PAU Business & Business Model Design (La Rioja) cheat sheet

A firm is a unit that organises productive factors (land, labour, capital, knowledge) to produce goods or services for a market, bearing risk in exchange for expected profit.

Legal forms in Spain: sole trader (empresario individual, unlimited liability), sociedad limitada (SL, capital divided in shares, liability limited to contribution), sociedad anónima (SA, minimum capital 60,000 EUR, shares freely transferable), sociedad cooperativa (member-based, democratic control), and sociedad laboral.

Size classification (EU/Spain): micro (<10 employees, turnover or balance sheet <=2M EUR), small (<50, <=10M), medium (<250, <=43M), large (>=250 or above thresholds).

Ownership vs control: shareholders own residual claims; managers control day-to-day decisions; separation creates agency costs, mitigated by incentives, monitoring and board oversight.

Objectives are plural: profit, growth, market share, survival, stakeholder satisfaction, CSR/ESG. Profit maximisation is a simplifying model, not a description of real behaviour.

Stakeholders: internal (owners, managers, workers) and external (customers, suppliers, creditors, competitors, state, local community, environment). Each holds a stake and some degree of power, legitimacy or urgency.

Stakeholder salience model (Mitchell, Agle & Wood): power + legitimacy + urgency; definitive stakeholders hold all three, expectant hold two, latent hold one.

Social economy firms (cooperatives, labour companies, foundations) prioritise member and community objectives, often with limited profit distribution and democratic governance.

PESTEL scans macro factors: Political, Economic, Social, Technological, Environmental, Legal. Each factor is classified as opportunity or threat, with impact and probability rated.

Porter's Five Forces: rivalry among existing competitors, threat of new entrants, threat of substitutes, bargaining power of buyers, bargaining power of suppliers. High force intensity lowers industry profitability.

Entry barriers include economies of scale, capital requirements, brand loyalty, switching costs, access to distribution, regulation and retaliation expectations.

Industry life cycle: introduction, growth, maturity, decline. Rivalry typically peaks in maturity when growth slows and firms compete on price.

Strategic groups are sets of firms within an industry following similar strategies on chosen dimensions (price, quality, geography); mobility barriers separate groups.

Competitor analysis maps objectives, current strategy, assumptions and capabilities; a competitor profile links strengths/weaknesses to likely reactions.

Environmental uncertainty is assessed on two axes: complexity (number of factors) and dynamism (rate of change). High on both calls for flexible, adaptive strategy.

Scenario planning builds 2-4 plausible futures from critical uncertainties, then stress-tests the strategy against each; it is not forecasting.

Strategic management process: mission and vision, external and internal analysis, strategy formulation, implementation, evaluation and control.

SWOT is a summary tool: internal Strengths/Weaknesses, external Opportunities/Threats. It is diagnostic, not a decision rule; pair it with TOWS to derive options.

Porter's generic strategies: cost leadership (lowest cost in the industry), differentiation (unique valued attributes), focus (narrow segment with either cost or differentiation). Stuck in the middle means no clear advantage.

Resource-based view: a resource yields sustained advantage when it is valuable, rare, inimitable and organised (VRIO). Imitability depends on history, causal ambiguity and social complexity.

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

Growth modes: organic growth, mergers and acquisitions, joint ventures and alliances, franchising and licensing. Each trades control against speed and risk.

Corporate strategy decides portfolio scope (diversification, vertical integration, internationalisation); competitive strategy decides how to win in each business.

Strategic decisions are long-term, resource-committing, hard to reverse and made under uncertainty; they require judgement, not only analytical optimisation.

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

Canvas logic: the right side (segments, value, channels, relationships, revenue) describes value creation and delivery; the left side (resources, activities, partners, costs) describes value capture and infrastructure.

Value Proposition Canvas: customer profile (jobs, pains, gains) matched against value map (products/services, pain relievers, gain creators). Fit occurs when the map addresses the highest-priority profile items.

Revenue stream types: asset sale, usage fee, subscription, lending/leasing, licensing, brokerage commission, advertising. Each is priced fixed (list, feature-dependent, segment-dependent, volume) or dynamic (negotiation, yield, auction, real-time).

Cost structure is either cost-driven (lean, low fixed cost, high volume) or value-driven (premium, high fixed cost, customisation); costs split into fixed, variable and economies of scale/scope.

Business model patterns: unbundling (customer relationship, product innovation, infrastructure), long tail, multi-sided platforms, freemium, open business models.

Business Model Environment map: market forces, industry forces, key trends, macroeconomic forces - used to test the model against external change.

A business model is validated by evidence (interviews, pilots, pre-sales), not by the elegance of the canvas; assumptions are ranked by importance and uncertainty and tested cheapest-first.

