Business Models
2024 Curriculum
CFA Program Level I
Corporate Finance
Refresher reading access
Overview
A clearly described business model helps the analyst understand a business: its strategy, operations, target markets, key customers, suppliers, and ultimately prospects, risks, and financial profile. Many firms have conventional business models that are easily understood and have long existed, such as manufacturers and retailers. However, many business models are complex, novel, or a combination of models. Technological innovation, particularly digitalization, has enabled significant business model innovation over the past decades. Analysts need to develop their own understanding of an issuer’s business model to inform their outlook and risk assessment; analysts should not rely solely on management’s description of its business model.
1 PL Credit
If you are a CFA Institute member don’t forget to record Professional Learning (PL) credit from reading this article.