Although (as Markides points out) there is no widely accepted definition, Magretta defines business models as ‘stories that explain how enterprises work’, and follows Drucker in defining ‘a good business model’ as the one that provides answers to the following questions: ‘Who is the customer and what does the costumer value?’ and ‘What is the underlying economic
logic that explains how we can deliver value to customers at an appropriate cost?’ While not formal, her implicit idea is that a business model is about how an organization earns money by addressing these two fundamental issues e how it identifies and creates value for customers, and how it captures some of this value as its profit in the process