STP: Segmentation (divide market by demographic, geographic, psychographic, behavioural criteria), Targeting (evaluate segment size, growth, competition, fit, accessibility), Positioning (distinctive place in the customer's mind).

A segment is viable when it is measurable, substantial, accessible, differentiable, actionable and stable.

Value proposition statement: for [segment] who [need/job], our [offering] provides [benefit] unlike [alternative] because [evidence].

Marketing mix 4Ps: Product (features, quality, brand, packaging, lifecycle), Price, Place (channels, coverage, logistics), Promotion (advertising, sales promotion, PR, personal selling, digital).

Service marketing adds 3Ps: People, Process, Physical evidence.

Pricing methods: cost-plus (cost + margin), target-return, perceived-value, value-based, competitive/going-rate, penetration (low entry price), skimming (high launch price).

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

Product life cycle: introduction, growth, maturity, decline - marketing mix emphasis shifts across stages (awareness, share, differentiation, harvest).

Productivity = outputs / inputs; multifactor productivity uses a basket of inputs. Improvements come from better methods, technology or scale, not only more effort.

Break-even quantity Q* = Fixed costs / (Price - Variable cost per unit). Contribution margin per unit = P - CVu.

Break-even in revenue = Fixed costs / contribution margin ratio, where contribution margin ratio = (P - CVu)/P.

Capacity decisions weigh economies of scale against diseconomies (complexity, coordination, motivation). Utilisation = actual output / maximum capacity.

Inventory costs: ordering/setup cost, holding cost, stockout cost. Economic Order Quantity EOQ = sqrt(2DS/H), where D = annual demand, S = order cost, H = holding cost per unit per year.

Lean operations target waste (overproduction, waiting, transport, over-processing, inventory, motion, defects) and use just-in-time, kanban and continuous improvement (kaizen).

Quality: quality control detects defects; quality assurance prevents them. Total Quality Management stresses customer focus, process approach and continuous improvement; Six Sigma targets 3.4 defects per million opportunities.

Supply chain risks: single-supplier dependency, lead-time variability, bullwhip effect (demand distortion amplified upstream), supplier financial failure. Mitigations include dual sourcing, safety stock and information sharing.

Balance sheet identity: Assets = Liabilities + Equity. Working capital = current assets - current liabilities.

Profit vs cash: profit is accrual-based; cash flow timing differs. A profitable firm can fail from illiquidity.

Financial ratios: liquidity (current ratio = current assets/current liabilities; quick ratio excludes inventory), solvency (debt ratio = liabilities/total assets; debt-to-equity), profitability (ROE = net income/equity; ROA = net income/total assets; margin = profit/sales), activity (inventory turnover, receivables collection period).

DuPont: ROE = net margin x asset turnover x financial leverage (equity multiplier).

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

Net Present Value NPV = sum of CFt/(1+r)^t - initial investment. Accept if NPV > 0. It is the preferred criterion because it measures value added in money terms.

Internal Rate of Return IRR is the discount rate making NPV = 0; accept if IRR > cost of capital. Multiple IRRs can occur with alternating cash-flow signs.

Profitability Index = PV of future cash flows / initial investment; accept if > 1. Useful when capital is rationed.

Financing sources: internal (retained earnings), external equity (share issue, venture capital, business angels), debt (bank loan, bond, leasing), and hybrid (convertible). Trade-off: debt is cheaper (tax shield) but raises financial risk.

WACC = (E/V) x Ke + (D/V) x Kd x (1 - tax rate); it is the discount rate for projects of average risk.

Entrepreneurship is the identification, evaluation and exploitation of opportunities under uncertainty; the entrepreneur bears risk and assembles resources.

Opportunity vs idea: an opportunity is attractive, durable, timely and anchored in a product or service that creates value for buyers.

Lean startup: build-measure-learn loop, minimum viable product (MVP), validated learning, pivot or persevere.

Innovation types: product, process, organisational, marketing (Oslo Manual). Radical vs incremental; sustaining vs disruptive (disruptive enters a low-end or new market and moves up).

Innovation diffusion (Rogers): innovators, early adopters, early majority, late majority, laggards; adoption driven by relative advantage, compatibility, complexity, trialability, observability.

Digital transformation layers: processes (automation, ERP/CRM), business model (platforms, servicestorm/subscription, data monetisation), customer experience (omnichannel, personalisation).

Digital levers: cloud, data analytics, AI, IoT, e-commerce and digital marketing. Barriers: legacy systems, skills gaps, culture, cybersecurity, cost of change.

Protection of innovation: patents (novel, inventive, industrial application; up to 20 years), utility models, trademarks (renewable), industrial design, trade secrets, copyright for software.

