was originally intended to provide a more nimble and understandable replacement for a business plan.

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What Is a Business Model?
Understanding business models, evaluating successful business models, how to create a business model.
- Business Model FAQs
The Bottom Line
Learn to understand a company's profit-making plan
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The term business model refers to a company's plan for making a profit . It identifies the products or services the business plans to sell, its identified target market , and any anticipated expenses . Business models are important for both new and established businesses. They help new, developing companies attract investment, recruit talent, and motivate management and staff.
Established businesses should regularly update their business model or they'll fail to anticipate trends and challenges ahead. Business models also help investors evaluate companies that interest them and employees understand the future of a company they may aspire to join.
Key Takeaways
- A business model is a company's core strategy for profitably doing business.
- Models generally include information like products or services the business plans to sell, target markets, and any anticipated expenses.
- There are dozens of types of business models including retailers, manufacturers, fee-for-service, or freemium providers.
- The two levers of a business model are pricing and costs.
- When evaluating a business model as an investor, consider whether the product being offer matches a true need in the market.
Business Model
A business model is a high-level plan for profitably operating a business in a specific marketplace. A primary component of the business model is the value proposition . This is a description of the goods or services that a company offers and why they are desirable to customers or clients, ideally stated in a way that differentiates the product or service from its competitors.
A new enterprise's business model should also cover projected startup costs and financing sources, the target customer base for the business, marketing strategy , a review of the competition, and projections of revenues and expenses. The plan may also define opportunities in which the business can partner with other established companies. For example, the business model for an advertising business may identify benefits from an arrangement for referrals to and from a printing company.
Successful businesses have business models that allow them to fulfill client needs at a competitive price and a sustainable cost. Over time, many businesses revise their business models from time to time to reflect changing business environments and market demands .
When evaluating a company as a possible investment, the investor should find out exactly how it makes its money. This means looking through the company's business model. Admittedly, the business model may not tell you everything about a company's prospects. But the investor who understands the business model can make better sense of the financial data.
A common mistake many companies make when they create their business models is to underestimate the costs of funding the business until it becomes profitable. Counting costs to the introduction of a product is not enough. A company has to keep the business running until its revenues exceed its expenses.
One way analysts and investors evaluate the success of a business model is by looking at the company's gross profit . Gross profit is a company's total revenue minus the cost of goods sold (COGS). Comparing a company's gross profit to that of its main competitor or its industry sheds light on the efficiency and effectiveness of its business model. Gross profit alone can be misleading, however. Analysts also want to see cash flow or net income . That is gross profit minus operating expenses and is an indication of just how much real profit the business is generating.
The two primary levers of a company's business model are pricing and costs. A company can raise prices, and it can find inventory at reduced costs. Both actions increase gross profit. Many analysts consider gross profit to be more important in evaluating a business plan. A good gross profit suggests a sound business plan. If expenses are out of control, the management team could be at fault, and the problems are correctable. As this suggests, many analysts believe that companies that run on the best business models can run themselves.
When evaluating a company as a possible investment, find out exactly how it makes its money (not just what it sells but how it sells it). That's the company's business model.
Types of Business Models
There are as many types of business models as there are types of business. For instance, direct sales, franchising , advertising-based, and brick-and-mortar stores are all examples of traditional business models. There are hybrid models as well, such as businesses that combine internet retail with brick-and-mortar stores or with sporting organizations like the NBA .
Below are some common types of business models; note that the examples given may fall into multiple categories.
One of the more common business models most people interact with regularly is the retailer model. A retailer is the last entity along a supply chain. They often buy finished goods from manufacturers or distributors and interface directly with customers.
Example: Costco Wholesale
Manufacturer
A manufacturer is responsible for sourcing raw materials and producing finished products by leveraging internal labor, machinery, and equipment. A manufacturer may make custom goods or highly replicated, mass produced products. A manufacturer can also sell goods to distributors, retailers, or directly to customers.
Example: Ford Motor Company
Fee-for-Service
Instead of selling products, fee-for-service business models are centered around labor and providing services. A fee-for-service business model may charge by an hourly rate or a fixed cost for a specific agreement. Fee-for-service companies are often specialized, offering insight that may not be common knowledge or may require specific training.
Example: DLA Piper LLP
Subscription
Subscription-based business models strive to attract clients in the hopes of luring them into long-time, loyal patrons. This is done by offering a product that requires ongoing payment, usually in return for a fixed duration of benefit. Though largely offered by digital companies for access to software, subscription business models are also popular for physical goods such as monthly reoccurring agriculture/produce subscription box deliveries.
Example: Spotify
Freemium business models attract customers by introducing them to basic, limited-scope products. Then, with the client using their service, the company attempts to convert them to a more premium, advance product that requires payment. Although a customer may theoretically stay on freemium forever, a company tries to show the benefit of what becoming an upgraded member can hold.
Example: LinkedIn/LinkedIn Premium
Some companies can reside within multiple business model types at the same time for the same product. For example, Spotify (a subscription-based model) also offers free version and a premium version.
If a company is concerned about the cost of attracting a single customer, it may attempt to bundle products to sell multiple goods to a single client. Bundling capitalizes on existing customers by attempting to sell them different products. This can be incentivized by offering pricing discounts for buying multiple products.
Example: AT&T
Marketplace
Marketplaces are somewhat straight-forward: in exchange for hosting a platform for business to be conducted, the marketplace receives compensation. Although transactions could occur without a marketplace, this business models attempts to make transacting easier, safer, and faster.
Example: eBay
Affiliate business models are based on marketing and the broad reach of a specific entity or person's platform. Companies pay an entity to promote a good, and that entity often receives compensation in exchange for their promotion. That compensation may be a fixed payment, a percentage of sales derived from their promotion, or both.
Example: social media influencers such as Lele Pons, Zach King, or Chiara Ferragni.
Razor Blade
Aptly named after the product that invented the model, this business model aims to sell a durable product below cost to then generate high-margin sales of a disposable component of that product. Also referred to as the "razor and blade model", razor blade companies may give away expensive blade handles with the premise that consumers need to continually buy razor blades in the long run.
Example: HP (printers and ink)
"Tying" is an illegal razor blade model strategy that requires the purchase of an unrelated good prior to being able to buy a different (and often required) good. For example, imagine Gillette released a line of lotion and required all customers to buy three bottles before they were allowed to purchase disposable razor blades.
Reverse Razor Blade
Instead of relying on high-margin companion products, a reverse razor blade business model tries to sell a high-margin product upfront. Then, to use the product, low or free companion products are provided. This model aims to promote that upfront sale, as further use of the product is not highly profitable.
Example: Apple (iPhones + applications)
The franchise business model leverages existing business plans to expand and reproduce a company at a different location. Often food, hardware, or fitness companies, franchisers work with incoming franchisees to finance the business, promote the new location, and oversee operations. In return, the franchisor receives a percentage of earnings from the franchisee.
Example: Domino's Pizza
Pay-As-You-Go
Instead of charging a fixed fee, some companies may implement a pay-as-you-go business model where the amount charged depends on how much of the product or service was used. The company may charge a fixed fee for offering the service in addition to an amount that changes each month based on what was consumed.
Example: Utility companies
A brokerage business model connects buyers and sellers without directly selling a good themselves. Brokerage companies often receive a percentage of the amount paid when a deal is finalized. Most common in real estate, brokers are also prominent in construction/development or freight.
Example: ReMax
There is no "one size fits all" when making a business model. Different professionals may suggest taking different steps when creating a business and planning your business model. Here are some broad steps one can take to create their plan:
- Identify your audience. Most business model plans will start with either defining the problem or identifying your audience and target market . A strong business model will understand who you are trying to target so you can craft your product, messaging, and approach to connecting with that audience.
- Define the problem. In addition to understanding your audience, you must know what problem you are trying to solve. A hardware company sells products for home repairs. A restaurant feeds the community. Without a problem or a need, your business may struggle to find its footing if there isn't a demand for your services or products.
- Understand your offerings. With your audience and problem in mind, consider what you are able to offer. What products are you interested in selling, and how does your expertise match that product? In this stage of the business model, the product is tweaked to adapt to what the market needs and what you're able to provide.
- Document your needs. With your product selected, consider the hurdles your company will face. This includes product-specific challenges as well as operational difficulties. Make sure to document each of these needs to assess whether you are ready to launch in the future.
- Find key partners. Most businesses will leverage other partners in driving company success. For example, a wedding planner may forge relationships with venues, caterers, florists, and tailors to enhance their offering. For manufacturers, consider who will provide your materials and how critical your relationship with that provider will be.
- Set monetization solutions. Until now, we haven't talked about how your company will make money. A business model isn't complete until it identifies how it will make money. This includes selecting the strategy or strategies above in determining your business model type. This might have been a type you had in mind but after reviewing your clients needs, a different type might now make more sense.
- Test your model. When your full plan is in place, perform test surveys or soft launches. Ask how people would feel paying your prices for your services. Offer discounts to new customers in exchange for reviews and feedback. You can always adjust your business model, but you should always consider leveraging direct feedback from the market when doing so.
Instead of reinventing the wheel, consider what competing companies are doing and how you can position yourself in the market. You may be able to easily spot gaps in the business model of others.
Criticism of Business Models
Joan Magretta, the former editor of the Harvard Business Review, suggests there are two critical factors in sizing up business models. When business models don't work, she states, it's because the story doesn't make sense and/or the numbers just don't add up to profits. The airline industry is a good place to look to find a business model that stopped making sense. It includes companies that have suffered heavy losses and even bankruptcy .
For years, major carriers such as American Airlines, Delta, and Continental built their businesses around a hub-and-spoke structure , in which all flights were routed through a handful of major airports. By ensuring that most seats were filled most of the time, the business model produced big profits.
However, a competing business model arose that made the strength of the major carriers a burden. Carriers like Southwest and JetBlue shuttled planes between smaller airports at a lower cost. They avoided some of the operational inefficiencies of the hub-and-spoke model while forcing labor costs down. That allowed them to cut prices, increasing demand for short flights between cities.
As these newer competitors drew more customers away, the old carriers were left to support their large, extended networks with fewer passengers. The problem became even worse when traffic fell sharply following the September 11 terrorist attacks in 2001 . To fill seats, these airlines had to offer more discounts at even deeper levels. The hub-and-spoke business model no longer made sense.
Example of Business Models
Consider the vast portfolio of Microsoft. Over the past several decades, the company has expanded its product line across digital services, software, gaming, and more. Various business models, all within Microsoft, include but are not limited to:
- Productivity and Business Processes: Microsoft offers subscriptions to Office products and LinkedIn. These subscriptions may be based off product usage (i.e. the amount of data being uploaded to SharePoint).
- Intelligent Cloud: Microsoft offers server products and cloud services for a subscription. This also provide services and consulting.
- More Personal Computing: Microsoft sells physically manufactured products such as Surface, PC components, and Xbox hardware. Residual Xbox sales include content, services, subscriptions, royalties, and advertising revenue.
A business model is a strategic plan of how a company will make money. The model describes the way a business will take its product, offer it to the market, and drive sales. A business model determines what products make sense for a company to sell, how it wants to promote its products, what type of people it should try to cater to, and what revenue streams it may expect.
What Is an Example of a Business Model?
Best Buy, Target, and Walmart are some of the largest examples of retail companies. These companies acquire goods from manufacturers or distributors to sell directly to the public. Retailers interface with their clients and sell goods, though retails may or may not make the actual goods they sell.
What Are the Main Types of Business Models?
Retailers and manufacturers are among the primary types of business models. Manufacturers product their own goods and may or may not sell them directly to the public. Meanwhile, retails buy goods to later resell to the public.
How Do I Build a Business Model?
There are many steps to building a business model, and there is no single consistent process among business experts. In general, a business model should identify your customers, understand the problem you are trying to solve, select a business model type to determine how your clients will buy your product, and determine the ways your company will make money. It is also important to periodically review your business model; once you've launched, feel free to evaluate your plan and adjust your target audience, product line, or pricing as needed.
A company isn't just an entity that sells goods. It's an ecosystem that must have a plan in plan on who to sell to, what to sell, what to charge, and what value it is creating. A business model describes what an organization does to systematically create long-term value for its customers. After building a business model, a company should have stronger direction on how it wants to operate and what its financial future appears to be.
Harvard Business Review. " Why Business Models Matter ."
Bureau of Transportation Statistics. " Airline Travel Since 9/11 ."
Microsoft. " Annual Report 2021 ."
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What is B2G or business-to-government? Definition and examples
B2G , which stands for business-to-government, refers to the business relationship a company can have with a government institution. It commonly refers to the offering of products, services, or information online. However, we use the term for traditional business procedures too.
We also call this way of doing business B2A , which stands for business-to-administration . The term refers to a company doing business either with the government or the public sector.
Techopedia has the following definition of the term :
“Business-to-government (B2G) is a business model that refers to businesses selling products, services or information to governments or government agencies.”
B2G – bids and tenders
In many cases, government agencies work with pre-negotiated contracts. The government puts out tenders which companies bid for.
To put out a tender means to ask companies to say formally how much they would charge for a project.
We call each formal submission a ‘ bid .’ The government selects one of the bidders, and that company gets the B2G contract.
These contracts exist at national, state, or local level.
‘To’ – not ‘two’
Remember that in its short form – B2G – the number ‘ 2 ‘ stands for the word ‘ to ‘ in ‘business- to -government.’ When you write the long form, do not write ‘business- two -government.’ That is wrong!

