PAU Business & Business Model Design (Cantabria) cheat sheet

Primary sector extracts raw materials (farming, mining, fishing); secondary transforms them (manufacturing, construction); tertiary provides services (retail, banking, transport).

Sole trader: unlimited liability, no minimum capital, taxed via personal income tax; the owner and the business are one legal person.

Sociedad Anónima (SA): minimum share capital €60,000, of which at least 25% must be paid up at incorporation; shares freely transferable.

Sociedad de Responsabilidad Limitada (SL): minimum capital €3,000, fully paid up; liability limited to capital contributed; transfer of shares restricted.

Cooperatives: members hold one vote each regardless of capital contributed; profits distributed according to cooperative statutes, partly to a reserve fund.

Stakeholders: shareholders (return), employees (pay and security), customers (value), suppliers (payment), government (tax and regulation), society (externalities).

Objectives hierarchy: mission (purpose) → vision (future state) → strategic objectives (long term) → tactical (functional) → operational (short term, day-to-day).

Agency problem: separation of ownership and control lets managers pursue their own goals; mitigated by incentives, board oversight and transparency.

Value proposition = the bundle of benefits a customer receives; value creation = activities producing it; value capture = the share of value the firm retains as profit.

Business Model Canvas has nine blocks: customer segments, value propositions, channels, customer relationships, revenue streams, key resources, key activities, key partnerships, cost structure.

Revenue streams may be transaction-based (one-off sale), recurring (subscription), licensing, advertising or usage-based; pricing can be fixed or dynamic.

Cost structure distinction: cost-driven (minimise cost, low price) versus value-driven (premium features, high price); costs are fixed or variable.

Business model innovation changes at least two canvas blocks simultaneously, not merely a product improvement; examples: freemium, razor-and-blade, leasing instead of selling.

Platform models create value by matching two or more user groups and capture value via commissions or advertising; they exhibit network effects.

Disintermediation removes an intermediary from the chain; reintermediation inserts a new type of intermediary (e.g. an online aggregator).

A model is financially viable when revenue per customer exceeds the sum of variable cost per customer plus allocated fixed cost at the planned volume.

Productivity = outputs / inputs; multi-factor productivity uses a weighted or monetary measure of total inputs.

Break-even quantity Q = Fixed costs / (Price − Variable cost per unit); margin of safety = (actual sales − break-even sales) / actual sales.

Process types: project, job shop, batch, mass/line, continuous - chosen by volume and variety; high volume with low variety favours line or continuous.

Capacity utilisation = actual output / maximum possible output × 100; low utilisation raises unit fixed cost.

Economic order quantity EOQ = √(2DS/H), where D = annual demand, S = order cost, H = holding cost per unit per year.

Just-in-time reduces inventory and holding cost but increases dependence on supplier reliability and leaves little buffer against disruption.

Quality costs: prevention and appraisal (cost of good quality) versus internal and external failure (cost of poor quality); external failure is usually the most expensive.

Deming's PDCA cycle: Plan, Do, Check, Act; kaizen is continuous incremental improvement; Six Sigma targets 3.4 defects per million opportunities.

Market segmentation criteria must be measurable, accessible, substantial and actionable; targeting selects segments; positioning defines the perceived place in the customer's mind.

Marketing mix (4Ps): Product, Price, Place, Promotion; services add People, Process and Physical evidence (7Ps).

Price elasticity of demand = % change in quantity demanded / % change in price; |E| > 1 elastic (revenue rises when price falls), |E| < 1 inelastic.

Product life cycle: introduction, growth, maturity, decline; maturity typically shows peak sales with falling margins and strongest competition.

BCG matrix: stars (high growth, high share), cash cows (low growth, high share), question marks (high growth, low share), dogs (low growth, low share).

Distribution intensity: intensive (convenience goods), selective, exclusive; channel length = number of intermediaries between producer and consumer.

AIDA model of promotion: Attention, Interest, Desire, Action; promotional mix = advertising, sales promotion, personal selling, public relations, direct/digital.

Digital marketing metrics: CTR = clicks / impressions; conversion rate = conversions / visits; CAC = total acquisition cost / new customers; ROI = (gain − cost) / cost.

Accounting equation: Assets = Liabilities + Equity; the balance sheet is a snapshot at a date, the income statement covers a period.

Current ratio = current assets / current liabilities (≈2 acceptable in many sectors); acid-test = (current assets − inventory) / current liabilities.

ROE = net profit / equity; ROA = net profit / total assets; these decompose via DuPont into margin × turnover × leverage.

Gearing = debt / (debt + equity) or debt / equity; higher gearing raises financial risk and fixed interest obligations.

NPV = Σ CFt / (1 + r)^t − initial outlay; accept if NPV > 0. IRR is the discount rate making NPV = 0; accept if IRR > cost of capital.

Payback period = time to recover the initial outlay from cumulative cash flows; it ignores cash flows after payback and the time value of money.

ARR = average annual accounting profit / average investment × 100%; it uses profit, not cash flow, so it is not a discounted method.

Sources of finance: internal (retained earnings), external short term (overdraft, trade credit), long term (bank loan, bonds, equity issue, leasing, venture capital).

Maslow's hierarchy: physiological, safety, social, esteem, self-actualisation - lower needs must be broadly satisfied before higher ones motivate.

Herzberg two-factor theory: hygiene factors (pay, conditions, policy) prevent dissatisfaction; motivators (achievement, recognition, responsibility) create satisfaction.

Taylor's scientific management: task specialisation, time-and-motion study, piece-rate pay; McGregor Theory X assumes workers dislike work, Theory Y assumes they seek responsibility.

Leadership styles: autocratic (fast, low participation), democratic (higher commitment, slower), laissez-faire (high autonomy, weak control), situational (style adapts to maturity of followers).

Span of control = number of subordinates per manager; a wide span with many levels removed flattens the hierarchy and shortens communication lines.

Organisational structures: functional (grouped by specialism), divisional (by product or market), matrix (dual reporting - combines functional and project authority).

Recruitment process: job analysis → job description and person specification → sourcing → selection (interview, testing, assessment centre) → induction.

Labour turnover = leavers / average number of employees × 100; absenteeism = days lost / total possible working days × 100.

Porter's five forces: rivalry, threat of new entrants, threat of substitutes, bargaining power of buyers, bargaining power of suppliers.

Porter's generic strategies: cost leadership, differentiation, focus (cost focus or differentiation focus); being stuck in the middle risks low profitability.

SWOT is internal (strengths, weaknesses) plus external (opportunities, threats); PESTEL covers political, economic, social, technological, environmental, legal factors.

Ansoff matrix: market penetration (existing product/market), product development, market development, diversification (highest risk).

Growth methods: organic (internal, slower, lower risk), merger or acquisition (fast, integration risk), joint venture or strategic alliance (shared cost and control).

Horizontal integration merges competitors at the same stage; vertical integration moves along the chain - backward toward suppliers, forward toward customers.

Internationalisation drivers: market seeking, resource seeking, efficiency seeking, strategic asset seeking; entry modes range from exporting (low commitment) to FDI (high control, high risk).

Porter's diamond explains national competitive advantage via factor conditions, demand conditions, related and supporting industries, and firm strategy/structure/rivalry.