A firm is a unit that organises productive factors (land, labour, capital, knowledge) to produce goods or services for a market, bearing risk in exchange for expected profit.

Legal forms in Spain: sole trader (empresario individual, unlimited liability), sociedad limitada (SL, capital divided in shares, liability limited to contribution), sociedad anónima (SA, minimum capital 60,000 EUR, shares freely transferable), sociedad cooperativa (member-based, democratic control), and sociedad laboral.

Size classification (EU/Spain): micro (<10 employees, turnover or balance sheet <=2M EUR), small (<50, <=10M), medium (<250, <=43M), large (>=250 or above thresholds).

Ownership vs control: shareholders own residual claims; managers control day-to-day decisions; separation creates agency costs, mitigated by incentives, monitoring and board oversight.

Objectives are plural: profit, growth, market share, survival, stakeholder satisfaction, CSR/ESG. Profit maximisation is a simplifying model, not a description of real behaviour.

Stakeholders: internal (owners, managers, workers) and external (customers, suppliers, creditors, competitors, state, local community, environment). Each holds a stake and some degree of power, legitimacy or urgency.

Stakeholder salience model (Mitchell, Agle & Wood): power + legitimacy + urgency; definitive stakeholders hold all three, expectant hold two, latent hold one.

Social economy firms (cooperatives, labour companies, foundations) prioritise member and community objectives, often with limited profit distribution and democratic governance.

PESTEL scans macro factors: Political, Economic, Social, Technological, Environmental, Legal. Each factor is classified as opportunity or threat, with impact and probability rated.

Porter's Five Forces: rivalry among existing competitors, threat of new entrants, threat of substitutes, bargaining power of buyers, bargaining power of suppliers. High force intensity lowers industry profitability.

Entry barriers include economies of scale, capital requirements, brand loyalty, switching costs, access to distribution, regulation and retaliation expectations.

Industry life cycle: introduction, growth, maturity, decline. Rivalry typically peaks in maturity when growth slows and firms compete on price.

Strategic groups are sets of firms within an industry following similar strategies on chosen dimensions (price, quality, geography); mobility barriers separate groups.

Competitor analysis maps objectives, current strategy, assumptions and capabilities; a competitor profile links strengths/weaknesses to likely reactions.

Environmental uncertainty is assessed on two axes: complexity (number of factors) and dynamism (rate of change). High on both calls for flexible, adaptive strategy.

Scenario planning builds 2-4 plausible futures from critical uncertainties, then stress-tests the strategy against each; it is not forecasting.

Strategic management process: mission and vision, external and internal analysis, strategy formulation, implementation, evaluation and control.

SWOT is a summary tool: internal Strengths/Weaknesses, external Opportunities/Threats. It is diagnostic, not a decision rule; pair it with TOWS to derive options.

Porter's generic strategies: cost leadership (lowest cost in the industry), differentiation (unique valued attributes), focus (narrow segment with either cost or differentiation). Stuck in the middle means no clear advantage.

Resource-based view: a resource yields sustained advantage when it is valuable, rare, inimitable and organised (VRIO). Imitability depends on history, causal ambiguity and social complexity.

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

Growth modes: organic growth, mergers and acquisitions, joint ventures and alliances, franchising and licensing. Each trades control against speed and risk.

Corporate strategy decides portfolio scope (diversification, vertical integration, internationalisation); competitive strategy decides how to win in each business.

Strategic decisions are long-term, resource-committing, hard to reverse and made under uncertainty; they require judgement, not only analytical optimisation.

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

Canvas logic: the right side (segments, value, channels, relationships, revenue) describes value creation and delivery; the left side (resources, activities, partners, costs) describes value capture and infrastructure.

Value Proposition Canvas: customer profile (jobs, pains, gains) matched against value map (products/services, pain relievers, gain creators). Fit occurs when the map addresses the highest-priority profile items.

Revenue stream types: asset sale, usage fee, subscription, lending/leasing, licensing, brokerage commission, advertising. Each is priced fixed (list, feature-dependent, segment-dependent, volume) or dynamic (negotiation, yield, auction, real-time).

Cost structure is either cost-driven (lean, low fixed cost, high volume) or value-driven (premium, high fixed cost, customisation); costs split into fixed, variable and economies of scale/scope.

Business model patterns: unbundling (customer relationship, product innovation, infrastructure), long tail, multi-sided platforms, freemium, open business models.

Business Model Environment map: market forces, industry forces, key trends, macroeconomic forces - used to test the model against external change.

A business model is validated by evidence (interviews, pilots, pre-sales), not by the elegance of the canvas; assumptions are ranked by importance and uncertainty and tested cheapest-first.