If it weren’t for B2G, most defense contractors, such as Lockheed Martin, would be much smaller companies. The defense market is a monopsony, i.e., a single buyer dominates the market . That single buyer, in this case, is the government.
B2G contracts
In the US, the General Services Administration (GSA) issues these types of B2G contracts.
The GSA purchases billions of dollars’ worth of services and products through contracts each year.
Rejecting bids
The GSA may reject bids for many different reasons. If the public institution has acquired the service of a certain company before, it may reject its bid. It may also turn down a bid if the bidder already has an ongoing project with the public institution.
The GSA may reject those bids because it wants to give other companies a chance. In other words, it wants to make sure that all players compete on a level playing field.
In 2017, the GSA acquired around $45 billions’ worth of products and services. It purchased them on behalf of federal, state, and local government institutions.
The GSA purchased IT (equipment, software, and service), construction, and medical equipment and supplies. It also bought cleaning and food services.
In fact, the GSA purchased hundreds of different B2G products and services.
Some B2G networks provide a way for companies to bid to government agencies or projects.
IT stands for i nformation t echnology. Information technology is the use of computer hardware and software. IT includes computers, networking, storage, infrastructure, software, and the exchange of electronic data.
IT contracts between companies and government departments are very common. Every public institution needs IT goods and services.
The GSA purchases new computers, term software licenses, and wireless services. It also secures maintenance contracts and cloud computing services.
Cloud computing is a kind of computing in which remote computers store files and other data . Your computer’s hard drive does not store the information. In other words, we store files and other data in ‘ the cloud .’
B2G and five others
Business-to-government is one of six business models. The others are:
- B2B (business-to-business). This means companies selling to other companies .
- C2C (consumer-to-consumer). This model involves consumers selling to other consumers . If I sell my car to my next-door-neighbor, that is a C2C transaction.
- G2B (government-to-business). This means government selling to businesses.
- B2C (business-to-consumer). In this model, companies sell to consumers . For example, a supermarket, i.e., a business, sells to us, i.e., consumers.
- G2C (government-to-consumer or government-to-citizen). When the government gives somebody a tax rebate, that is a G2C transaction.
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INLOGOV Blog
The institute of local government studies, university of birmingham, business models in local government.
Lasse Oulasvirta & Ari-Veikko Anttiroiko
Business models in local government?
Since the 1960s a range of business management models have been introduced in the public sector, including accrual accounting, management information systems, activity-based cost management, human resource management, customer relationship management and the like, which in most cases are in line with the tenets of New Public Management (NPM). One of the newcomers in this list is comprehensive risk management, known as Enterprise Risk Management (ERM) in the private sector. This normative risk management model, of which the most well-known version is COSO ERM, developed by the privately run Committee of Sponsoring Organizations of the Treadway Commission (COSO), has been promoted widely to all organisations, local governments included. Using survey data, our article in Local Government Studies describes and explains the diffusion and adoption of comprehensive ERM in local government in Finland.

