(Strategy Management)

Case

Sirius XM

Customer value proposition: For a monthly subscription fee, provided satellite-based music, news, sports, national and regional weather, traffic reports in limited areas, and talk radio programming.

Also offered subscribers streaming Internet channels and the ability to create personalized commercial-free stations for online and mobile listening.

Offered programming interrupted only by brief, occasional ads

Profit formula: Revenue generation: Monthly subscription fees, sales of satellite radio equipment, and advertising revenues.

Cost structure: Fixed costs associated with operating a satellite-based music delivery service and streaming Internet service. Fixed and variable costs related to programming and content royalties, marketing, and support activities.

Profit margin: Profitability dependent on attracting a sufficiently large number of subscribers to cover costs and provide attractive profits.

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Go to investor SiriusXM corn and check whether Sirius XMs recent financial reports (2021) indicate that its business model (as described in Case) is working.

Does its cost structure allow for acceptable profit margins? Why? ( I wonder about acceptable profit for what like for shareholders, stockholders.....? Can you explain this clearly?)