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Subject 2. Business Models: Financial Implications PDF Download

External and firm-specific factors can impact a company's financing needs.

External factors:

  • Economic conditions affect almost all businesses.
  • Demographic trends affect the whole economy.
  • Sector demand characteristics vary by industry.
  • Industry cost characteristics are important. For example, a higher degree of operating leverage creates added sensitivity to changes in revenue, and is considered to be risky but scalable.
  • The political, legal and regulatory environment.
  • Social and political trends.

Firm-specific factors:

  • Stage of the business.
  • Competitive position. Is it a market leader?
  • Business model. To own or rent assets? How to reduce the need for working capital?

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