(Source: Kuntajohtajan johtajasopimus (”Director contracts for municipal chief executive officers”), a publication of the Finnish Association of Local and Regional Authorities, 2016, p. 20)
What explains local governments’ reluctance to buy the idea of comprehensive risk management?
Our survey results support the argument that if comprehensive risk management is not obligatory, it is not widely used in local government. Our statistical analysis reveals that financial constraints explain to some extent the existence of comprehensive management in municipalities, while structural factors such as the size of municipalities do not, even though risk management is slightly more advanced in larger cities than in smaller local governments.
This compels us to ask whether the slow adoption is because of the special nature of RM as a managerial innovation. Such considerations direct our attention to the kind of intuitive cost-benefit assessment public managers are likely to go through when evaluating the needs and preconditions for the introduction of a comprehensive risk management model. Our assumption is that as a managerial innovation ERM lacks immediate benefit when assessed against the efforts and costs of its introduction and maintenance. It seems that the risk environment and institutional characteristics of public sector entities, including persisting silo mentality, do not provide a particularly strong incentive neither for politicians nor public managers to pursue voluntarily the adoption of such a model.
A need for tailored solutions
The question is not only about the nature of comprehensive RM as such (and the COSO ERM model in particular). We claim that part of the slow adoption is due to the insensitivity of the developers of such models and consequently also their models and tools to the needs and realities of public sector organisations. Thus, if business management models are not sufficiently tailored to the factual needs of local governments, their voluntary adoption is likely to be meagre.
This observation relates to the interplay between developers, consultants and local authorities, and points to private sector parties in particular, who should do their homework before rushing their potential clients in the local government.
Local choice matters
Lastly, our research implies that providing a condition for proper local choice may produce system level benefits, for local politicians, public managers and the front-line staff are in the best position to assess the suitability and benefit of each business model. In the case of comprehensive RM, for example, representatives of local government may see that this particular models is not cost-effective or may even appear to be insignificant in terms of its added value. This hints that new business models and management tools should not be too lightly imposed by the legislature on local governments – spontaneous evolution is as a rule better for creating cost-effective and resilient solutions. We may conclude that local government organisations, when given a general competence to decide on the conduct of local affair, are generally more rational and selective in adopting business models than generally assumed.

Lasse Oulasvirta is Professor of Financial Administration and Public Sector Accounting in the University of Tampere, School of management. His research interests include public sector financial management, budgeting, accounting and auditing. He holds PhD (Administrative Sciences) and M.A. (Business Economics) degrees.

Ari-Veikko Anttiroiko is an Adjunct Professor based in the School of Management, University of Tampere, Finland. He holds a PhD (Administrative Sciences) and MPhil and Licentiate (Philosophy) degrees. His main research areas include local governance, local economic development, smart cities, creative cities and public sector innovations.
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- Environment
- Energy infrastructure
- Oil, gas and coal
- Carbon capture and storage
Carbon capture, usage and storage (CCUS): business models
Updates on the proposed commercial frameworks for transport and storage, power, and industrial carbon capture business models.

Industrial Carbon Capture business model: summary (December 2022)
PDF , 1.04 MB , 70 pages
This file may not be suitable for users of assistive technology.

Industrial Carbon Capture: Standard Terms and Conditions (December 2022)
PDF , 4.35 MB , 521 pages

Industrial Carbon Capture: Front End Agreement (December 2022)
PDF , 452 KB , 23 pages

Industrial Carbon Capture: Standard Terms and Conditions - Comparison (December 2022)
PDF , 92.8 MB , 557 pages

Industrial Carbon Capture: Front End Agreement - Comparison (December 2022)
PDF , 8.19 MB , 46 pages

Waste Industrial Carbon Capture: Summary Table (December 2022)
PDF , 236 KB , 7 pages

Waste Industrial Carbon Capture: Biogenic CEMS Rider (December 2022)
PDF , 400 KB , 19 pages
Industrial Carbon Capture: Form of Supply Chain Report Part B Spreadsheet (December 2022)
MS Excel Spreadsheet , 122 KB

ICC Contract: Annex 9 - Greenhouse Gas Removal Credits (December 2022)
PDF , 665 KB , 49 pages
Government Response to April 2022 ICC Business Model Consultation (December 2022)
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1125247/icc-business-model-consultation-government-response.pdf
CIF Industrial Carbon Capture Grant Funding Agreement: terms and conditions (December 2022)
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1125243/CIF_Industrial_Carbon_Capture_Grant_Funding_Agreement_Terms_and_Conditions.pdf
Industrial Carbon Capture Grant Funding Offer Letter (December 2022)
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1125250/CIF_Industrial_Carbon_Capture_Grant_Funding_Agreement_Offer_Letter.pdf

CCS Network Code Head of Terms explanatory note, December 2022
PDF , 189 KB , 10 pages

(Annex) Updated Indicative Heads of Terms, December 2022
PDF , 1.24 MB , 148 pages

CCS Network Code Indicative Heads of Terms comparison, December 2022
PDF , 1.44 MB , 165 pages

Dispatchable Power Agreement business model summary, November 2022
PDF , 499 KB , 53 pages

Draft: Dispatchable Power Agreement (DPA) terms and conditions: November 2022 update
PDF , 4.84 MB , 571 pages

Draft: Dispatchable Power Agreement (DPA) front end agreement: November 2022 update
PDF , 369 KB , 21 pages
Dispatchable Power Agreement: Form of Supply Chain Report Part B Spreadsheet, November 2022
MS Excel Spreadsheet , 111 KB
CCUS: government response to a consultation on the Dispatchable Power Agreement business model
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1117539/dpa-consultation-government-response.pdf

Industrial carbon capture business model: adaptations for the waste sector: July 2022 update
PDF , 412 KB , 21 pages

Draft: Waste industrial carbon capture contractual riders (Annex A): July 2022
PDF , 805 KB , 45 pages

Draft: carbon capture, usage and storage network code indicative heads of terms: June
PDF , 962 KB , 100 pages

Draft: carbon capture, usage and storage network code heads of terms explanatory note: June 2022
PDF , 217 KB , 10 pages

Dispatchable power agreement: business model summary and consultation: April 2022 update
PDF , 536 KB , 58 pages

Dispatchable Power Agreement (DPA) gain share guidance (Annex A): April 2022 update
PDF , 312 KB , 18 pages

Draft: Dispatchable Power Agreement (DPA) front end agreement: April 2022 update
PDF , 294 KB , 19 pages

Draft: Dispatchable Power Agreement (DPA) terms and conditions: April 2022 update
PDF , 3.41 MB , 472 pages

Draft: Dispatchable Power Agreement (DPA) gain share schedule: April 2022 update
PDF , 924 KB , 114 pages

Industrial carbon capture business model: summary and consultation: April 2022 update
PDF , 1010 KB , 60 pages

Industrial carbon capture business model: April 2022 update
PDF , 1.53 MB , 85 pages

