Andalusia PAU Business and Business Model Design cheat sheet

A firm is an economic unit combining productive factors under an entrepreneur's direction to create goods or services; its legal forms in Spain include the sole trader (empresario individual), the sociedad anónima (SA, minimum capital €60,000) and the sociedad limitada (SL, minimum capital €3,000).

Objectives are hierarchical: general or strategic aims (survival, growth, profit) are translated into tactical objectives by middle management and operational targets by first-line managers; each level must be measurable and time-bound.

Profit maximisation is a classic objective but conflicts with satisficing behaviour: managers pursue acceptable rather than maximal results because of bounded rationality and information limits.

Stakeholders are internal (owners/shareholders, managers, employees) and external (customers, suppliers, creditors, government, local community, competitors); each has an interest (stake) and a different degree of power, legitimacy and urgency.

Shareholder theory (Friedman) holds that the firm's only social responsibility is to increase profits within legal rules; stakeholder theory (Freeman) holds that the firm must balance the interests of all affected parties.

CSR is the voluntary integration of social, environmental and ethical concerns into strategy and operations, beyond legal obligation; in the EU it is framed as 'corporate social responsibility' and reported under the CSRD for large and listed firms.

The triple bottom line evaluates performance on three axes: economic (profit), social (people) and environmental (planet); a sustainable firm creates value on all three without depleting the capital that supports them.

The firm's environment has a general layer (political-legal, economic, socio-cultural, technological, ecological - PESTEL) and a specific layer (customers, suppliers, competitors, financial intermediaries, public administration).

Corporate governance is the set of rules and bodies (board of directors, shareholders' meeting, audit committee) that align managers' decisions with owners' interests and control agency conflicts.

Porter's five forces assess industry attractiveness: rivalry among existing competitors, threat of new entrants, threat of substitutes, bargaining power of buyers and bargaining power of suppliers; strong forces compress margins.

Porter's generic strategies are cost leadership, differentiation and focus (cost focus or differentiation focus); a firm 'stuck in the middle' pursues none clearly and earns below-average returns.

SWOT analysis crosses internal strengths and weaknesses with external opportunities and threats; it is a diagnostic, not a decision, and should feed directly into strategy choice.

The value chain (Porter) splits activities into primary (inbound logistics, operations, outbound logistics, marketing and sales, service) and support (firm infrastructure, HR, technology, procurement); competitive advantage arises where the firm performs activities differently or better.

Ansoff's growth matrix crosses products (existing/new) with markets (existing/new) giving four options: market penetration, product development, market development and diversification (related or unrelated).

Growth can be internal (investment in own capacity), external (mergers, acquisitions, joint ventures) or cooperative (strategic alliances); external growth is faster but carries integration and cultural risk.

A merger combines two firms into one; an acquisition buys control of another firm; a joint venture creates a new entity owned by two or more partners; an alliance coordinates without equity.

Vertical integration moves along the value chain (backward toward suppliers, forward toward customers); horizontal integration merges competitors at the same stage; diversification enters new products and markets.

Competitive advantage is sustainable when it is valuable, rare, hard to imitate and organisationally supported (VRIO), and when it rests on resources that are imperfectly mobile and not easily substituted.

A business model describes how a firm creates, delivers and captures value; the Business Model Canvas decomposes it into nine blocks: customer segments, value propositions, channels, customer relationships, revenue streams, key resources, key activities, key partnerships and cost structure.

A value proposition states the specific problem solved or benefit delivered for a segment, and why the offer is better than alternatives; it must be testable against customer evidence, not asserted.

Customer segments group buyers with similar needs, behaviours and willingness to pay; a mass market, niche market, segmented market, diversified market and multi-sided platform are the standard patterns.

Channels are the touchpoints through which value is delivered and communicated (own vs partner, direct vs indirect, physical vs digital); each channel has phases: awareness, evaluation, purchase, delivery and after-sales.

Revenue streams define how value is captured: asset sale, usage fee, subscription, lending/leasing, licensing, brokerage commission and advertising; each has a pricing mechanism (fixed list price, negotiation, auction, yield management).

