Business Strategy vs. Business Model

The terms are frequently used interchangeably, but they answer different questions. A business model describes the mechanics of value creation and capture: who the customer is, what is offered, how revenue is generated, and what the cost structure looks like (e.g., subscription, marketplace, freemium, direct sales).

A business strategy is more specific and competitive: it describes which arenas a company will compete in, how it will get there, and how it will win against particular rivals — the five facets captured by the Strategy Diamond.

Two companies can share the same business model (e.g., subscription software) while pursuing entirely different strategies (different arenas, different differentiators, different economic logic). Confusing the two often leads companies to mistake 'we have a working business model' for 'we have a strategy,' when the latter requires a specific, defensible answer to how the company will beat named competitors.