CFA Level I · CFA Level I Exam · Business Models
A business model describes how a company plans to create value for its customers and capture value for its owners. Which of the following is most likely a core element of a company's business model?
The customer value proposition is a core element of a business model. A business model explains how a firm creates value for customers and captures it as profit, so the offer made to customers sits at its center. Earnings per share and tax rates are results or external factors.
- AIts customer value propositionCorrect
- BThe company's reported earnings per share
- CThe statutory tax rate in its home country
Explanation
A business model covers who the customers are, what value is offered to them, and how the company earns profit from that offer. The value proposition is therefore central. Earnings per share is an outcome of the model, and the statutory tax rate is an external factor, not a design element.
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