STP: Segmentation (divide market by demographic, geographic, psychographic, behavioural criteria), Targeting (evaluate segment size, growth, competition, fit, accessibility), Positioning (distinctive place in the customer's mind).

A segment is viable when it is measurable, substantial, accessible, differentiable, actionable and stable.

Value proposition statement: for [segment] who [need/job], our [offering] provides [benefit] unlike [alternative] because [evidence].

Marketing mix 4Ps: Product (features, quality, brand, packaging, lifecycle), Price, Place (channels, coverage, logistics), Promotion (advertising, sales promotion, PR, personal selling, digital).

Service marketing adds 3Ps: People, Process, Physical evidence.

Pricing methods: cost-plus (cost + margin), target-return, perceived-value, value-based, competitive/going-rate, penetration (low entry price), skimming (high launch price).

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

Product life cycle: introduction, growth, maturity, decline - marketing mix emphasis shifts across stages (awareness, share, differentiation, harvest).

Productivity = outputs / inputs; multifactor productivity uses a basket of inputs. Improvements come from better methods, technology or scale, not only more effort.

Break-even quantity Q* = Fixed costs / (Price - Variable cost per unit). Contribution margin per unit = P - CVu.

Break-even in revenue = Fixed costs / contribution margin ratio, where contribution margin ratio = (P - CVu)/P.

Capacity decisions weigh economies of scale against diseconomies (complexity, coordination, motivation). Utilisation = actual output / maximum capacity.

Inventory costs: ordering/setup cost, holding cost, stockout cost. Economic Order Quantity EOQ = sqrt(2DS/H), where D = annual demand, S = order cost, H = holding cost per unit per year.

Lean operations target waste (overproduction, waiting, transport, over-processing, inventory, motion, defects) and use just-in-time, kanban and continuous improvement (kaizen).

Quality: quality control detects defects; quality assurance prevents them. Total Quality Management stresses customer focus, process approach and continuous improvement; Six Sigma targets 3.4 defects per million opportunities.

Supply chain risks: single-supplier dependency, lead-time variability, bullwhip effect (demand distortion amplified upstream), supplier financial failure. Mitigations include dual sourcing, safety stock and information sharing.

Balance sheet identity: Assets = Liabilities + Equity. Working capital = current assets - current liabilities.

Profit vs cash: profit is accrual-based; cash flow timing differs. A profitable firm can fail from illiquidity.

Financial ratios: liquidity (current ratio = current assets/current liabilities; quick ratio excludes inventory), solvency (debt ratio = liabilities/total assets; debt-to-equity), profitability (ROE = net income/equity; ROA = net income/total assets; margin = profit/sales), activity (inventory turnover, receivables collection period).

DuPont: ROE = net margin x asset turnover x financial leverage (equity multiplier).

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

Net Present Value NPV = sum of CFt/(1+r)^t - initial investment. Accept if NPV > 0. It is the preferred criterion because it measures value added in money terms.

Internal Rate of Return IRR is the discount rate making NPV = 0; accept if IRR > cost of capital. Multiple IRRs can occur with alternating cash-flow signs.

Profitability Index = PV of future cash flows / initial investment; accept if > 1. Useful when capital is rationed.

Financing sources: internal (retained earnings), external equity (share issue, venture capital, business angels), debt (bank loan, bond, leasing), and hybrid (convertible). Trade-off: debt is cheaper (tax shield) but raises financial risk.

WACC = (E/V) x Ke + (D/V) x Kd x (1 - tax rate); it is the discount rate for projects of average risk.

Entrepreneurship is the identification, evaluation and exploitation of opportunities under uncertainty; the entrepreneur bears risk and assembles resources.

Opportunity vs idea: an opportunity is attractive, durable, timely and anchored in a product or service that creates value for buyers.

Lean startup: build-measure-learn loop, minimum viable product (MVP), validated learning, pivot or persevere.

Innovation types: product, process, organisational, marketing (Oslo Manual). Radical vs incremental; sustaining vs disruptive (disruptive enters a low-end or new market and moves up).

Innovation diffusion (Rogers): innovators, early adopters, early majority, late majority, laggards; adoption driven by relative advantage, compatibility, complexity, trialability, observability.

Digital transformation layers: processes (automation, ERP/CRM), business model (platforms, servicestorm/subscription, data monetisation), customer experience (omnichannel, personalisation).

Digital levers: cloud, data analytics, AI, IoT, e-commerce and digital marketing. Barriers: legacy systems, skills gaps, culture, cybersecurity, cost of change.

Protection of innovation: patents (novel, inventive, industrial application; up to 20 years), utility models, trademarks (renewable), industrial design, trade secrets, copyright for software.