Draft: Industrial carbon capture: standard terms and conditions (Annex A): April 2022 update
PDF , 2.8 MB , 391 pages

Draft: Industrial carbon capture front end agreement (Annex B): April 2022 update
PDF , 361 KB , 34 pages

Transport and storage business model: January 2022 update
PDF , 1.18 MB , 70 pages

Transport and storage - indicative heads of terms: January 2022 update
PDF , 698 KB , 53 pages
November 2021: Updates on the industrial carbon capture and dispatchable power agreement business models

Dispatchable power agreement (DPA) business model: October 2021 update
PDF , 433 KB , 35 pages

Dispatchable Power Agreement (DPA) provisional Heads of Terms (Annex A): October 2021 update
PDF , 1.22 MB , 125 pages

Industrial Carbon Capture (ICC) business model: October 2021 update
PDF , 619 KB , 45 pages

Industrial Carbon Capture (ICC) front-end agreement (Annex A): October 2021 update
PDF , 220 KB , 16 pages

Industrial Carbon Capture (ICC) indicative Heads of Terms (Annex B): October 2021 update
PDF , 894 KB , 98 pages

Transport and storage business model: May 2021 update
PDF , 657 KB , 53 pages

Dispatchable power agreement (DPA) business model: May 2021 update
PDF , 589 KB , 44 pages

Industrial carbon capture business model: May 2021 update
PDF , 616 KB , 31 pages

Carbon capture, usage and storage: an update on business models (December 2020)
PDF , 1.12 MB , 82 pages


Transport and storage services (T&SCO) licence - draft commercial principles: December 2020 update (Annex A)
PDF , 256 KB , 16 pages

Transport and storage services (T&SCO) - government support package draft commercial principles: December 2020 update (Annex B)
PDF , 130 KB , 7 pages

Dispatchable power agreement (DPA) - detailed explanation and examples: December 2020 update (Annex C)
PDF , 590 KB , 29 pages

Dispatchable power agreement (DPA) - heads of terms: December 2020 update (Annex D)
PDF , 991 KB , 111 pages

Industrial carbon capture - indicative heads of terms: December 2020 update (Annex E)
PDF , 309 KB , 20 pages
These documents provide details of the proposed carbon capture, usage and storage ( CCUS ) commercial frameworks for business models that apply to:
- transport and storage
- industrial carbon capture
December 2022 updates
Industrial carbon capture.
- the December 2022 update outlines the key design aspects of the Industrial Carbon Capture ( ICC ) business models (including for the waste management sector)
- this business model update is being published alongside a government response to the consultation on the ICC business models , the ICC Contract (comprising front end agreement and standard terms and conditions), the Greenhouse Gas Removal Credits Annex, ICC Form of Supply Chain Report Spreadsheet, the Waste ICC Contract’s Summary Table, the Waste ICC Contract’s Biogenic CEMS rider, and the CCS Infrastructure Fund (CIF) Grant Funding Agreement offer letter and terms and conditions
CCS Network Code
- CCS Network Code Head of Terms explanatory note - December 2022
- we published (Annex) Updated Indicative Heads of Terms to the CCS
- we published CCS Network Code Indicative Heads of Terms (HoTs) highlighting changes with the previous version of the HoTs (published in June).
November 2022 updates
- Power CCUS business model - a summary of the full dispatchable power agreement ( DPA ) business model
- we published a full DPA contract consisting of a front end agreement, DPA terms and conditions and a supply chain Part B template spreadsheet: November 2022
- we published a government response to the DPA consultation that ran between 12 April 2022 and 10 June 2022
July 2022 updates
- The July 2022 update presents key adaptations to the industrial carbon capture ( ICC ) business model for carbon capture, use, and storage ( CCUS ) projects in the waste management sector
- some information contained in the July 2022 update may also apply to emitters in other industrial sectors (‘generic’ ICC Contract holders)
- alongside this July 2022 update on the ICC business model for CCUS projects in the management waste sector, we have also published the draft Waste ICC contractual riders
- we will continue to engage with waste management stakeholders upon the publication of this update and take into account these views as we develop the final Waste ICC Contract, including through Waste Expert Groups held over the summer. If you wish to be involved in any future stakeholder events in connection with the Waste ICC business model, please contact us via email at [email protected]
April 2022 updates
- Power CCUS business model - a summary of the full draft dispatchable power agreement ( DPA ) business model, including an annex on the proposed gain share mechanism, plus consultation questions
- alongside the DPA summary and consultation , we have published a full draft DPA contract consisting of a front end agreement, terms and conditions and gain share schedule
- industrial carbon capture ( ICC ) business model - the April 2022 update on the proposed ICC business model covers updates on the commercial framework including the payment mechanism (asymmetric payments, Transport and Storage ( T&S ) fees, CCS projects that also include CCU, and an update on free allowances) and risk allocation, mitigations relating to the risk of the excessive carbon intensity of industrial products, opex reopener, extension provisions, and adaptations for Combined Heat and Power (CHP) projects. It includes an update on the legal contractual framework, including termination, Operational Conditions Precedent (OCPs), the Milestone Requirement, Qualifying Changes in Law, metering and reporting requirements. We also outline the changes to the model that are being considered for waste management CCS projects. Finally, this update includes information on the proposed Cluster Sequencing Process Track-1 negotiation approach and next steps
- alongside the ICC business model April 2022 update, we have published a draft ICC contract for initial projects consisting of Draft Terms and Conditions and a Front-End Agreement
- in addition, we have published a summary of the ICC business model and including a consultation on the proposed business model
January 2022 update
This update builds on previous Transport and Storage ( T&S ) business model publications and provides further details on the T&S Regulatory Investment ( TRI ) model. The January 2022 update also includes an indicative Heads of Terms document.
November 2021 update
The November 2021 update on the proposed industrial carbon capture( ICC ) business model and the proposed dispatchable power agreement ( DPA ) covers updates on CCUS supply chains and the eligibility of waste management CCUS projects to apply for the ICC business model.
October 2021 updates
- Power CCUS business model – the update on the proposed dispatchable power agreement ( DPA ) business model includes further updates to the DPA payment mechanism and legal and contractual framework for power CCUS
- alongside the DPA business model October 2021 update, we have published an updated set of provisional Heads of Terms representing the policy developments included in the May 2021 and October 2021 updates
- Industrial carbon capture ( ICC ) business model - the October 2021 update on the proposed ICC business model covers updates on eligibility criteria, capital grant support, and the commercial and contractual framework, including further elements of the payment structure, risk allocation and ‘Capture as a Service’ (a delivery model in which companies could provide carbon capture as a ‘service’ to industrial facilities)
- alongside the ICC business model October 2021 update, we have also published the provisional Heads of Terms and Front-End Agreement for the ICC contract
Please read these documents in conjunction with the December 2020 and May 2021 updates.
For further information on CCUS Business Models see the related consultation Carbon capture, usage and storage ( CCUS ): business models .
The business models focus on deployment development as set out in the Energy ten point plan and the Energy white paper .
Update on Phase-1 eligible clusters and Phase-2 timeline
May 2021 update
- Cluster Sequencing for Carbon Capture Usage and Storage Deployment: Phase 1
- an update on the CCS Infrastructure Fund (CIF)
- CCUS Supply Chain Roadmap
December 2022 summary update outlines key design aspects of ICC business models (also for waste management sector) alongside ICC business models consultation govt response, ICC Contract (front end agreement / standard T&Cs), Greenhouse Gas Removal Credits Annex, ICC Form of Supply Chain Report Spreadsheet, Waste ICC Contract’s Summary Table / Biogenic CEMS rider, CCS Infrastructure Fund (CIF) Grant Funding Agreement offer letter / T&Cs.
We have published: CCS Network Code Head of Terms explanatory note; (Annex) Updated Indicative Heads of Terms and CCS Network Code Indicative Heads of Terms (HoTs) comparison with the previous version of the HoTs (published in June).
We have published: Power CCUS business model - a summary of the full dispatchable power agreement (DPA) business model; full DPA contract consisting of a front end agreement, DPA terms and conditions and supply chain Part B template Spreadsheet; government response to the 2022 DPA consultation.
July 2022 update: Industrial carbon capture business model: adaptations for the waste sector
Draft carbon capture, usage and storage network code heads of terms and explanatory note added.
Added updated industrial carbon capture (ICC) and dispatchable power agreement (DPA) business models, including draft terms and conditions, front end agreements and gain share schedule and guidance for the DPA. Added links to consultations on both business models.
Latest version of Transport and Storage (T&S) business model including Heads of Terms added, providing further details on the T&S Regulatory Investment (TRI) model.
Added November 2021 update on the industrial carbon capture and dispatchable power agreement business models.
Further updates to the dispatchable power agreement (DPA) and industrial carbon capture (ICC) business models added.
Business model updates covering transport and storage, the dispatchable power agreement (DPA) and industrial carbon capture (ICC) added.
First published.
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Asia Pacific Business Review
New business models and government features: an example from china.
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- https://doi.org/10.1080/13602381.2020.1785188