Cost structure is either cost-driven (lean, low fixed cost, high volume) or value-driven (premium, fixed-cost intensive, customisation); economies of scale and economies of scope reduce unit cost as volume or variety grows.

Key partnerships (suppliers, allies, joint-venture partners) exist to optimise and economise, reduce risk and acquire resources; the make-or-buy decision compares transaction costs with internal coordination costs.

A business model is viable only if revenue streams exceed cost structure over time and the value proposition fits a segment that can be reached through the chosen channels at an acceptable acquisition cost.

The Business Model Canvas (Osterwalder) is a one-page, nine-block visual tool used to describe, compare and redesign business models; it is descriptive and static, not a validation method.

The Lean Canvas (Maurya) replaces four blocks with problem, solution, key metrics and unfair advantage, keeping customer segments, channels, revenue streams, cost structure and existing alternatives; it is designed for start-ups under uncertainty.

The Value Proposition Canvas pairs customer profile (jobs, pains, gains) with value map (products/services, pain relievers, gain creators) to test fit before building.

The Empathy Map records what a customer says, thinks, does and feels, separating explicit statements from inferred needs.

The Business Model Environment map (market forces, industry forces, key trends, macroeconomic forces) situates the canvas in its external context.

Metrics must be actionable, accessible and auditable; the pirate metrics framework (AARRR: acquisition, activation, retention, revenue, referral) tracks the customer lifecycle.

A model is validated by evidence from experiments (interviews, landing pages, prototypes, pre-sales), not by internal consensus; assumptions are ranked by importance and uncertainty before testing.

Unit economics check viability: contribution margin per customer = revenue per customer − variable cost per customer; customer lifetime value (LTV) should exceed customer acquisition cost (CAC), commonly by a factor of about 3.

Innovation is the successful implementation of a new idea in the market; invention is the creation of the idea itself, so innovation requires both novelty and adoption.

Types of innovation by object: product/service, process, organisational and commercial (marketing); by degree: incremental (improves existing) vs radical/disruptive (creates new markets or reshapes existing ones).

Schumpeter's creative destruction holds that entrepreneurs introduce new combinations (new goods, methods, markets, sources of supply, organisation) that displace incumbents.

Idea generation techniques include brainstorming, SCAMPER, morphological analysis, lead-user method and open innovation; screening then filters ideas by market fit, feasibility and resources.

The lean start-up loop is build–measure–learn: convert assumptions into a minimum viable product (MVP), measure real behaviour, and pivot or persevere based on evidence.

A pivot changes one core element of the model (segment, channel, value proposition, revenue model) while keeping what has been learned; persevering without evidence is a failure mode.

The start-up lifecycle runs from idea and validation to seed financing, growth and scaling; each stage has different capital needs and risk profiles.

Funding sources for new ventures include own savings, family and friends, business angels, venture capital, crowdfunding, public grants and bank loans; each imposes different cost, control and dilution.

The business plan documents the opportunity, market, model, team, financials and risks; it is a communication and planning instrument, not proof of viability.

Net present value: NPV = Σ CFt/(1+k)^t − initial investment; accept a project if NPV > 0, and among mutually exclusive projects choose the highest NPV.

Internal rate of return (IRR) is the discount rate k at which NPV = 0; accept if IRR > required rate of return; IRR can fail with non-conventional cash flows or multiple sign changes.

Payback period is the time to recover the initial outlay from cumulative cash flows; it ignores cash flows after payback and the time value of money (discounted payback corrects the latter).

The discount rate should reflect project risk; the weighted average cost of capital is WACC = (E/V)·Ke + (D/V)·Kd·(1−t), where t is the corporate tax rate.

Cash flows, not accounting profit, are the basis of appraisal; relevant flows are incremental and after tax, and exclude sunk costs and allocated fixed costs, while including opportunity costs and working-capital changes.

Financing sources: internal (retained earnings/self-financing) and external; external is own capital (shares, reserves) or borrowed capital (bank loans, bonds, leasing); short-term vs long-term depends on the asset financed.