A firm is a unit that organises productive factors (land, labour, capital, knowledge) to produce goods or services for a market, bearing risk in exchange for expected profit.

Legal forms in Spain: sole trader (empresario individual, unlimited liability), sociedad limitada (SL, capital divided in shares, liability limited to contribution), sociedad anónima (SA, minimum capital 60,000 EUR, shares freely transferable), sociedad cooperativa (member-based, democratic control), and sociedad laboral.

Size classification (EU/Spain): micro (<10 employees, turnover or balance sheet <=2M EUR), small (<50, <=10M), medium (<250, <=43M), large (>=250 or above thresholds).

Ownership vs control: shareholders own residual claims; managers control day-to-day decisions; separation creates agency costs, mitigated by incentives, monitoring and board oversight.

Objectives are plural: profit, growth, market share, survival, stakeholder satisfaction, CSR/ESG. Profit maximisation is a simplifying model, not a description of real behaviour.

Stakeholders: internal (owners, managers, workers) and external (customers, suppliers, creditors, competitors, state, local community, environment). Each holds a stake and some degree of power, legitimacy or urgency.

Stakeholder salience model (Mitchell, Agle & Wood): power + legitimacy + urgency; definitive stakeholders hold all three, expectant hold two, latent hold one.

Social economy firms (cooperatives, labour companies, foundations) prioritise member and community objectives, often with limited profit distribution and democratic governance.

PESTEL scans macro factors: Political, Economic, Social, Technological, Environmental, Legal. Each factor is classified as opportunity or threat, with impact and probability rated.

Porter's Five Forces: rivalry among existing competitors, threat of new entrants, threat of substitutes, bargaining power of buyers, bargaining power of suppliers. High force intensity lowers industry profitability.

Entry barriers include economies of scale, capital requirements, brand loyalty, switching costs, access to distribution, regulation and retaliation expectations.

Industry life cycle: introduction, growth, maturity, decline. Rivalry typically peaks in maturity when growth slows and firms compete on price.

Strategic groups are sets of firms within an industry following similar strategies on chosen dimensions (price, quality, geography); mobility barriers separate groups.

Competitor analysis maps objectives, current strategy, assumptions and capabilities; a competitor profile links strengths/weaknesses to likely reactions.

Environmental uncertainty is assessed on two axes: complexity (number of factors) and dynamism (rate of change). High on both calls for flexible, adaptive strategy.

Scenario planning builds 2-4 plausible futures from critical uncertainties, then stress-tests the strategy against each; it is not forecasting.

Strategic management process: mission and vision, external and internal analysis, strategy formulation, implementation, evaluation and control.

SWOT is a summary tool: internal Strengths/Weaknesses, external Opportunities/Threats. It is diagnostic, not a decision rule; pair it with TOWS to derive options.

Porter's generic strategies: cost leadership (lowest cost in the industry), differentiation (unique valued attributes), focus (narrow segment with either cost or differentiation). Stuck in the middle means no clear advantage.

Resource-based view: a resource yields sustained advantage when it is valuable, rare, inimitable and organised (VRIO). Imitability depends on history, causal ambiguity and social complexity.

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

Growth modes: organic growth, mergers and acquisitions, joint ventures and alliances, franchising and licensing. Each trades control against speed and risk.

Corporate strategy decides portfolio scope (diversification, vertical integration, internationalisation); competitive strategy decides how to win in each business.

Strategic decisions are long-term, resource-committing, hard to reverse and made under uncertainty; they require judgement, not only analytical optimisation.

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

Canvas logic: the right side (segments, value, channels, relationships, revenue) describes value creation and delivery; the left side (resources, activities, partners, costs) describes value capture and infrastructure.

Value Proposition Canvas: customer profile (jobs, pains, gains) matched against value map (products/services, pain relievers, gain creators). Fit occurs when the map addresses the highest-priority profile items.

Revenue stream types: asset sale, usage fee, subscription, lending/leasing, licensing, brokerage commission, advertising. Each is priced fixed (list, feature-dependent, segment-dependent, volume) or dynamic (negotiation, yield, auction, real-time).

Cost structure is either cost-driven (lean, low fixed cost, high volume) or value-driven (premium, high fixed cost, customisation); costs split into fixed, variable and economies of scale/scope.

Business model patterns: unbundling (customer relationship, product innovation, infrastructure), long tail, multi-sided platforms, freemium, open business models.

Business Model Environment map: market forces, industry forces, key trends, macroeconomic forces - used to test the model against external change.

A business model is validated by evidence (interviews, pilots, pre-sales), not by the elegance of the canvas; assumptions are ranked by importance and uncertainty and tested cheapest-first.