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A number of innovative business models involve public infrastructure service, such as shared cars. Considering the regulating role of government in these industries, it is important to know what governmental features influence the development of such models. With data of 102 cities in China, we find that government service quality is positively associated with the speed with which car sharing companies are established in a city, and cities with south-born mayors have higher service quality than those with north-born mayors. The mayor’s region of birth has an indirect effect on the speed with which car sharing is established.
- Characteristics of mayors
- car-sharing
- governmental service quality
- new business model
- sharing economy
Disclosure statement
No potential conflict of interest was reported by the author.
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36°03′40″N 103°49′55″E, Lanzhou, China
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What Is A Business Model? The 30 Types Explained

Your prototype might be ready for presenting to investors or licensees but it is worth nothing if you do not have a business model in place. How are you going to explain to anyone what your product does or intends to do and how it is going to create value for customers as well as the company?
You need a business model for that.
It is a term people frequently use but most of them don’t truly understand what it means. Michael Lewis, the author of The New, New Thing: A Silicon Valley Story , says that a business model is a “term of art”. Most people know it when they see it but cannot accurately describe it.
So, what exactly is a business model and what are its components?
Let’s find out.
What Is A Business Model?
A business model is a conceptual structure that supports the viability of the business and explains who the business serves, what it offers, how it offers it, and how it achieves its goals.
All the business processes and policies that a company adopts and follows are part of the business model.
According to management guru Peter Drucker:
A business model is supposed to answer who your customer is, what value you can create/add for the customer and how you can do that at reasonable costs.
Thus, a business model is a description of how a company creates, delivers, and captures value for the customer as well as itself.
What Are The Components of A Business Model?
An ideal business model usually conveys four key aspects of the business which is presented using a specialised tool called business model canvas . These key components are customers, value proposition, operating model, and revenue model.
Precisely, a business model answers the following key questions –
- Who is the customer?
- What value does the business deliver to the customers?
- How does the business operate?
- How does the business make money?

Who Is The Customer?
The customer forms the heart of a business model. It answers who the company plans to sell its offerings to. A business usually groups the customers into different segments with certain homogeneous needs, characteristics, or behaviour. It then defines one or more customer segments that it serves or wants to serve, followed by an answer to why it plans to serve this segment.
What Value Does The Business Deliver To The Customers?
This is the most important component of a business model that answers several key customers and business value related questions. It is often usually presented using a value proposition canvas .
- What are the jobs the customer wants to be done?
- What are their pains in doing the job?
- What do they gain by doing the job?
Once these questions are answered, the business answers another set of questions that relates business to the customers:
- How does business get the job done?
- How does the business relieve the customer’s pain?
- How can the business help the customer get the gains?