Leverage effect: if the return on assets exceeds the cost of debt, borrowing raises return on equity; if not, it reduces it, and it always raises financial risk.

Break-even point in units = fixed costs / (price − variable cost per unit); the margin of safety = (actual sales − break-even sales) / actual sales.

Working capital = current assets − current liabilities; the cash conversion cycle = days inventory + days receivable − days payable.

The balance sheet lists assets (non-current and current), equity and liabilities (non-current and current) at a point in time; the accounting equation is Assets = Equity + Liabilities.

The income statement reports revenue minus expenses over a period, arriving at profit before tax and net profit; the statement of cash flows splits operating, investing and financing flows.

Liquidity ratios: current ratio = current assets / current liabilities (around 1.5–2 is often cited); acid-test = (current assets − inventory) / current liabilities.

Solvency ratios: debt ratio = total liabilities / total assets; debt-to-equity = liabilities / equity; interest coverage = EBIT / interest expense.

Profitability ratios: return on equity ROE = net profit / equity; return on assets ROA = EBIT or net profit / total assets; net margin = net profit / sales.

Efficiency ratios: asset turnover = sales / total assets; inventory turnover = cost of sales / average inventory; days sales outstanding = 365 / receivables turnover.

Horizontal analysis compares items across years as percentage change; vertical analysis expresses each item as a percentage of a base (total assets or sales).

Window dressing and differing accounting policies (depreciation methods, inventory valuation FIFO vs weighted average) limit comparability; ratios must be read with the notes and the industry benchmark.

The audit report and notes qualify the reliability of statements; a qualified opinion signals that specific items may not be fairly presented.

A formal organisation has explicit structure, rules and authority; the informal organisation consists of unplanned relationships, norms and communication channels that also shape behaviour.

Organisational structures: functional (grouped by speciality), divisional (by product, market or geography), matrix (dual reporting), and network/holacracy; each trades coordination cost against responsiveness.

Span of control is the number of subordinates per manager; a wide span flattens the hierarchy and needs standardised work, while a narrow span increases levels and cost.

Centralisation concentrates decision authority at the top; decentralisation pushes it down, improving speed and motivation at the cost of consistency.

Mechanistic structures are highly formalised and suitable for stable environments; organic structures are flexible, low-formalisation and suited to uncertain environments (Burns and Stalker).

HR functions: recruitment and selection, training and development, performance appraisal, compensation and benefits, and labour relations; each must align with strategy (strategic HRM).

Motivation theories: Maslow's hierarchy, Herzberg's two factors (hygiene vs motivators), Vroom's expectancy theory (motivation = expectancy × instrumentality × valence) and equity theory.

Team development follows Tuckman's stages: forming, storming, norming, performing (and adjourning); leadership styles range from autocratic to democratic to laissez-faire, or transactional vs transformational.

Sustainable development meets present needs without compromising the ability of future generations to meet theirs (Brundtland definition); for firms it means economic, social and environmental value jointly.

The triple bottom line (Elkington) measures profit, people and planet; sustainability reporting under the EU CSRD requires double materiality (financial and impact materiality).

ESG criteria: environmental (emissions, energy, waste, water), social (labour standards, health and safety, diversity, community) and governance (board independence, ethics, transparency, anti-corruption).

The circular economy replaces take-make-dispose with reduce, reuse, repair, remanufacture and recycle; the R-framework and life-cycle assessment operationalise it.

The tragedy of the commons and negative externalities explain why environmental costs are often unpriced; policy instruments include taxes, cap-and-trade permits, regulation and extended producer responsibility.

Codes of ethics and compliance programmes set standards and controls; whistleblowing channels and ethics committees detect misconduct; greenwashing is unsubstantiated sustainability marketing.

Fair trade and social economy organisations prioritise cooperative ownership and fair pricing; B Corp certification measures verified social and environmental performance.

Sustainable finance links capital allocation to ESG: green bonds, sustainability-linked loans and ESG ratings; the EU taxonomy defines which activities count as environmentally sustainable.

