Canary Islands PAU Business & Business Model Design (ULPGC / ULL) cheat sheet

Economic function of the firm: it combines productive factors (land, labour, capital, organisation) to create utility and added value; its outputs are goods/services, employment, taxes and innovation.

Objectives hierarchy: survival and profitability are primary; growth, market share, social responsibility and stakeholder satisfaction are secondary and can conflict with profit maximisation in the short run.

Stakeholder map: internal (owners/shareholders, managers, workers) vs external (customers, suppliers, creditors, government, community, competitors); each has a different claim and power to influence decisions.

Shareholder model (Friedman): the firm's only social responsibility is to increase profits within legal and ethical rules. Stakeholder model (Freeman): the firm is accountable to all groups affected by it.

CSR dimensions (Carroll): economic, legal, ethical and philanthropic responsibilities, usually represented as a pyramid with economic duties at the base.

Corporate social responsibility instruments: codes of conduct, sustainability/ESG reports, environmental management systems (ISO 14001), social action and fair-trade certification.

PESTEL analysis classifies external macro factors as Political, Economic, Socio-cultural, Technological, Environmental and Legal; it is a scanning tool, not a strategy.

Porter's Five Forces assesses industry attractiveness through rivalry among existing firms, threat of new entrants, threat of substitutes, bargaining power of suppliers and bargaining power of buyers.

Value chain (Porter): primary activities (inbound logistics, operations, outbound logistics, marketing and sales, service) and support activities (firm infrastructure, HR, technology, procurement); competitive advantage arises where activities create distinctive value.

Definition: a business model describes how an organisation creates, delivers and captures value - the logic that turns an idea into sustainable revenue.

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

Canvas split: the right side is market-facing (segments, value proposition, channels, relationships, revenue); the left side is efficiency-facing (resources, activities, partners, costs).

Value proposition content: what is offered, the customer problem solved or need met, the benefit differential versus alternatives, and the reason the customer chooses this offer.

Value proposition fit tests: relevance to a real job-to-be-done, measurable differentiation, credibility of delivery, and willingness of the segment to pay.

Revenue stream types: asset sale, usage fee, subscription, lending/leasing/renting, licensing, brokerage commission, advertising. Pricing mechanisms: fixed (list price) vs dynamic (negotiation, yield management).

Cost structure distinction: cost-driven (lean, low price, automation) vs value-driven (premium, customisation); costs are fixed vs variable, and economies of scale/scope matter.

Business model patterns: unbundling, long tail, multi-sided platforms, FREE (freemium, advertising, bait-and-hook), open business models.

Business model vs business plan: the model is the conceptual architecture of value creation; the plan is the documented, quantified roadmap with forecasts and milestones.

Porter's generic strategies: cost leadership, differentiation and focus (cost focus or differentiation focus). Being 'stuck in the middle' - no clear advantage - usually yields below-average returns.

SWOT combines internal strengths and weaknesses with external opportunities and threats; the output must feed specific actions (offensive, defensive, reorientation, survival combinations).

Growth directions (Ansoff matrix): market penetration (existing product/market), product development, market development, diversification (related or unrelated).

Growth methods: internal (organic investment) vs external (mergers, acquisitions, joint ventures, strategic alliances, franchising); external growth is faster but carries integration and valuation risk.

Vertical integration: backwards towards suppliers or forwards towards customers; benefits are control and margin capture, risks are loss of flexibility and higher fixed costs.

Internationalisation motives: market seeking, resource seeking, efficiency seeking and strategic asset seeking. Entry modes ranked by commitment: export, licensing/franchising, joint venture, wholly owned subsidiary.

Uppsala/gradual model: firms internationalise incrementally, increasing commitment as market knowledge grows (psychic distance matters). Born-global firms skip stages.

BCG matrix: stars (high growth, high share), cash cows (low growth, high share), question marks (high growth, low share) and dogs; it guides resource allocation across a portfolio.

Competitive strategy requires a defensible advantage: cost advantage comes from scale, experience curve and efficiency; differentiation from brand, quality, service or technology that buyers value and will pay for.

Market research stages: define the problem, design the research, collect data, analyse, interpret and report. Primary data are collected for the study; secondary data already exist.

Qualitative techniques (focus groups, in-depth interviews, observation) explore motives; quantitative techniques (surveys, panels, experiments) measure and generalise.

Segmentation criteria must be measurable, accessible, substantial, differentiable and actionable. Bases: geographic, demographic, psychographic and behavioural.

Targeting strategies: undifferentiated (mass), differentiated (several segments), concentrated (niche) and micromarketing (local/individual).

Positioning: the place a brand occupies in the consumer's mind relative to competitors; it is built on a differential advantage and expressed in a positioning statement.

Marketing mix 4Ps: product (features, quality, brand, packaging, lifecycle), price (cost-plus, value-based, penetration, skimming, psychological), place (channels, coverage, logistics) and promotion (advertising, sales promotion, PR, personal selling, direct marketing).

Services extend the mix to 7Ps by adding people, processes and physical evidence; services are intangible, inseparable, variable and perishable.

Product life cycle: introduction, growth, maturity, decline; strategy shifts from building awareness to maximising share to harvesting.

Digital marketing tools: SEO/SEM, content marketing, social media, email, affiliate and display. Metrics: CTR, conversion rate, CPA, CAC, LTV, ROI. Inbound pulls users via valuable content; outbound pushes messages.