How Does The Business Operate?
It’s the operating model of the business that elaborates:
- Key Activities: What all offerings does the business sell to the customers.
- Key Partners: Who all help the business in delivering value to the customers.
- Key Resources: What all resources does the business use to develop and deliver its offerings.
- Key Channels: What channels does the business use to deliver its offerings to the customers.
- Customer Relationships: What type of relationships does the business maintain with its customers.
How Does The Business Make Money?
Making money is important for the business to sustain itself. This component of the business model focuses on elaborating on the financials and how the business makes money.
It’s called the revenue model of the business and has two components:
- The cost structure includes all the expenses that the business incurs in creating and delivering value to the customers.
- The revenue streams include all the primary and non-primary revenue streams that the business utilises.
Why Is It Important To Develop A Business Model?
The business model acts as the blueprint of the business and a roadmap for its success (or failure). This tool helps the founders decide how their business will work and make money.
It is the only documentation that makes clear –
- The business concept – the market opportunity the business capitalises on.
- The target market the business caters to.
- The problems the business intends to solve.
- The solution the business offers and how it creates customer value.
- How the business gets its customers.
- The operating model the business follows.
- How the business makes money and what are the costs incurred to get the same.
Moreover, the business model gives a reason for the customers to choose the offering over others in the market. People chose Facebook because it helped them connect and chat with other people around the world (operating model) and it didn’t even charge for it (revenue model). Netflix’s business model was preferred over others as it provided value in the form of consistent on-demand content instead of the usual TV streaming business model.
The 30 Types Of Business Models
There are different types of business models meant for different businesses. Some of the basic types of business models are:
Manufacturer
A manufacturer makes finished products from raw materials. It may sell directly to the customers or sell it to a middleman i.e another business that sells it finally to the customer. Examples – Ford, 3M, General Electric.
Distributor
A distributor buys products from manufacturers and resells them to the retailers or the public. Examples – Auto Dealerships.
A retailer sells directly to the public after purchasing the products from a distributor or wholesaler. Examples – Amazon , Tesco.
A franchise can be a manufacturer, distributor or retailer. Instead of creating a new product, the franchisee uses the parent business’s model and brand while paying royalties to it. Examples – McDonald’s, Pizza Hut.
Brick-and-Mortar
Brick-and-mortar is a traditional business model where the retailers, wholesalers, and manufacturers deal with the customers face-to-face in an office, a shop, or a store that the business owns or rents.
The ecommerce business model is an upgradation of the traditional brick-and-mortar business model. It focuses on selling products by creating a web store on the internet.
Bricks-and-Clicks
A company that has both an online and offline presence allows customers to pick up products from the physical stores while they can place the order online. This model gives flexibility to the business since it is present online for customers who live in areas where they do not have brick-and-mortar stores. Examples – Almost all apparel companies nowadays.
Nickel-and-Dime
In this model, the basic product provided to the customers is very cost-sensitive and hence priced as low as possible. For every other service that comes with it, a certain amount is charged. Examples – All low-cost air carriers.
This is one of the most common business models on the Internet. Companies offer basic services to the customers for free while charging a certain premium for extra add-ons . So there will be multiple plans with various benefits for different customers. Generally, the basic service comes with certain restrictions or limitations, such as in-app advertisements, storage restrictions etc., which the premium plans shall not have. For example, the basic version of Dropbox comes with 2 GB of storage. If you want to increase that limit, you can move to the Pro plan and pay a premium of $9.99 a month for it. Some online image editors allow you to edit only a certain number of images in the free basic plan while an unlimited number of images in the paid plan. Youtube’s free plan comes with ads while the premium (Red) plan has no ad interruption plus it has other benefits too. This model is one of the most adopted models for online companies because it is not only a great marketing tool but also a cost-effective way to scale up and attract new users.
Subscription
If customer acquisition costs are high, this business model might be the most suitable option. The subscription business model lets you keep customers over a long-term contract and get recurring revenues from them through repeat purchases. Examples – Netflix , Dollar Shave Club .
Aggregator business model is a recently developed model where the company has various service providers of a niche and sell their services under its own brand. The money is earned as commissions. Examples – Uber , Airbnb , Oyo .
Online Marketplace
Online marketplaces aggregate different sellers into one platform who then compete with each other to provide the same product/service at competitive prices. The marketplace builds its brand over different factors like trust, free and/or on-time home delivery, quality sellers, etc. and earns a commission on every sale carried on its platform. Examples – Amazon , Alibaba .
Advertisement
Advertisement business models are evolving even more with the rise of the demand for free products and services on the internet. Just like the earlier times, these business models are popular with media publishers like Youtube , Forbes, etc. where the information is provided for free but are accompanied by advertisements that are paid for by identified sponsors .
Data Licencing / Data Selling
With the advent of the internet, there has been an increase in the amount of data generated upon the users’ activities over the internet. This has led to the advent of a new business model – the data licencing business model . Many companies like Twitter and Onesignal sell or licence the data of their users to third parties who then use the same for analysis, advertising, and other purposes.
Agency-Based
An agency can be considered as a partner company that specialises in handling non-core business activities like advertising, digital marketing, PR, ORM, etc. This company partners with several other companies that outsource their non-core tasks to them and is responsible to maintain privacy and efficiency in their work. Examples of such agencies are Ogilvy & Mathers, Dentsu Aegis Network, etc.
Affiliate Marketing
Affiliate marketing business model is a commission-based model where the affiliate builds its business around promoting a partner’s product and directs all its efforts to convince its followers and users to buy the same. In return, the affiliate gets a commission for every sale referred. An example of a business operating on an affiliate marketing business model is lifewire.com.
Dropshipping
Dropshipping is a type of e-commerce business model where the business owns no product or inventory but just a store. The actual product is sold by partner sellers who receive the order as soon as the store receives an order from the ultimate customer. These partner sellers then deliver the products directly to the customer.
Network Marketing
Network marketing or multi-level marketing involves a pyramid structured network of people who sell a company’s products. The model runs on a commission basis where the participants are remunerated when –
- They make a sale of the company’s product.
- Their recruits make a sale of the product.
The network marketing business model works on direct marketing and direct selling philosophy where there are no retail shops but the offerings are marketed to the target market directly by the participants. The market is tapped by making more and more people part of the pyramid structure where they make money by selling more goods and getting more people on board.
Crowdsourcing
Crowdsourcing business model involves the users contributing to the value provided. This business model is often combined with other business and revenue models to create an ultimate solution for the user and to earn money. Examples of businesses using the crowdsourcing business model are Wikipedia , reCAPTCHA , Duolingo , etc.
Peer 2 Peer Catalyst/Platform
A P2P economy is a decentralized internet-based economy where two parties interact directly with each other to buy or sell goods or to conduct a transaction without the intervention of any third party. A P2P catalyst is a platform where these users meet. Examples of P2P platforms are Craigslist , OLX , Airbnb etc.
The Blockchain is an immutable, decentralized, digital ledger. It is a digital database that no one owns but anyone can contribute to. Many businesses are taking this decentralised route to develop their business models. Models based on blockchain are not owned or monitored by a single entity. Rather, they work on peer-to-peer interactions and record everything on a digital decentralized ledger.
SAAS, IAAS, PAAS
Many companies have started offering their software, platform, and infrastructure as a service . The ‘as a service’ business model works on the principle of pay as you go where the customer pays for his usage of such software, platform, and infrastructure; he pays for what and how many features he has used and not for what he hasn’t.
The high touch model is one that requires lots of human interaction. The relationship between the salesperson and the customer has a huge impact on the overall revenues of the company. The companies with this business model operate on trust and credibility. Examples – hair salons, consulting firms.
The opposite of the high touch model, the low touch model requires minimal human assistance or intervention in selling a product or service. Since as a company, you do not have to maintain a huge sales force, your costs decrease, though such companies also focus on improving technology to further reduce human intervention while making the customer experience better at the same time. Examples – Ikea, SurveyMonkey.
Auction-Based
Mostly used for unique items that are not frequently traded and that don’t have a well-established market value, like collectables, antiques, real estate, and even businesses.
This business model involves the listing of an offering by the seller and the buyers making repeated bids to buy that offering while fully aware of other bids by other buyers. The offering is sold to the highest buyer with the auction broker charging a listing fee and/or commission based on the transaction value.
eBay is one such auction platform.
Reverse-Auction-Based
A reverse auction is an auction where the roles of a buyer and seller are exchanged, i.e. sellers bid prices instead of buyers.
The reverse-auction-based business model is often used when there are several sellers selling a similar offering to a single buyer. These sellers lower their price with every bid and generally the bidder with the lowest bid wins the auction. However, there are cases when the bidder with a price higher than the lowest bid wins the auction as the buyer likes his offer (offering with add-ons)
A platform that lets sellers bid for government contracts is an example of a reverse auction based business model.
Razor And Blades
Razor and blade model is used by companies that deal in complementary or companion products like razors and blades.
It involves selling the high-margin root product at a low price to increase the volume sales of the complementary or related low-margin product.
By using this model, businesses create a stream of recurring income over the life of the root product.
Companies dealing in razors, mosquito vaporizers, and other refillable products employ this business model. The game industry also makes use of this model by providing the gaming console at a very economical price and making good profits with the sale of games.
Reverse Razor And Blades
A business employing a reverse razor and blades model offers the low margin item at a very less price or below the cost to encourage the sale of the high margin product.
Amazon employs this business model to sell its Kindle e-reader. It provides Kindle ebooks at a price lower than their actual cost so to make people consider Kindle as a one-time investment to enjoy low-cost books throughout its life.
An on-demand model is a model where a customer’s demand is fulfilled by delivering goods and services on demand (usually immediately).
This business model is driven by the use of the internet and mobile phones. It works like this –
- The customer order for products on services through a web-app.
- The request is received by the company’s employee or a demand fulfilling partner.
- The employee or a partner fulfils the demand by delivering the ordered product or service either immediately or in the time promised.
Uber, Instacart, and Postmates are some examples of an on-demand business model.
User Community
Driven by the network effect , this business model involves granting access to a community or a network in return for a membership fee.
Glassdoor is a good example of such a user community.
Final Thoughts
Of course, most companies do not operate on any one of these business models but rather on a combination of some. Like it is perfectly possible for you to be a Bricks-and-clicks Low Touch Retailer or a High Touch Subscription-Based Manufacturer. What business model you choose depends on your business needs and what value you want to create for your stakeholders. Next, we will see how to develop the perfect business model for your startup, so that the chances of your success are amplified.
The Startup Process
We know how important your dream business is to you. Therefore, we’ve come up with an all in one guide: The Startup Process to help you turn your vision into reality.
A startup consultant, digital marketer, traveller, and philomath. Aashish has worked with over 20 startups and successfully helped them ideate, raise money, and succeed. When not working, he can be found hiking, camping, and stargazing.
32 Comments
Hi, I’m interested in starting a business but I am not sure what kind of business as I’m staying in a rural place that is not well developed, please assist me with all required information to gather me in making good decisions in business
Inbox me,i give you proper solution by unique idea
After reading your article , i got a lot in a few pages and can i please get some more articles
I find your articles very informative and exciting.
Thank you for nice article.