A firm is an economic unit combining productive factors under an entrepreneur's direction to create goods or services; its legal forms in Spain include the sole trader (empresario individual), the sociedad anónima (SA, minimum capital €60,000) and the sociedad limitada (SL, minimum capital €3,000).

Objectives are hierarchical: general or strategic aims (survival, growth, profit) are translated into tactical objectives by middle management and operational targets by first-line managers; each level must be measurable and time-bound.

Profit maximisation is a classic objective but conflicts with satisficing behaviour: managers pursue acceptable rather than maximal results because of bounded rationality and information limits.

Stakeholders are internal (owners/shareholders, managers, employees) and external (customers, suppliers, creditors, government, local community, competitors); each has an interest (stake) and a different degree of power, legitimacy and urgency.

Shareholder theory (Friedman) holds that the firm's only social responsibility is to increase profits within legal rules; stakeholder theory (Freeman) holds that the firm must balance the interests of all affected parties.

CSR is the voluntary integration of social, environmental and ethical concerns into strategy and operations, beyond legal obligation; in the EU it is framed as 'corporate social responsibility' and reported under the CSRD for large and listed firms.

The triple bottom line evaluates performance on three axes: economic (profit), social (people) and environmental (planet); a sustainable firm creates value on all three without depleting the capital that supports them.

The firm's environment has a general layer (political-legal, economic, socio-cultural, technological, ecological - PESTEL) and a specific layer (customers, suppliers, competitors, financial intermediaries, public administration).

Corporate governance is the set of rules and bodies (board of directors, shareholders' meeting, audit committee) that align managers' decisions with owners' interests and control agency conflicts.

Porter's five forces assess industry attractiveness: rivalry among existing competitors, threat of new entrants, threat of substitutes, bargaining power of buyers and bargaining power of suppliers; strong forces compress margins.

Porter's generic strategies are cost leadership, differentiation and focus (cost focus or differentiation focus); a firm 'stuck in the middle' pursues none clearly and earns below-average returns.

SWOT analysis crosses internal strengths and weaknesses with external opportunities and threats; it is a diagnostic, not a decision, and should feed directly into strategy choice.

The value chain (Porter) splits activities into primary (inbound logistics, operations, outbound logistics, marketing and sales, service) and support (firm infrastructure, HR, technology, procurement); competitive advantage arises where the firm performs activities differently or better.

Ansoff's growth matrix crosses products (existing/new) with markets (existing/new) giving four options: market penetration, product development, market development and diversification (related or unrelated).

Growth can be internal (investment in own capacity), external (mergers, acquisitions, joint ventures) or cooperative (strategic alliances); external growth is faster but carries integration and cultural risk.

A merger combines two firms into one; an acquisition buys control of another firm; a joint venture creates a new entity owned by two or more partners; an alliance coordinates without equity.

Vertical integration moves along the value chain (backward toward suppliers, forward toward customers); horizontal integration merges competitors at the same stage; diversification enters new products and markets.

Competitive advantage is sustainable when it is valuable, rare, hard to imitate and organisationally supported (VRIO), and when it rests on resources that are imperfectly mobile and not easily substituted.

A business model describes how a firm creates, delivers and captures value; the Business Model Canvas decomposes it into nine blocks: customer segments, value propositions, channels, customer relationships, revenue streams, key resources, key activities, key partnerships and cost structure.

A value proposition states the specific problem solved or benefit delivered for a segment, and why the offer is better than alternatives; it must be testable against customer evidence, not asserted.

Customer segments group buyers with similar needs, behaviours and willingness to pay; a mass market, niche market, segmented market, diversified market and multi-sided platform are the standard patterns.

Channels are the touchpoints through which value is delivered and communicated (own vs partner, direct vs indirect, physical vs digital); each channel has phases: awareness, evaluation, purchase, delivery and after-sales.

Revenue streams define how value is captured: asset sale, usage fee, subscription, lending/leasing, licensing, brokerage commission and advertising; each has a pricing mechanism (fixed list price, negotiation, auction, yield management).