Productivity = output / input. Total factor productivity uses all inputs; labour productivity = units produced / labour hours. It rises with better technology, training, organisation or capital per worker.

Total cost TC = FC + VC, where FC is fixed cost and VC = variable cost per unit (v) × quantity (Q). Average total cost = TC / Q.

Break-even point in units: Q* = FC / (p − v), where p is unit price and (p − v) is the unit contribution margin. In monetary terms: FC / contribution margin ratio, where ratio = (p − v)/p.

Margin of safety = (actual sales − break-even sales) / actual sales, expressed as a percentage; it measures how far sales can fall before losses appear.

Operating leverage: the higher the proportion of fixed costs, the more profit reacts to changes in sales; high leverage means high risk and high upside.

Stock/EOQ model balances ordering cost and holding cost; just-in-time reduces inventory but requires reliable suppliers and exposes the firm to supply disruption.

Quality definitions: fitness for use (Juran), conformance to requirements (Crosby). Quality costs are prevention, appraisal, internal failure and external failure; prevention is cheapest.

Quality management tools: PDCA cycle, Kaizen, Six Sigma, total quality management (TQM), Pareto chart (80/20), Ishikawa/fishbone diagram for causes, control charts for statistical process control.

Net Present Value: NPV = Σ [CFt / (1 + k)^t] − initial investment. Decision rule: accept if NPV > 0; among mutually exclusive projects, choose the highest NPV.

Internal Rate of Return: the discount rate k that makes NPV = 0. Accept if IRR > cost of capital; IRR can give multiple or misleading results with non-conventional cash flows.

Payback period: time to recover the initial outlay from cash flows; simple but ignores the time value of money and flows after payback. Discounted payback corrects for the first flaw.

Accounting Rate of Return = average annual accounting profit / average investment; it uses profit, not cash flow, and ignores timing.

Financing sources: internal (retained earnings) vs external; external splits into own funds (equity: shares, reserves) and borrowed funds (debt: bank loans, bonds, leasing).

Cost of capital: weighted average of the cost of debt (after tax: i × (1 − t)) and the cost of equity, weighted by their market proportions (WACC).

Balance sheet identity: Assets = Liabilities + Equity. Assets are non-current and current; liabilities are non-current and current; equity is capital plus reserves plus retained profit.

Income statement: Revenue − expenses = profit, with EBITDA, EBIT and net profit as successive levels. Depreciation is a non-cash expense that reduces accounting profit and tax.

Liquidity and solvency ratios: current ratio = current assets / current liabilities (≈1.5–2 healthy); debt ratio = total liabilities / total assets; ROE = net profit / equity; ROA = net profit / total assets.

Maslow's hierarchy: physiological, safety, social, esteem and self-actualisation needs, satisfied in order; once a level is met it stops motivating.

Herzberg's two-factor theory: hygiene factors (salary, conditions, policy) prevent dissatisfaction but do not motivate; motivators (achievement, recognition, responsibility, growth) create satisfaction.

Vroom's expectancy theory: motivation = expectancy × instrumentality × valence; if any factor is zero, motivation is zero.

Adams' equity theory: employees compare their input/outcome ratio with referents; perceived inequity leads to reduced effort, exit or rationalisation.

McGregor: Theory X assumes workers dislike work and need control; Theory Y assumes they seek responsibility and self-direction. Assumptions shape management style.

Leadership styles: autocratic, democratic/participative, laissez-faire, plus transactional (reward/punishment exchange) vs transformational (vision, intellectual stimulation, individual consideration).

Leadership vs management: managers administer complexity through planning and control; leaders cope with change through vision and influence.

Organisational structures: functional (specialisation, silos), divisional (product/market focus, duplicated resources), matrix (dual authority, faster projects, conflict risk), and network/flat structures.

Span of control and hierarchy: wider spans reduce levels and cost but demand more autonomy; narrow spans increase supervision and vertical layers.

Team development stages (Tuckman): forming, storming, norming, performing, adjourning. Group norms and cohesion affect productivity.

Entrepreneurial process: identify opportunity, evaluate feasibility, obtain resources, launch, manage growth. Opportunity differs from an idea by being attractive, durable and timely.

Idea generation techniques: brainstorming, SCAMPER, mind mapping, observation of unmet needs, trend analysis and customer pain-point interviews.

Business model validation tools: lean start-up build–measure–learn loop, minimum viable product, customer development interviews, pivot decisions.

Business plan sections: executive summary, promoter team, product/service description, market analysis, marketing plan, operations plan, organisation and HR, legal form, financial plan, risk analysis and timetable.

Financial plan contents: initial investment, funding sources, projected income statement, cash budget, projected balance sheet and break-even analysis; the cash budget is critical for survival.

Spanish legal forms: empresario individual (sole trader, unlimited liability), sociedad limitada (SL, capital ≥ €3,000, limited liability), sociedad anónima (SA, capital ≥ €60,000), sociedad cooperativa, comunidad de bienes and sociedad civil.

Sociedad limitada formation: capital fully subscribed and at least 25% paid up at incorporation; the rest is called as needed. SL is the most common form for small Spanish firms.

Fiscal obligations: IRPF for the sole trader, Impuesto de Sociedades for companies, plus IGIC (Canary Islands indirect tax, not VAT) and local IAE/IBI taxes.

Public support for start-ups in Spain and the Canary Islands includes ENISA loans, ICO lines, regional subsidies and incubators; the Social Economy and Start-up Acts add tax and administrative incentives.