Castilla y León PAU Business and Business Model Design cheat sheet

Economic activity combines scarce productive resources (land, labour, capital, entrepreneurship) to produce goods and services that satisfy needs; the opportunity cost of a choice is the value of the best alternative forgone.

The business environment splits into general (PESTEL: political, economic, socio-cultural, technological, ecological, legal) and specific (customers, suppliers, competitors, intermediaries, financial institutions, public administration).

Primary sector extracts natural resources, secondary transforms them, tertiary delivers services; in developed economies tertiary typically exceeds 60% of employment and value added.

Business functions: production/operations, marketing, finance, human resources, and research & development; they must be coordinated because decisions in one constrain the others.

Objectives are commonly classified as economic (profit, growth, profitability, market share) versus social (employee welfare, environmental responsibility); profit maximisation is a theoretical assumption, not a description of real behaviour.

Stakeholders are internal (owners/shareholders, managers, workers) or external (customers, suppliers, creditors, unions, government, local community, society); shareholder and stakeholder interests can conflict over wages, prices and pollution.

Corporate social responsibility and the triple bottom line (economic, social, environmental) extend the objective set beyond profit; sustainability reporting is voluntary in most jurisdictions but increasingly expected by investors.

Business reputation, brand value and know-how are intangible assets not always on the balance sheet; they are sources of competitive advantage that are hard for rivals to copy.

The legal environment affects the firm through labour law, consumer protection, competition law and tax rules; the economic environment through interest rates, inflation, exchange rates and the business cycle (expansion, peak, recession, recovery).

Sole trader (empresario individual): unlimited personal liability, no minimum capital, taxed through personal income tax (IRPF), business name cannot include a company suffix; suited to small activity with low risk.

Sociedad Limitada (S.L.): capital divided into participaciones, legal minimum capital 3,000 euros fully subscribed and paid, liability limited to capital contributed, transfer of shares restricted; the most common company form in Spain.

Sociedad Anónima (S.A.): capital divided into freely transferable shares, minimum capital 60,000 euros of which at least 25% must be paid on incorporation, suitable for large capital-raising projects.

Sociedad Cooperativa: members contribute capital and work, one member one vote in most classes, profit distributed according to cooperative statutes; special tax regime available.

Sociedad Laboral (S.L.L. or S.A.L.): at least 51% of capital held by employees with indefinite contracts, no member may hold more than one third except public bodies; tax advantages apply.

Other forms: comunidad de bienes and sociedad civil (no separate legal personality, unlimited liability), sociedad comanditaria (partners with and without management), and the S.L. Nueva Empresa (fast online incorporation, 3,000-120,000 euros capital).

Incorporation steps: name certification from the Mercantile Registry, opening a bank account and depositing capital, public deed before a notary, registration in the Mercantile Registry, then tax identification and Social Security registration of the company and its workers.

Classification criteria: number of owners (individual versus social), liability (limited versus unlimited), legal personality (separate or not), size (micro, small, medium, large by staff and turnover) and ownership (private, public, mixed, cooperative).

Porter's generic strategies: cost leadership, differentiation and focus (cost focus or differentiation focus); being 'stuck in the middle' without a clear advantage usually yields below-average returns.

Porter's five forces: rivalry among existing competitors, threat of new entrants, threat of substitutes, bargaining power of buyers, bargaining power of suppliers; high combined force intensity means low industry profitability.

SWOT crosses internal strengths and weaknesses with external opportunities and threats; its output must feed a decision rule (SO grow, WO fix, ST defend, WT avoid), not just a list.

PESTEL analyses the macro environment; Porter's value chain separates primary activities (inbound logistics, operations, outbound logistics, marketing and sales, service) from support activities (firm infrastructure, HR, technology, procurement).

Ansoff matrix: market penetration (existing product, existing market), product development, market development, diversification (related or unrelated, the highest risk).

Growth routes: internal (investment in own capacity), external (merger, acquisition, takeover), and cooperative (joint venture, strategic alliance, franchise, licensing); each trades control against speed and cost.

Internationalisation: exporting (low commitment), licensing/franchising, joint venture, and wholly owned subsidiary or foreign direct investment (highest commitment and control); drivers include market seeking, efficiency seeking, resource seeking and strategic asset seeking.

Decision-making under uncertainty uses expected value (probability-weighted outcomes), decision trees, break-even analysis and payback; bounded rationality and satisficing (Simon) explain why real managers accept 'good enough' options.

Competitive advantage must be valuable, rare, hard to imitate and organisationally exploitable (VRIO) to be sustainable; a strategy is only a plan until resources and capabilities support it.

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

Value proposition states the specific problem solved or benefit delivered per segment; it must be testable against customer needs and different from competitors' offers.

Customer segments are groups with distinct needs, behaviours or willingness to pay; segmentation criteria include geographic, demographic, psychographic and behavioural variables.

Channels cover awareness, evaluation, purchase, delivery and after-sales; they can be own or partner, direct or indirect, physical or digital, each with different cost and control trade-offs.

