Even though the concept of business model dates back to the initial days of business, it simply outlines the manner in which an organization generates money. A business model could be simple or highly multifaceted. For instance, business model of a retail store like Tesco is to make money through developing and offering products to buyers. The business model of Tesco highlights the way how it applies its resources to its selected areas across the entire life-cycle of a product in order to assist in delivering company’s strategic priorities and adding value. Tesco creates and preserves value through making investment in and operating lengthy-life, low-cost, extendable operations within the highly attractive market segments.
From the initial phases of exploration, in assets’ productive live stages, and all through the restoration and closure phase, Tesco commits to superior standards of sustainable growth. The company’s goals are simple i.e. to continue investing within advanced network as well as consumer experience and sustaining superior levels of cash creation with which the company could reward shareholders and invest again in the business – thus, upholding that virtuous circle. Further, the formal recognition of a company business model within the Annual Report is a good idea to only some extend. It is not a productive act for any company to reveal all its revenue sources and exactly how it generates revenue in the public. If it does so it might become difficult for it to survive in highly competitive world as everything would be made public. The below sections highlight problems in interpreting the concept within accounting conventions.