thank you for your sharing!
Thank you Sir, for this information. I like this!
I agree with you
Will start a business.
please share with the 30 business models for lending business.
i’m a student, and need them for my assignment. thank you
Thank you, this was great!
I mean, this is really educating, good work But how I do write a business model if I am a publisher for an affiliate site like CJ Cheers
good day where would you catagorize a shopping centre
very helpful, thanks a lot. 🙂
Very helpful, different things to ponder about.
Thanks for the comment, Daniel!
Good write up
wow,I just realized that I actually have no business model. Thanks for the help,though I’ll want more.
which of these models are generic business models
What is the business model of a Tele Medicine company
A great Article covering complete Business Models! Very useful information.
Thanks, that was helpful
Best information
What about network marketing??
Hi Satish network marketing is nothing but promoting business within your network and market it i.e marketing product and selling them with your network or group.
i really liked the information
Hi, and Business Model Canvas?!!!!
Read about business model canvas here: https://www.feedough.com/business-model-canvas-explained/
GC Enterprise Architecture/Business Capability Model
Written by Jeremy Barlow
Operating a business in today’s society is increasingly complex and full of risks. The complexity of the business world, combined with the current unstable economic climate, places elevated demands on boards of directors in the nonprofit and for-profit worlds. These are just a couple of reasons that boards need to select a board governance model that aligns their work with the goals of the organization.
Governance is an amalgamation of policies, systems, and structures, along with a strategic, operational framework that aligns organizational leadership to take action, so that they can make effective decisions with accountability. A model for governance refers to how those policies, systems, structures, and framework interface with each other and whether the responsibility for them lies with the board as a whole, or with the individual board members.
Board governance models for nonprofit and for-profit organizations are as different as the organizations that boards serve. Nonprofit organizations generally start up to serve a humanitarian or environmental need. For-profit companies generate income for the company, its employees, and its shareholders. While many board governance models can be used for either nonprofit or for-profit entities, depending upon the needs of the organization, certain types of models may be amenable to nonprofit organizations, while other models are more appropriate for for-profit organizations. It’s common for a board to adopt a combination of board governance models that caters to the feature of the organization and the composition of the board.
Nonprofit Governance Models
Nonprofit boards keep the organization’s mission at the forefront when directing the affairs of the organization. Incoming funds are used to support the organization’s work. Most board members for nonprofit organizations serve on the board because of their passion and commitment to a cause. While serving on a nonprofit board carries a certain level of honor and prestige, board members need to take an active approach to overseeing the organization to prevent problems and legal issues. Nonprofit boards hold responsibility for fiduciary matters, as well as matters that have been delegated to others.
There are five common board models for nonprofit boards :
1. Advisory Board Governance Model
A CEO who founds an organization will soon find that he needs help in running the organization. An advisory board serves as the primary resource for the CEO to turn for help and advice. Members of an advisory board are trusted advisors who offer professional skills and talents at no cost to the organization. Advisory boards may also be formed in addition to an organization’s board to help and advise the board, as a whole. Advisory board members typically have established expertise or credentials in the nonprofit’s field. An organization that is visibly connected to an advisory board’s name, can increase the organization’s credibility, fundraising efforts, or public relation efforts.
2. Patron Governance Model
The Patron Model is similar to the Advisory Board Model. The main difference between the two models is that the primary purpose of the board members under the Patron Model is to perform duties related to fundraising. Patron Model boards are typically comprised of board members who have personal wealth or influence within the field. The primary role of board members under the Patron Model is to contribute their own funds to the organization and to use their network to gain outside contributions for the organization. Under this model, the board members have less influence over the CEO or organization’s board than in the Advisory Board Model.
3. Cooperative Governance Model
A board that operates without a CEO uses a Cooperative Model. The board makes consensual decisions as a group of peers, making it the most democratic governance model. There is no hierarchy and no one individual has power over another. The board exists only because the law requires its formation. This model requires that each member be equally committed to the organization and willing to take responsibility for the actions of the whole board.
4. Management Team Model
The most popular governance model for nonprofit organizations is the Management Team Model. This model is similar to how an organization administers its duties. Rather than hiring paid employees to be responsible for human resources, fund-raising, finance, planning, and programs, the board forms committees to perform those duties.
5. Policy Board Model
John Carver, author of “Boards that Make a Difference,” developed the Policy Board Model, which quickly became a staple platform for nonprofits. The board gives a high level of trust and confidence over to the CEO. The board has regular meetings with the CEO to get updates on the organization’s activities. Under this model, there are few standing committees. Board members should have a demonstrated commitment to the organization and be willing to grow in the knowledge and abilities regarding the organization.
Many nonprofit organizations will adopt one main model, such as Carver’s Policy Board Model, and add one or more boards to round out the needs of the organization. For example, a health organization may form an advisory board to advise them and a charity board to work on fundraising. Religious organizations operate under different rules than other non-profits. Churches, faith missions, and other religious organizations may add a religious board, so that they may be better stewards of their organization’s assets.
Corporate Governance Models
Adopting an appropriate governance model is only one step in setting the stage for good governance. Organizations need to establish guiding principles and policies for the organization, delegate responsibility and authority to individuals for enacting principles and policies, and to identify a path for accountability.
There are five notable corporate governance models in today’s business establishments:
1. Traditional Model
The Traditional Model is the oldest model for corporate governance. It’s a bit outdated by today’s standards, but it includes a useful template that continues to be used for establishing articles of incorporation. The Traditional Model gives legal responsibility to the collective board and the board speaks as one voice on all matters. The model identifies the structures, but the board outlines the processes as stated in the bylaws.
2. Carver Board Governance Model
As noted in the section on nonprofit models, the Carver Model works for nonprofit and for-profit organizations. The Carver Model places its focus on the “ends” of the organization’s purpose. This means the organization actively works towards what it needs to achieve or what it needs to do to put itself out of business. Within defined limits, the board gives the CEO the bulk of the responsibility for using the means to get to the ends.
3. Cortex Board Governance Model
The Cortex Model is a model that focuses on the value that the organization brings to the community. The board defines the standards, expectations, and performance outcomes according to the aspiration of the organization. Clarifying and setting outcomes to achieve success become the primary duties of the board under this model.
4. Consensus Board Governance Model
The Consensus, or Process Model, is a form of the Cooperative Model that nonprofit organizations use. It gives all board members an equal vote, equal responsibility, and equal liability. The Consensus Model is appropriate for corporations without major shareholders.
5. Competency Board Governance Model
A corporate board that is interested in developing the knowledge and skills of the board members will benefit from the Competency Model, a model that focuses on communication, trust, and relationships to improve overall board performance. The organization’s bylaws do the work of outlining practices and strategies.
While many board governance models can be used for either nonprofit or for-profit entities, depending upon the needs of the organization, certain types of models may be amenable to nonprofit organizations, while other models are more amenable to for-profit organizations. It’s common for boards to adopt a combination of board governance models that cater to the features of the organization and the composition of the board.
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France on strike: Unions say ‘non’ to higher pension age
PARIS (AP) — Demonstrators were marching across France on Tuesday in a new round of protests and strikes against the government’s plan to raise the retirement age to 64, in what unions hope to be their biggest show of force against the proposal.
Garbage collectors, utility workers, train drivers and others have walked off the job on Tuesday across France to show their anger at the reform .
More than 250 protests were expected in Paris and around the country against President Emmanuel Macron’s showcase legislation . The bill is under debate in the French Senate this week.
Tens of thousands of demonstrators took to the streets in Paris, Marseille, Nice and other cities, including Nantes and Lyon where some minor clashes with police broke out.
Laurent Berger, the secretary-general of the CFDT union, said that based on initial figures, the numbers of demonstrators nationwide are expected to be the biggest since the beginning of the movement in January.
Unions threatened to freeze up the French economy with work stoppages across multiple sectors, most visibly an open-ended strike at the SNCF national rail authority.
Philippe Martinez, head of the CGT union, said “the goal is that the government withdraw its draft reform. Full stop,” on news broadcaster FranceInfo.
Senate will grill Powell over Fed efforts to tame inflation
China's trade contracts as western demand weakens, us sees china propaganda efforts becoming more like russia's, sri lanka leader says imf deal imminent after china's pledge.
Some unions have called for open-ended strikes in sectors from refineries and oil depots to electricity and gas facilities. Workers in each sector will decided locally in the evening about whether to prolong the movement, Martinez said.
All oil shipments in the country have been halted on Tuesday amid strikes at the refineries of TotalEnergies, Esso-ExxonMobil and Petroineos groups, according to the CGT.
Truckers have sporadically blocked major highway arteries and interchanges in go-slow actions near several cities in French regions.
In Paris, garbage collectors have started an open-ended strike and blocked on Tuesday morning the access to the incineration plant of Ivry-sur-Seine, south of the capital, Europe’s biggest such facility.
“The job of a garbage collector is painful. We usually work very early or late ... 365 days per year. We usually have to carry heavy weight or stand up for hours to sweep,” said Regis Viecili, a 56-year-old garbage worker.
Some strikers said that such an intense rhythm has a negative impact on their daily life and that the job was so demanding that they often experienced tendinitis and aches. That’s why they have a special pension plan. But with the planned changes, they would have to retire at 59 instead of 57.
“A lot of garbage workers die before the retirement age,” Viceli said.
Figures from government statistics agency Insee showed that in the period 2009-2013, the latest period studied, the life expectancy of unskilled male workers was 6.4 years below the one of men in management positions — compared with 3.2 years of difference for female workers in each category.
A fifth of flights were canceled at Paris’ Charles de Gaulle Airport and about a third of flights were scrapped at Orly Airport. Trains to Germany and Spain were expected to come to a halt, and those to and from Britain and Belgium will be reduced by a third, according to the SNCF rail authority.
Most high-speed trains and regional trains have been canceled.
Public transportation and other services were disrupted in most French cities. In Paris, the Eiffel Tower was closed, as the Palace of Versailles, west of the capital.
According to the education ministry, about one third of teachers were on strike nationwide.
The government encouraged people to work from home if their jobs allow.
At Paris-Nord train station, some unionists voted to continue the strike Wednesday.
“We are convinced that the government will step back only if we block the economy,” said Xavier Bregail, a 40-year-old train driver in northern Paris. “We did strong demonstrations earlier, but it’s time to take the movement one step further.”
Bregail hoped the protests will turn into a broader movement against economic injustice.
“We often said we have to bring France to its knees but I think we should bring the world to its knees,” he said, citing nationwide strikes in Britain. “The subject behind this is inflation, soaring food and energy prices. I just want to live decently from my work.”
The reform would raise the minimum pension age from 62 to 64 and require 43 years of work by 2030 to earn a full pension, amid other measures. The government argues the system is expected to dive into deficit within a decade as France’s population ages and life expectancy lengthens.
Opinion polls suggest that most French voters oppose the bill.
At the Saint Lazare train station in Paris, Briki Mokrane, a 54-year-old fire safety worker, said “obviously it’s very very difficult for workers, but unfortunately in France it’s always the same: we have to have strikes or demonstrations to preserve our rights.”
Left-wing lawmakers say companies and the wealthy should pitch in more to finance the pension system.
France’s eight main unions and five youth organizations will meet on Tuesday evening to decide about the next steps of the mobilization.
Angela Charlton in Paris, and Barbara Surk in Nice, contributed to this story.