STP: Segmentation (divide market by demographic, geographic, psychographic, behavioural criteria), Targeting (evaluate segment size, growth, competition, fit, accessibility), Positioning (distinctive place in the customer's mind).

A segment is viable when it is measurable, substantial, accessible, differentiable, actionable and stable.

Value proposition statement: for [segment] who [need/job], our [offering] provides [benefit] unlike [alternative] because [evidence].

Marketing mix 4Ps: Product (features, quality, brand, packaging, lifecycle), Price, Place (channels, coverage, logistics), Promotion (advertising, sales promotion, PR, personal selling, digital).

Service marketing adds 3Ps: People, Process, Physical evidence.

Pricing methods: cost-plus (cost + margin), target-return, perceived-value, value-based, competitive/going-rate, penetration (low entry price), skimming (high launch price).

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

Product life cycle: introduction, growth, maturity, decline - marketing mix emphasis shifts across stages (awareness, share, differentiation, harvest).

Productivity = outputs / inputs; multifactor productivity uses a basket of inputs. Improvements come from better methods, technology or scale, not only more effort.

Break-even quantity Q* = Fixed costs / (Price - Variable cost per unit). Contribution margin per unit = P - CVu.

Break-even in revenue = Fixed costs / contribution margin ratio, where contribution margin ratio = (P - CVu)/P.

Capacity decisions weigh economies of scale against diseconomies (complexity, coordination, motivation). Utilisation = actual output / maximum capacity.

Inventory costs: ordering/setup cost, holding cost, stockout cost. Economic Order Quantity EOQ = sqrt(2DS/H), where D = annual demand, S = order cost, H = holding cost per unit per year.

Lean operations target waste (overproduction, waiting, transport, over-processing, inventory, motion, defects) and use just-in-time, kanban and continuous improvement (kaizen).

Quality: quality control detects defects; quality assurance prevents them. Total Quality Management stresses customer focus, process approach and continuous improvement; Six Sigma targets 3.4 defects per million opportunities.

Supply chain risks: single-supplier dependency, lead-time variability, bullwhip effect (demand distortion amplified upstream), supplier financial failure. Mitigations include dual sourcing, safety stock and information sharing.

Balance sheet identity: Assets = Liabilities + Equity. Working capital = current assets - current liabilities.

Profit vs cash: profit is accrual-based; cash flow timing differs. A profitable firm can fail from illiquidity.

Financial ratios: liquidity (current ratio = current assets/current liabilities; quick ratio excludes inventory), solvency (debt ratio = liabilities/total assets; debt-to-equity), profitability (ROE = net income/equity; ROA = net income/total assets; margin = profit/sales), activity (inventory turnover, receivables collection period).

DuPont: ROE = net margin x asset turnover x financial leverage (equity multiplier).

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

Net Present Value NPV = sum of CFt/(1+r)^t - initial investment. Accept if NPV > 0. It is the preferred criterion because it measures value added in money terms.

Internal Rate of Return IRR is the discount rate making NPV = 0; accept if IRR > cost of capital. Multiple IRRs can occur with alternating cash-flow signs.

Profitability Index = PV of future cash flows / initial investment; accept if > 1. Useful when capital is rationed.

Financing sources: internal (retained earnings), external equity (share issue, venture capital, business angels), debt (bank loan, bond, leasing), and hybrid (convertible). Trade-off: debt is cheaper (tax shield) but raises financial risk.

WACC = (E/V) x Ke + (D/V) x Kd x (1 - tax rate); it is the discount rate for projects of average risk.

Entrepreneurship is the identification, evaluation and exploitation of opportunities under uncertainty; the entrepreneur bears risk and assembles resources.

Opportunity vs idea: an opportunity is attractive, durable, timely and anchored in a product or service that creates value for buyers.

Lean startup: build-measure-learn loop, minimum viable product (MVP), validated learning, pivot or persevere.

Innovation types: product, process, organisational, marketing (Oslo Manual). Radical vs incremental; sustaining vs disruptive (disruptive enters a low-end or new market and moves up).

Innovation diffusion (Rogers): innovators, early adopters, early majority, late majority, laggards; adoption driven by relative advantage, compatibility, complexity, trialability, observability.

Digital transformation layers: processes (automation, ERP/CRM), business model (platforms, servicestorm/subscription, data monetisation), customer experience (omnichannel, personalisation).

Digital levers: cloud, data analytics, AI, IoT, e-commerce and digital marketing. Barriers: legacy systems, skills gaps, culture, cybersecurity, cost of change.

Protection of innovation: patents (novel, inventive, industrial application; up to 20 years), utility models, trademarks (renewable), industrial design, trade secrets, copyright for software.