Revenue streams are transaction-based (one-off sale) or recurring (subscription, licence, lease, usage fee, advertising, commission); pricing can be fixed (list price, feature-dependent) or dynamic (negotiation, yield management, auction).

Cost structure is either cost-driven (lean, low price, automation, outsourcing) or value-driven (premium, customisation); costs are fixed, variable, economies of scale and economies of scope.

The lean canvas substitutes problem, solution, key metrics and unfair advantage for the resource, activity and partner blocks to fit early-stage startups.

Business model innovation changes the logic of value creation or capture (e.g. razor-and-blades, freemium, platform/multi-sided, subscription); it can disrupt incumbents without any product change.

Market research: define the problem, design the study, collect data, analyse, report; primary data (surveys, interviews, observation, experiments) versus secondary data (already published, cheaper and faster but possibly outdated).

Sampling: probability methods (random, stratified, cluster) allow inference to the population; non-probability methods (convenience, quota) do not support statistical generalisation.

Marketing mix 4Ps: product (attributes, branding, packaging, life cycle), price (cost-plus, value-based, penetration, skimming, psychological, discriminatory), place (channel length and width, distribution intensity) and promotion (advertising, sales promotion, personal selling, public relations, direct marketing).

Services add three Ps: people, processes and physical evidence, because services are intangible, inseparable, variable and perishable.

Product life cycle stages (introduction, growth, maturity, decline) drive price, promotion and distribution decisions; the BCG matrix classifies products as star, cash cow, question mark or dog by growth and market share.

Market segmentation leads to targeting and positioning; positioning maps plot brands on two attributes that consumers consider relevant.

Digital marketing: SEO (organic visibility), SEM/paid search, content and inbound marketing, email, affiliate, social media and influencer marketing; metrics include CTR, conversion rate, CAC (customer acquisition cost), LTV (lifetime value) and ROI.

Customer relationship management: the value of a loyal customer is the LTV, so retention cost is usually lower than acquisition cost; CRM systems integrate sales, marketing and service data to segment and personalise.

Pricing rules: break-even price equals fixed cost per unit plus variable cost; penetration pricing sacrifices margin for share, skimming maximises early margin on innovators.

Internal finance: retained earnings, asset sales, owner contributions; external: bank loans, leasing, bonds, share issues, venture capital, business angels, crowdfunding, subsidies; short-term versus long-term by maturity.

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

Profitability ratios: gross margin = gross profit/sales; net margin = net profit/sales; ROA = net profit/total assets; ROE = net profit/equity; ROCE = operating profit/capital employed.

Liquidity ratios: current ratio = current assets/current liabilities (around 1.5-2 often considered healthy); quick ratio = (current assets - inventory)/current liabilities.

Solvency: debt ratio = liabilities/total assets; debt-to-equity = liabilities/equity; interest coverage = operating profit (EBIT)/interest expense.

Break-even point in units = fixed costs/(price - variable cost per unit); in value = fixed costs/(1 - variable cost/sales); margin of safety = (actual sales - break-even sales)/actual sales.

Investment appraisal: NPV discounts future cash flows at the cost of capital and accepts projects with NPV > 0; IRR is the discount rate making NPV zero, accepted if IRR > cost of capital; payback ignores flows after the cut-off and time value.

Budgeting: operating budget (sales, production, purchases, expenses) feeds the cash budget and the forecast financial statements; a variance is favourable when profit impact is positive, unfavourable otherwise.

Financing choice depends on cost, maturity matching, control dilution and risk; debt raises financial leverage, increasing ROE in good years and insolvency risk in bad ones.

Organisational structures: lineal (clear authority, slow decisions), functional (specialisation, possible silos), divisional (by product, market or geography, own results), matrix (two bosses, dual focus, conflict risk), and network or virtual forms.

Span of control is the number of subordinates per manager; a wide span flattens the hierarchy, a narrow span deepens it; centralisation concentrates decisions at the top, decentralisation pushes them down.

Organisational charts show formal authority; informal organisation (relationships, unofficial leaders) coexists and affects communication and performance.

Motivation theories: Maslow's hierarchy (physiological to self-actualisation), Herzberg's two factors (hygiene prevents dissatisfaction, motivators drive satisfaction), McGregor's Theory X and Y, Vroom's expectancy (motivation = expectancy x instrumentality x valence), Adams' equity (perceived fairness of input/output ratio).

Leadership styles: autocratic, democratic/participative, laissez-faire, transactional (rewards and sanctions) and transformational (vision, individual consideration, intellectual stimulation).

Team development stages: forming, storming, norming, performing, adjourning (Tuckman); roles (Belbin) and group norms shape effectiveness; groupthink suppresses dissent.

HR cycle: recruitment (internal versus external sources), selection (interview, tests, assessment centres), training, performance appraisal, compensation and dismissal; collective bargaining with unions sets wages and conditions.

Communication flows downward, upward, horizontal and informal; barriers include noise, filtering, semantic differences and status, and feedback is the control that closes the loop.

Labour relations in Spain: workers' statute, works council (comité de empresa) from 50 workers, union sections, collective agreement (convenio colectivo) covering wages, hours and classification.