Cost structure is either cost-driven (lean, low fixed cost, high volume) or value-driven (premium, fixed-cost intensive, customisation); economies of scale and economies of scope reduce unit cost as volume or variety grows.

Key partnerships (suppliers, allies, joint-venture partners) exist to optimise and economise, reduce risk and acquire resources; the make-or-buy decision compares transaction costs with internal coordination costs.

A business model is viable only if revenue streams exceed cost structure over time and the value proposition fits a segment that can be reached through the chosen channels at an acceptable acquisition cost.

The Business Model Canvas (Osterwalder) is a one-page, nine-block visual tool used to describe, compare and redesign business models; it is descriptive and static, not a validation method.

The Lean Canvas (Maurya) replaces four blocks with problem, solution, key metrics and unfair advantage, keeping customer segments, channels, revenue streams, cost structure and existing alternatives; it is designed for start-ups under uncertainty.

The Value Proposition Canvas pairs customer profile (jobs, pains, gains) with value map (products/services, pain relievers, gain creators) to test fit before building.

The Empathy Map records what a customer says, thinks, does and feels, separating explicit statements from inferred needs.

The Business Model Environment map (market forces, industry forces, key trends, macroeconomic forces) situates the canvas in its external context.

Metrics must be actionable, accessible and auditable; the pirate metrics framework (AARRR: acquisition, activation, retention, revenue, referral) tracks the customer lifecycle.

A model is validated by evidence from experiments (interviews, landing pages, prototypes, pre-sales), not by internal consensus; assumptions are ranked by importance and uncertainty before testing.

Unit economics check viability: contribution margin per customer = revenue per customer − variable cost per customer; customer lifetime value (LTV) should exceed customer acquisition cost (CAC), commonly by a factor of about 3.

Innovation is the successful implementation of a new idea in the market; invention is the creation of the idea itself, so innovation requires both novelty and adoption.

Types of innovation by object: product/service, process, organisational and commercial (marketing); by degree: incremental (improves existing) vs radical/disruptive (creates new markets or reshapes existing ones).

Schumpeter's creative destruction holds that entrepreneurs introduce new combinations (new goods, methods, markets, sources of supply, organisation) that displace incumbents.

Idea generation techniques include brainstorming, SCAMPER, morphological analysis, lead-user method and open innovation; screening then filters ideas by market fit, feasibility and resources.

The lean start-up loop is build–measure–learn: convert assumptions into a minimum viable product (MVP), measure real behaviour, and pivot or persevere based on evidence.

A pivot changes one core element of the model (segment, channel, value proposition, revenue model) while keeping what has been learned; persevering without evidence is a failure mode.

The start-up lifecycle runs from idea and validation to seed financing, growth and scaling; each stage has different capital needs and risk profiles.

Funding sources for new ventures include own savings, family and friends, business angels, venture capital, crowdfunding, public grants and bank loans; each imposes different cost, control and dilution.

The business plan documents the opportunity, market, model, team, financials and risks; it is a communication and planning instrument, not proof of viability.

Net present value: NPV = Σ CFt/(1+k)^t − initial investment; accept a project if NPV > 0, and among mutually exclusive projects choose the highest NPV.

Internal rate of return (IRR) is the discount rate k at which NPV = 0; accept if IRR > required rate of return; IRR can fail with non-conventional cash flows or multiple sign changes.

Payback period is the time to recover the initial outlay from cumulative cash flows; it ignores cash flows after payback and the time value of money (discounted payback corrects the latter).

The discount rate should reflect project risk; the weighted average cost of capital is WACC = (E/V)·Ke + (D/V)·Kd·(1−t), where t is the corporate tax rate.

Cash flows, not accounting profit, are the basis of appraisal; relevant flows are incremental and after tax, and exclude sunk costs and allocated fixed costs, while including opportunity costs and working-capital changes.

Financing sources: internal (retained earnings/self-financing) and external; external is own capital (shares, reserves) or borrowed capital (bank loans, bonds, leasing); short-term vs long-term depends on the asset financed.