A firm is a unit that organises productive factors (land, labour, capital, knowledge) to produce goods or services for a market, bearing risk in exchange for expected profit.

Legal forms in Spain: sole trader (empresario individual, unlimited liability), sociedad limitada (SL, capital divided in shares, liability limited to contribution), sociedad anónima (SA, minimum capital 60,000 EUR, shares freely transferable), sociedad cooperativa (member-based, democratic control), and sociedad laboral.

Size classification (EU/Spain): micro (<10 employees, turnover or balance sheet <=2M EUR), small (<50, <=10M), medium (<250, <=43M), large (>=250 or above thresholds).

Ownership vs control: shareholders own residual claims; managers control day-to-day decisions; separation creates agency costs, mitigated by incentives, monitoring and board oversight.

Objectives are plural: profit, growth, market share, survival, stakeholder satisfaction, CSR/ESG. Profit maximisation is a simplifying model, not a description of real behaviour.

Stakeholders: internal (owners, managers, workers) and external (customers, suppliers, creditors, competitors, state, local community, environment). Each holds a stake and some degree of power, legitimacy or urgency.

Stakeholder salience model (Mitchell, Agle & Wood): power + legitimacy + urgency; definitive stakeholders hold all three, expectant hold two, latent hold one.

Social economy firms (cooperatives, labour companies, foundations) prioritise member and community objectives, often with limited profit distribution and democratic governance.

PESTEL scans macro factors: Political, Economic, Social, Technological, Environmental, Legal. Each factor is classified as opportunity or threat, with impact and probability rated.

Porter's Five Forces: rivalry among existing competitors, threat of new entrants, threat of substitutes, bargaining power of buyers, bargaining power of suppliers. High force intensity lowers industry profitability.

Entry barriers include economies of scale, capital requirements, brand loyalty, switching costs, access to distribution, regulation and retaliation expectations.

Industry life cycle: introduction, growth, maturity, decline. Rivalry typically peaks in maturity when growth slows and firms compete on price.

Strategic groups are sets of firms within an industry following similar strategies on chosen dimensions (price, quality, geography); mobility barriers separate groups.

Competitor analysis maps objectives, current strategy, assumptions and capabilities; a competitor profile links strengths/weaknesses to likely reactions.

Environmental uncertainty is assessed on two axes: complexity (number of factors) and dynamism (rate of change). High on both calls for flexible, adaptive strategy.

Scenario planning builds 2-4 plausible futures from critical uncertainties, then stress-tests the strategy against each; it is not forecasting.

Strategic management process: mission and vision, external and internal analysis, strategy formulation, implementation, evaluation and control.

SWOT is a summary tool: internal Strengths/Weaknesses, external Opportunities/Threats. It is diagnostic, not a decision rule; pair it with TOWS to derive options.

Porter's generic strategies: cost leadership (lowest cost in the industry), differentiation (unique valued attributes), focus (narrow segment with either cost or differentiation). Stuck in the middle means no clear advantage.

Resource-based view: a resource yields sustained advantage when it is valuable, rare, inimitable and organised (VRIO). Imitability depends on history, causal ambiguity and social complexity.

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

Growth modes: organic growth, mergers and acquisitions, joint ventures and alliances, franchising and licensing. Each trades control against speed and risk.

Corporate strategy decides portfolio scope (diversification, vertical integration, internationalisation); competitive strategy decides how to win in each business.

Strategic decisions are long-term, resource-committing, hard to reverse and made under uncertainty; they require judgement, not only analytical optimisation.

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

Canvas logic: the right side (segments, value, channels, relationships, revenue) describes value creation and delivery; the left side (resources, activities, partners, costs) describes value capture and infrastructure.

Value Proposition Canvas: customer profile (jobs, pains, gains) matched against value map (products/services, pain relievers, gain creators). Fit occurs when the map addresses the highest-priority profile items.

Revenue stream types: asset sale, usage fee, subscription, lending/leasing, licensing, brokerage commission, advertising. Each is priced fixed (list, feature-dependent, segment-dependent, volume) or dynamic (negotiation, yield, auction, real-time).

Cost structure is either cost-driven (lean, low fixed cost, high volume) or value-driven (premium, high fixed cost, customisation); costs split into fixed, variable and economies of scale/scope.

Business model patterns: unbundling (customer relationship, product innovation, infrastructure), long tail, multi-sided platforms, freemium, open business models.

Business Model Environment map: market forces, industry forces, key trends, macroeconomic forces - used to test the model against external change.

A business model is validated by evidence (interviews, pilots, pre-sales), not by the elegance of the canvas; assumptions are ranked by importance and uncertainty and tested cheapest-first.

