Two Ways to Increase a Profit of a Company

• Two ways to increase a profit of a company

• Increase the shareholder value
• Increase the level of profit abilities

• ROIC – Return on invested capital

• Sustained competitive advantage

• If a company has above average profitability for over 3 years, they have sustained competitive advantage

• Business Model

• 3 dimensions

• Customer groups

• Who are the customers?

• Customer needs

• What kind of needs of customers are being satisfied?

• Distinctive competencies

• How are these customers being satisfied?

In-class handout questions:

Customer groups: Women who have been cheated or want to avoid cheaters

• Women who would like to see information about potential or current partners

Customer needs: To avoid men who are cheaters

• Reassurance

Distinctive competencies: Posting the profiles of cheaters

• Fundamental flaw of business: Potential for imitation of the company

• How to prevent that:

• Build your customers as large and as quick as possible

• Two types of stakeholders:

• External

• Customers
• Advertising companies
• Lawyers
• Suppliers

• Internal

• Shareholders
• Employers

Four important things to keep in mind:

• Be an imitator
• Do not be a perfect imitator – if you can do it, someone else can do too
• Do not build your business based on the conflict of two stakeholders
• If you were a business consultant

• Important is how to solve the operational problems in a company – competitive advantage
• Coming up with a business idea is not as important

Biases:

Reasoning by analogy bias examples:

• Today is a paradise. Hence, we do not need an umbrella
• Forming some sort of conclusion based on a metaphor