IMAGES
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COMMENTS
Government agencies are financed by taxes, fees, and service revenue, but are still accountable to deliver citizen value at scale. The idea that business models are just for business is just...
Business to government (B2G) is the sale and marketing of goods and services to federal, state, or local agencies. In modern lingo, there are three basic business models: business to consumer...
The business model — the representation of how an organization creates, delivers, and captures value — expanded in the late twentieth century to include the way in which Internet-based organizations conduct their activities ( Timmers, 1998 ).
Business to Government (B2G) refers to when a business sells products, information, or services to federal, state, or local government agencies. With this business model, businesses must bid for contracts by submitting responses to a request for proposal (RFP) solicited by a government agency.
It consists of 9 elements: value proposition, customer segments, customer relationships, channels, key partners, key resources, key activities, cost structure, and revenue streams. It can be used individually or in a group. It works in conjunction with the Value Proposition Canvas and other strategic management and execution tools and processes.
A business model is a company's core strategy for profitably doing business. Models generally include information like products or services the business plans to sell, target markets, and...
B2G and five others. Business-to-government is one of six business models. The others are: B2B (business-to-business). This means companies selling to other companies.; C2C (consumer-to-consumer). This model involves consumers selling to other consumers.If I sell my car to my next-door-neighbor, that is a C2C transaction.
It will form the basis of the Low Carbon Hydrogen Agreement, the business model contract between the government appointed counterparty and a low carbon hydrogen producer. The business...
Since the 1960s a range of business management models have been introduced in the public sector, including accrual accounting, management information systems, activity-based cost management, human resource management, customer relationship management and the like, which in most cases are in line with the tenets of New Public Management (NPM).
Carbon capture, usage and storage (CCUS): business models Updates on the proposed commercial frameworks for transport and storage, power, and industrial carbon capture business models. From:...
A number of innovative business models involve public infrastructure service, such as shared cars. Considering the regulating role of government in these industries, it is important to know what governmental features influence the development of such models.
A government business enterprise (GBE) is a government entity with the characteristics of a private business. Explore the definition and examples of GBEs to understand their purposes and how they ...
Business Function - Describes what the Federal government does at an aggregated level, leveraging the budget function classification codes provided in OMB Circular A‐11 Service - Further describes what the Federal government does at a secondary or component level Business Reference Model
Business-model innovation typically involves some fundamental re-combination of profits, incentives, risks, and rewards. Governments would do well to diversify their business models, moving...
Government-to-business (G2B) is a business model that refers to the government providing services or information to business organizations. The government uses the B2G model website to approach business organizations. Such websites support auctions, tenders and application submission functionalities. Peer-to-Peer (P2P)
A business model is a conceptual structure that supports the viability of the business and explains who the business serves, what it offers, how it offers it, and how it achieves its goals. ... A platform that lets sellers bid for government contracts is an example of a reverse auction based business model. Razor And Blades.
The ecommerce model includes the business-to-consumer, business-to-business, consumer-to-business and consumer-to-consumer models. Example: A jewelry maker with a small staff relies on online sales. It receives revenue without the expense of maintaining a physical store. 16. Manufacturer business model.
The GC BCM is a view of the whole Government of Canada as one large organization. Thus, one department's specific capability may be part of the bigger core capabilities of the GC BCM (mostly Section 6). GC BCM 2.0 Model Here are some benefits of business capabilities: provide a way to communicate between IT and business in a common language;
What is government to government (G2G)? Government to government (G2G) is a term used to describe interactions between governments, typically at the national level. These interactions can take a variety of forms, including diplomatic relations, economic cooperation, military alliances and so on.
model also covers the content of an e-government business model better in view of the fact that 208 M. Janssen et al. / Government Information Quarterly 25 (2008) 202 - 220 Author's personal copy
A business model is a specific method used to create and deliver this value. What Is Value in Business? A successful business creates something of value. The world is filled with opportunities to fulfill people's wants and needs, and your job as an entrepreneur is to find a way to capitalize on these opportunities.
Business-to-government (B2G) is a business model that refers to businesses selling products, services or information to governments or government agencies. B2G networks or models provide a way for businesses to bid on government projects or products that governments might purchase or need for their organizations. This can encompass public ...
There are five notable corporate governance models in today's business establishments: 1. Traditional Model. The Traditional Model is the oldest model for corporate governance. It's a bit outdated by today's standards, but it includes a useful template that continues to be used for establishing articles of incorporation.
The reform would raise the official pension age from 62 to 64 and require 43 years of work by 2030 to earn a full pension, amid other measures. The government argues the system is expected to dive into deficit within a decade as France's population ages and life expectancy lengthens. Opinion polls suggest that most French voters oppose the bill.