What's a business model?

Excerpts from HBS working knowledge article, by Henry Chesbrough and Richard S. Rosenbloom.

This term "Business Model" is widely used, but seldom well defined. In our usage, the functions of a Business Model are to:
1 identify a market segment, that is, the users to whom the technology is useful and for what purpose;
2 articulate the value proposition, that is, the value created for users by the offering based on the technology;
3 define the structure of the value chain, that is, the network of activities within the firm required to create and distribute the products or services offered to customers;
4 estimate the cost structure and profit potential of producing the offering, given the value proposition and value chain structure chosen;
5 describe the position of the firm within the value network linking suppliers and customers, including identification of potential complementors and competitors;
6 formulate the competitive strategy by which the innovating firm will gain and hold advantage over rivals