STP: Segmentation (divide market by demographic, geographic, psychographic, behavioural criteria), Targeting (evaluate segment size, growth, competition, fit, accessibility), Positioning (distinctive place in the customer's mind).

A segment is viable when it is measurable, substantial, accessible, differentiable, actionable and stable.

Value proposition statement: for [segment] who [need/job], our [offering] provides [benefit] unlike [alternative] because [evidence].

Marketing mix 4Ps: Product (features, quality, brand, packaging, lifecycle), Price, Place (channels, coverage, logistics), Promotion (advertising, sales promotion, PR, personal selling, digital).

Service marketing adds 3Ps: People, Process, Physical evidence.

Pricing methods: cost-plus (cost + margin), target-return, perceived-value, value-based, competitive/going-rate, penetration (low entry price), skimming (high launch price).

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

Product life cycle: introduction, growth, maturity, decline - marketing mix emphasis shifts across stages (awareness, share, differentiation, harvest).

Productivity = outputs / inputs; multifactor productivity uses a basket of inputs. Improvements come from better methods, technology or scale, not only more effort.

Break-even quantity Q* = Fixed costs / (Price - Variable cost per unit). Contribution margin per unit = P - CVu.

Break-even in revenue = Fixed costs / contribution margin ratio, where contribution margin ratio = (P - CVu)/P.

Capacity decisions weigh economies of scale against diseconomies (complexity, coordination, motivation). Utilisation = actual output / maximum capacity.

Inventory costs: ordering/setup cost, holding cost, stockout cost. Economic Order Quantity EOQ = sqrt(2DS/H), where D = annual demand, S = order cost, H = holding cost per unit per year.

Lean operations target waste (overproduction, waiting, transport, over-processing, inventory, motion, defects) and use just-in-time, kanban and continuous improvement (kaizen).

Quality: quality control detects defects; quality assurance prevents them. Total Quality Management stresses customer focus, process approach and continuous improvement; Six Sigma targets 3.4 defects per million opportunities.

Supply chain risks: single-supplier dependency, lead-time variability, bullwhip effect (demand distortion amplified upstream), supplier financial failure. Mitigations include dual sourcing, safety stock and information sharing.

Balance sheet identity: Assets = Liabilities + Equity. Working capital = current assets - current liabilities.

Profit vs cash: profit is accrual-based; cash flow timing differs. A profitable firm can fail from illiquidity.

Financial ratios: liquidity (current ratio = current assets/current liabilities; quick ratio excludes inventory), solvency (debt ratio = liabilities/total assets; debt-to-equity), profitability (ROE = net income/equity; ROA = net income/total assets; margin = profit/sales), activity (inventory turnover, receivables collection period).

DuPont: ROE = net margin x asset turnover x financial leverage (equity multiplier).

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

Net Present Value NPV = sum of CFt/(1+r)^t - initial investment. Accept if NPV > 0. It is the preferred criterion because it measures value added in money terms.

Internal Rate of Return IRR is the discount rate making NPV = 0; accept if IRR > cost of capital. Multiple IRRs can occur with alternating cash-flow signs.

Profitability Index = PV of future cash flows / initial investment; accept if > 1. Useful when capital is rationed.

Financing sources: internal (retained earnings), external equity (share issue, venture capital, business angels), debt (bank loan, bond, leasing), and hybrid (convertible). Trade-off: debt is cheaper (tax shield) but raises financial risk.

WACC = (E/V) x Ke + (D/V) x Kd x (1 - tax rate); it is the discount rate for projects of average risk.

Entrepreneurship is the identification, evaluation and exploitation of opportunities under uncertainty; the entrepreneur bears risk and assembles resources.

Opportunity vs idea: an opportunity is attractive, durable, timely and anchored in a product or service that creates value for buyers.

Lean startup: build-measure-learn loop, minimum viable product (MVP), validated learning, pivot or persevere.

Innovation types: product, process, organisational, marketing (Oslo Manual). Radical vs incremental; sustaining vs disruptive (disruptive enters a low-end or new market and moves up).

Innovation diffusion (Rogers): innovators, early adopters, early majority, late majority, laggards; adoption driven by relative advantage, compatibility, complexity, trialability, observability.

Digital transformation layers: processes (automation, ERP/CRM), business model (platforms, servicestorm/subscription, data monetisation), customer experience (omnichannel, personalisation).

Digital levers: cloud, data analytics, AI, IoT, e-commerce and digital marketing. Barriers: legacy systems, skills gaps, culture, cybersecurity, cost of change.

Protection of innovation: patents (novel, inventive, industrial application; up to 20 years), utility models, trademarks (renewable), industrial design, trade secrets, copyright for software.