Question

Read the overview below and complete the activities that follow.

While the company’s strategy sets forth an approach to offering superior value, a company’s business model is management’s blueprint for delivering a valuable product or service to customers in a manner that will yield an attractive profit. In this exercise you will be asked to evaluate the business model for SiriusXM.

The two elements of a company’s business model are (1) its customer value proposition and (2) its profit formula. The customer value proposition is established by the company’s overall strategy and lays out the company’s approach to satisfying buyer wants and needs at a price the customer will consider to be a good value. The greater the value provided and the lower the price, the more attractive the value proposition is to customers. The profit formula describes the company’s approach to determining a cost structure that will allow for acceptable profits given the pricing tied to its customer value proposition. The lower the costs given the customer value proposition, the greater the ability of the business model to be a moneymaker. The nitty-gritty issue surrounding a company’s business model is whether it can execute its customer value proposition profitably. Just because company managers have crafted a strategy for competing and running the business does not automatically mean that the strategy will lead to profitability—it may, or it may not.

Go to investor.siriusxm.com and check whether Sirius XM’s recent financial reports indicate that its business model is working. Are its subscription fees increasing or declining? Is its revenue stream from advertising and equipment sales growing or declining? Does its cost structure allow for acceptable profit margins?

Are Sirius XM’s subscription fees increasing or decreasing? Explain your answer. Make this original and answer all 3 question.

Answer 1

ANSWER: According to the sirius financial report which shows business model is working as when compared of the last three years from 2018 to 2020 which shows an increasing trend in its graph from 4.5 to to 6 approximately which shows the increasing sign of the model. Its subscription fee is also in increasing as when compared to that of 2017 and 2018 annual subscription revenue 4,447,522 is the subscription revenue of 2017 and that of 2018 which is 4,593,803.

Also it's revenue stream from the sales of it's advertisement and equipment sales is also in increasing fashion when the revenue of both the advertisement and equipment is compared between 2 year i.e advertisement revenue of 2017 at the december end is 160,347 and that of 2018 at the year end is at december 31 which is 187,569. Also when we discuss about the equipment revenue it is also increasing when compared between 2017 and 2018.

When it comes to it's cost structure it allows for an acceptable profit margin as its cost of various services is decreasing at the end of the december 31 in 2018 as when compared with the cost of 2017 which clearly indicates an sharp increase and acceptable profit margin as the gross profit margin of 2017 is $3846 that of 2018 is $4064 and of 2019 is $4441 which clearly shows the increasing trend in the last 3 years.

From the siris Xm subscription fee which is increasing as the subscription revenue is showing a increasing trend of the last 3 years i.e in 2017 which is $5305 and in 2018 it is -> $5742 and when it comes to 2019 it is of amount $6171.

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