Financial Values

 

 (click to enlarge)

 

The Financial Values can be split in two categories:

- Revenues: Amounts of money received by the organization in a transaction, in exchange of goods or services.

- Costs: Amounts of money paid by the organization in a transaction, in exchange of supplies.

 

The Bm2 framework adopts a cash flow approach, not an accounting approach: Revenues consist in cash inflows, and Costs consist in cash outflows.

 

(click on the following elements for more details)

> Revenues

Revenues depend on quantities and prices. For this reason, analysis of Revenues can be done regarding both aspects. Here, "revenues" are considered as the cash inflow associated with a specific type of transaction (for instance, for a specific product range).

 

CONTEXT 

Revenues may:

  • represent a small or large portion of total revenues for the organization
  • be higher or lower than competition

Prices may:

  • be determined by the organization (price setter) or not (price taker)
  • be higher or lower than competition
  • be related to a fixed or flexible budget

Quantities may:

  • be determined by the organization (quantity setter) or not (quantity taker)
  • be higher or lower than competition

 

CONTENT

Revenues may be:

  • Operational Revenues (from the selling of usual goods and services)
  • Divestment Revenues (from the selling of long-term assets)
  • Financial Revenues (from the selling of securities or rights associated with owned securities)

 

CONCEPT

Prices may:

  • be fixed, variable, dynamically set,
  • be stable, cyclical or moving,
  • depend on demand level,
  • depend on costs,
  • depend on willingness to pay,
  • depend on regulations,
  • depend on competition,
  • depend on uncontrolable factors or not,
  • depend on quantity per transaction or not,
  • depend on the nature of the customer or not,
  • depend on the level of utility for the customers or not,
  • be based on delivered value or not,
  • be result-based,
  • be based on profit-sharing,
  • be based on a frame agreement,
  • lead to elastic or non-elastic demand,
  • have a low or high dependence on demand,
  • have a low or high dependence on costs,
  • have a low or high dependence on availability of products,
  • have a low or high dependence on availability of substitute products,
  • have a low or high dependence on availability of complementary products,
  • have a low or high dependence on other products in the portfolio,
  • ...

 

Link with Super-Processes:

Revenues are the main outcome of the Capture Super-Process.

(see Process Quadrant)

 

> Costs

 

CONTEXT 

Costs may be:

  • represent a small or large portion of total revenues for the organization
  • be higher or lower than competition
  • be determined by the organization or not

 

CONTENT 

Costs may be:

  • Operational cash outflow (purchasing of supplies)
  • Financing cash outflow (debt repayment, dividends)
  • Investment cash outflow (investments - including financial)

 

CONCEPT 

Costs may:

  • be fixed costs or variable costs with regard to supplies,
  • be fixed or dynamically set,
  • be stable, cyclical or moving,
  • depend on on supply level,
  • depend on on regulations,
  • depend on on competition,
  • depend on uncontrolable factors or not,
  • depend on quantity per transaction or not,
  • depend on the nature of the supplier or not,
  • depend on the level of utility for the organization or not,
  • be based on received value or not,
  • be result-based,
  • be based on profit-sharing,
  • be based on a frame agreement,
  • lead to elastic or non-elastic supply,
  • have a low or high dependence on supply level,
  • have a low or high dependence on demand level,
  • have a low or high dependence on availability of substitute products,
  • have a low or high dependence on availability of complementary products,
  • ...

 

 

 

Operational Values < PREVIOUS

 

 

Bm2: Design, Analyse & Manage your Business