SiriusXMs Business Model

While the companys strategy sets forth an approach to offering superior value, a companys business model is managements 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 companys business model are (1) its customer value proposition and (2) its profit formula. The customer value proposition is established by the companys overall strategy and lays out the companys approach to satisfying buyer wants and needs at a price that customers will consider 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 companys 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 companys 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 profitabilityit may or may not.

The goal of this assignment is for you to understand what is meant by a companys strategy and why it needs to differ from that of competitors.

Before completing this exercise, be sure to review Ch. 1, What Is Strategy and Why Is It Important?, specifically, the section entitled A Companys Strategy and Its Business Model, Illustration Capsule 1.2, and the SiriusXM website (investor.siriusxm.com).

Does SiriusXMs cost structure allow for acceptable profit margins?

Multiple Choice SiriusXMs cost structure does not allow for an acceptable profit margin. It is difficult to determine whether SiriusXMs cost structure allows for an acceptable profit margin. SiriusXM needs to lower its subscription fees to get more customers. SiriusXMs cost structure allows for an acceptable profit margin. SiriusXM needs to raise its subscription fees to earn more profits.