BUSINESS111 Chap.2 Purpose, Business Models and Impact
Purpose, Business Models and Impact
Why a business exists and how it delivers
Week 2 argues that impact depends on two decisions: an organisation's purpose and the business model that translates it into action.
The chapter explains purpose statements, the meaning of value, and the three business-model components the course uses: value creation, value configuration and value capture.
Different logics of value
It then places enterprises on a continuum from philanthropic to commercial and examines Māori business models, where collective ownership, consensus decision-making and a kaitiaki-centred view of well-being reshape each component.
Using the model in later weeks
The three components return in Week 10, where each form of innovation is linked to value creation, configuration or capture.
Learning them precisely now makes that later analysis much easier. The chapter's practice cards ask you to find the weakest component in a model and to explain how values reshape a model, two moves that transfer directly to the innovation questions in the final exam.
What this chapter covers
- 01
Organisational purpose and the question of why
- 02
Value and its functional, emotional and social dimensions
- 03
Value creation, configuration and capture
- 04
Balancing creation with capture
- 05
The philanthropic to commercial continuum
- 06
Māori business models and the kaitiaki-centred view
Worked example · free
Diagnose a business model with three questions
- 2Describe the value created and for whom.
- 2Identify the configuration: resources, activities and partners.
- 2Judge value capture and recommend a fix.
Key terms
- Organisational Purpose
- A clear statement of why a business exists and the principles that guide its operations.
- Business Model
- The way an organisation creates value for customers and captures enough of it to cover its costs and survive.
- Value Capture
- How an organisation retains enough of the value it creates to remain viable.
- Kaitiakitanga
- Guardianship of resources and the environment, a core value in Māori business models.
- Value Creation
- What an organisation offers, to whom, and how it meets their needs.
- Social Enterprise
- An organisation that blends commercial activity with a social or environmental purpose.
Purpose, Business Models and Impact FAQ
What is the difference between value creation and value configuration?
Creation describes what customers receive, who they are and how the offering reaches them. Configuration describes the resources, activities, structure and partners that make that delivery possible. A supplier partnership belongs to configuration, while the benefit a customer feels belongs to creation.
Do non-profit organisations need value capture?
Yes. Canvas notes that even a charity must bring in enough revenue to break even. What differs along the continuum is how captured value is used and who it is meant to benefit, not whether capture matters.
How do Māori business models differ from mainstream ones?
They use the same components but infuse each with Māori values: purpose extends to intergenerational stewardship, value is pursued across cultural, social, environmental and economic dimensions, resources are often collectively owned, and decisions are reached by consensus.
What does value mean in a business model?
Canvas defines value as the benefit a business provides by addressing a customer's or stakeholder's needs, problems or desires. It can be functional, such as quality or convenience; emotional, such as trust or status; or social, such as belonging or impact.
What does the value capture component include?
It covers how the organisation earns revenue, for example through subscriptions or single sales, which costs matter most, and which non-monetary value it can keep, such as user data. The question it answers is whether the organisation retains enough value to remain viable.
Why is purpose linked to the business model?
Canvas explains that purpose sets the general direction for decisions while the business model translates that purpose into strategies, decisions and actions. A model that ignores the purpose may earn money but will not create the impact the organisation exists for.
Exam move
Pick a business you use every week and write its purpose in one sentence. Then answer the course's component questions for it: what it sells and to whom, which resources and partners it relies on, and how it makes money. Mark the component you think is weakest and say why. Repeat for a social enterprise you know, and note how the purpose changes what happens to captured value.
Finally, compare a purely commercial firm with a social enterprise in the same industry and note where their value capture differs. Keep the analysis to one page so it stays usable as a revision sheet. Say aloud which component each fact in your analysis belongs to.
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