Question

Strategy and a Company's Business Model

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 within the last 3 yrs

Answer 1

According to the Sirius financial report which indicates that its business model is working as when compared of the last three year i.e from 2018 to 2020 which is showing a increasing trend in its graph i.e from 4.5 to approx 6 which is the increasing sign of the model.

Its subscription fees is also increasing as when compared of 2017 and 2018 annual subscription revenue i.e 4,447,522 is the subscription revenue of (2017) and that of (2018) 4,593,803.

Its Revenue stream from the sales of its Advertisement and Equipment sales is also growing or increasing when the revenue of both advertisement and equipment is compared between two year i.e Advertisement revenue of 2017 at the december end is 160,347 and that of 2018 at the year end i.e at december31 it is - 187,569 and when we talk about Equipment revenue it is also increasing when compared between 2017 and 2018 i.e it is 131,568 at the december31 of 2017 and becomes 154,878 at the end of december 31 in 2018

Its cost structure allows for acceptable profit margin as its cost of various services is decreasing at the end of december31 in 2018 as an when compared with the cost of 2017 which shows a increase and acceptable profit margin as the gross profit marin of 2017 is $3846 that of 2018 is $4064 and of 2019 is $4441 which is showing a increasing trend in the last three years

The Siris Xm subscription fee is increasing as the subscription revenue is showing a increasing trend of the last three year i.e in 2017 it is - $5305 in 2018 it is - $5742 and in 2019 it is $6171.