Analyzing business models

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Resumé

New types of disclosure and reporting are argued to be vital in order to convey a transparent picture of the true state of the company. However, they are unfortunately not without problems as these types of information are somewhat more complex than the information provided in the traditional financial statement. Plumlee (2003) finds for instance that such information imposes significant costs on even expert users such as analysts and fund managers and reduces their use of it. Analysts’ ability to incorporate complex information in their analyses is a decreasing function of its complexity, because the costs of processing and analyzing it exceed the benefits indicating bounded rationality. Hutton (2002) concludes that the analyst community’s inability to raise important questions on quality of management and the viability of its business model inevitably led to the Enron debacle. There seems to be evidence of the fact that all types of corporate stakeholders from management to employees, owners, the media and politicians have grave difficulties in interpreting new forms of reporting. One hypothesis could be that if managements’ own understanding of value creation is disclosed to the other stakeholders in a form that corresponds to the stakeholders understanding, then disclosure and interpretation of key performance indicators will also be facilitated.
OriginalsprogEngelsk
TitelThe Basics of Business Models
Antal sider14
ForlagVentus
Publikationsdato2014
Sider105-118
Kapitel7
ISBN (Elektronisk)978-87-403-0525-8
StatusUdgivet - 2014

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Business model
Stakeholders
Analysts
Costs
Disclosure
Financial statements
Viability
Owners
Bounded rationality
Value creation
Enron
Key performance indicators
Fund managers
Politicians
Employees

Bibliografisk note

Learn how to analyze your business model and make it more successful.
New types of disclosure and reporting are vital in order to convey a transparent picture of the true state of a company. However, they are unfortunately not without problems. All types of corporate stakeholders from management to employees, owners, the media and politicians seem to have difficulties in interpreting new forms of reporting. For example, evaluating the potential return of investment in a new business model can be very complex.
The article seeks to solve this problem by presenting a guide on how to analyze business models. This will enable you to find the weaknesses that may affect the transparency of your company.


Published: 2014

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    Nielsen, C. (2014). Analyzing business models. I The Basics of Business Models (s. 105-118). Ventus.
    Nielsen, Christian. / Analyzing business models. The Basics of Business Models. Ventus, 2014. s. 105-118
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    Nielsen, C 2014, Analyzing business models. i The Basics of Business Models. Ventus, s. 105-118.

    Analyzing business models. / Nielsen, Christian.

    The Basics of Business Models. Ventus, 2014. s. 105-118.

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