Reporting your business model

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The need for companies to clearly articulate their business model is undeniable. Yet in the complex and dynamic world of today, many companies struggle with how to articulate their purpose, demonstrate how they create value, their resilience to change, and the quality and sustainability of the business and its performance. 

Articulate the business model

Time and time again, our discussions with companies show they continue to grapple with what their business model is, what information it should include, and how it aligns with other aspects of the business.

In this report, we examine why that might be and how companies are responding to better understand how FTSE 350 companies are communicating business models in their annual report. We have included practical guidance for companies, what we consider are the building blocks for effective business models, and good examples from current reporting.

“Given how disruptive markets are to business models – who, for example, would have predicted how something as simple as booking a taxi could have so fundamentally changed over such a short period of time – the lack of alignment between market insights and business models is surprising.”

Sarah Allen, PwC, Corporate Reporting Specialist

Building blocks for better business models

We recognise and understand the challenges companies face when articulating their business model. Companies and investors also recognise that in our rapidly changing world a static or generic business model is no longer sufficient.

To help those charged with articulating their company’s business model, we’ve identified four building blocks to build better business models. 

  • Value creation and competitive advantage
  • Resources and relationships
  • Integration of the business model
  • Tomorrow's business models
1

Value creation and competitive advantage

Explain how value is created and who benefits, and identify what makes the entity distinctive.

Our recommendations include:

  • Be specific. Avoid high level or broad generic statements about what makes a business model unique.
  • Explain clearly how value creation is measured and who benefits.

Our report also includes good practice examples that demonstrate these and further recommendations.

2

Resources and relationships

Identify the key resources and relationships that are critical for the long-term success of the business.

Our recommendations include:

  • Determine which resources and relationships are material to the business.
  • Explain and be transparent in the processes followed when determining those resources and relationships and what their material issues/concerns are.

Our report also includes good practice examples that demonstrate these and further recommendations.

3

Integration of the business model

Consider and explain how the business model links to other key elements of strategic reporting.

Our recommendations include:

  • Cross-referencing the business model to other elements of the report.
  • Performing a gap analysis of existing content by building a matrix of the key components of your business model, strategy, risks and KPIs reporting and drawing connections and/or identifying where gaps exist either in content or terminology.

Our report also includes good practice examples that demonstrate these and further recommendations.

4

Tomorrow's business models

Demonstrate the resilience of the business model and its ability to create long-term and sustainable value.

Our recommendations include:

  • Link the business model to market drivers.
  • Use a dynamic narrative.
  • Present a picture of how the business model might evolve in the future.

Our report also includes good practice examples that demonstrate these and further recommendations.

Contact us

Mark O'Sullivan
Head of Corporate Reporting
Tel: +44 (0)20 7804 3459
Email

Sarah Allen
Corporate Reporting Senior Manager
Tel: +44(0)113 289 4697
Email

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