Leverage effect: if the return on assets exceeds the cost of debt, borrowing raises return on equity; if not, it reduces it, and it always raises financial risk.

Break-even point in units = fixed costs / (price − variable cost per unit); the margin of safety = (actual sales − break-even sales) / actual sales.

Working capital = current assets − current liabilities; the cash conversion cycle = days inventory + days receivable − days payable.

The balance sheet lists assets (non-current and current), equity and liabilities (non-current and current) at a point in time; the accounting equation is Assets = Equity + Liabilities.

The income statement reports revenue minus expenses over a period, arriving at profit before tax and net profit; the statement of cash flows splits operating, investing and financing flows.

Liquidity ratios: current ratio = current assets / current liabilities (around 1.5–2 is often cited); acid-test = (current assets − inventory) / current liabilities.

Solvency ratios: debt ratio = total liabilities / total assets; debt-to-equity = liabilities / equity; interest coverage = EBIT / interest expense.

Profitability ratios: return on equity ROE = net profit / equity; return on assets ROA = EBIT or net profit / total assets; net margin = net profit / sales.

Efficiency ratios: asset turnover = sales / total assets; inventory turnover = cost of sales / average inventory; days sales outstanding = 365 / receivables turnover.

Horizontal analysis compares items across years as percentage change; vertical analysis expresses each item as a percentage of a base (total assets or sales).

Window dressing and differing accounting policies (depreciation methods, inventory valuation FIFO vs weighted average) limit comparability; ratios must be read with the notes and the industry benchmark.

The audit report and notes qualify the reliability of statements; a qualified opinion signals that specific items may not be fairly presented.

A formal organisation has explicit structure, rules and authority; the informal organisation consists of unplanned relationships, norms and communication channels that also shape behaviour.

Organisational structures: functional (grouped by speciality), divisional (by product, market or geography), matrix (dual reporting), and network/holacracy; each trades coordination cost against responsiveness.

Span of control is the number of subordinates per manager; a wide span flattens the hierarchy and needs standardised work, while a narrow span increases levels and cost.

Centralisation concentrates decision authority at the top; decentralisation pushes it down, improving speed and motivation at the cost of consistency.

Mechanistic structures are highly formalised and suitable for stable environments; organic structures are flexible, low-formalisation and suited to uncertain environments (Burns and Stalker).

HR functions: recruitment and selection, training and development, performance appraisal, compensation and benefits, and labour relations; each must align with strategy (strategic HRM).

Motivation theories: Maslow's hierarchy, Herzberg's two factors (hygiene vs motivators), Vroom's expectancy theory (motivation = expectancy × instrumentality × valence) and equity theory.

Team development follows Tuckman's stages: forming, storming, norming, performing (and adjourning); leadership styles range from autocratic to democratic to laissez-faire, or transactional vs transformational.

Sustainable development meets present needs without compromising the ability of future generations to meet theirs (Brundtland definition); for firms it means economic, social and environmental value jointly.

The triple bottom line (Elkington) measures profit, people and planet; sustainability reporting under the EU CSRD requires double materiality (financial and impact materiality).

ESG criteria: environmental (emissions, energy, waste, water), social (labour standards, health and safety, diversity, community) and governance (board independence, ethics, transparency, anti-corruption).

The circular economy replaces take-make-dispose with reduce, reuse, repair, remanufacture and recycle; the R-framework and life-cycle assessment operationalise it.

The tragedy of the commons and negative externalities explain why environmental costs are often unpriced; policy instruments include taxes, cap-and-trade permits, regulation and extended producer responsibility.

Codes of ethics and compliance programmes set standards and controls; whistleblowing channels and ethics committees detect misconduct; greenwashing is unsubstantiated sustainability marketing.

Fair trade and social economy organisations prioritise cooperative ownership and fair pricing; B Corp certification measures verified social and environmental performance.

Sustainable finance links capital allocation to ESG: green bonds, sustainability-linked loans and ESG ratings; the EU taxonomy defines which activities count as environmentally sustainable.