CIMA E2 Syllabus A. Business models and value creation - Capturing and sharing value - Notes ^{9 / 9}

The three main issues to consider when capturing value are the firm’s cost model, their revenue model, and the distribution of surplus.

Cost model

Key factors to establish cost

• Process efficiency

• Activity level

• Resources consumed

• Price paid for resources

Revenue model

The revenue model includes pricing policy and collection policy.

Pricing policy can be affected by regulations and market conditions. 

The collection policy determines how fast revenue is turned into cash.

Distribution of surplus

The residual value is then distributed among stakeholders based on the organisation's priority. It includes the government who receives taxes, shareholders who receive dividends, employees who receive performance related pay, etc. Some of it can also be used by the organisation for investments.