A Guide to Profile a Firm
In this template to profiel a firm we introduce tools to create the microeconomic model for the firm; the instittuional model and the capabilties model.
Industry Profile
- Production Chain: Key steps in the firm’s production or service delivery process.
- Value Chain: How the firm creates value at each stage.
- Competitors: Major competitors and positioning.
- Environment: Regulatory, technological, economic, and social context affecting the firm.
Market Profile
- Market Size: Total addressable market, served market, growth trends.
- Customer Segments: Key customer groups and their characteristics.
- Geographical Reach: Regions or countries of operation.
- Market Trends: Emerging trends affecting demand or competition.
Production (Value Creation)
Guiding Questions:
- What does the firm produce?
- What is the firm’s production function?
- What is the firm’s technical profile?
- How does the firm perform operationally?
- What is the cost structure?
- How do structural factors shape the firm’s future performance? Evaluate expected impacts of:
- Learning-by-doing
- Economies of scale
- Economies of scope
- Technological change
- Environmental and regulatory factors
- Resource constraints and external shocks
Technical Profile
- Category: Constitutive Technique, Operative Technique, Production Technical Object (Capital Good), Constitutive Technical Object.
- Use: How the technical element is used to bring the final good into existence.
| Category | Element | Description | Use |
|---|---|---|---|
| Constitutive Technique | — | Fundamental principles, rules, and abstract procedures that define how the technical object is possible. | Establishes the operational logic and constraints of the final good. |
| Operative Technique | — | Concrete methods, steps, and processes used to operate, manipulate, or transform elements. | Enables the execution and functioning of the technical object during production or use. |
| Production Technical Object (Capital Good) | — | Tools, machines, instruments, or systems used in the production of the final good. | Provides the physical or digital means through which production takes place. |
| Constitutive Technical Object | — | Component or subsystem essential to the identity and function of the final good. | Forms part of the internal architecture of the final good and allows it to exist as such. |
Product Catalog
| Product | Description | Category |
|---|---|---|
Business Model (Value Capture)
Guiding Quiestions:
Revenue Architecture
- What are the firm’s revenue streams, and how are they decomposed (product-level, segment-level, geography-level)?
- What is the pricing architecture (fixed, dynamic, discriminatory, subscription, usage-based, two-part tariff, bundling, peak-load)?
- What is the elasticity structure for each product and segment?
- What is the volume model (installed base, throughput, utilization, recurring vs. transactional share)?
- What contractual mechanisms govern cashflows (payment terms, AR cycle, lock-in mechanisms, switching costs)?
Unit Economics & Margins
- What is the contribution margin per product, per customer segment, and per delivery channel?
- How does cost behavior decompose into fixed, variable, step-fixed, and quasi-fixed components?
- What is the marginal cost curve, and how does it scale with output?
- Does the firm have positive learning curves that structurally reduce marginal costs?
- How sensitive are margins to: input prices, labor costs, utilization, downtime, and demand variability?
Cost Structure & Operating Leverage
- What is the firm’s operating leverage and its volatility across the business cycle?
- What are the break-even points for:
- Product lines
- Facilities
- Channels
- Entire firm
- How robust is the break-even structure to shocks (input shocks, demand contraction, regulatory changes)?
- Are cost centers optimized or overburdened (bottlenecks, inefficiencies, capacity slack)?
Capital Structure Interaction
- How do financing mechanisms (debt ratios, covenant structures, working-capital cycles) influence value capture?
- How sensitive is free cash flow to cost of capital, refinancing needs, and investment cycles?
- What share of value capture is absorbed by capital providers vs. captured through operations?
Market Power & Competitive Position
- Does the firm capture value through price-setting power, cost leadership, differentiation, or network effects?
- What is the markup structure relative to marginal cost?
- What is the firm’s bargaining position relative to suppliers and buyers (Porter power asymmetry analysis)?
- Are there barriers to entry or economies of scale/scope reinforcing value capture?
Contractual, Platform, and Data-Based Capture
- Does the firm generate value through platform fees, take rates, or intermediation spreads?
- Are there data-driven monetization loops (ads, optimization, insights, behavioral prediction)?
- Are switching costs, lock-in, or ecosystem interdependencies sources of durable extraction?
Risk Structure & Value Retention
- What risks systematically erode value capture (churn, volatility, operational downtime, commodity exposure)?
- How does the firm retain value under uncertainty (hedging, contracts, dynamic pricing, redundancy)?
- What is the variance decomposition of cashflow sources (stable vs. volatile components)?
Miscellaneous
Resource Allocation (Internal Economics):
- Capital allocation
- Labor allocation
- Investment decisions
- Coordination mechanisms (hierarchy, markets, hybrid)
Incentives & Governance (Organizational Economics):
- Contracts, incentives
- Agency relationships
- Monitoring and information asymmetries
- Ownership structure
Dynamics & Growth (Evolutionary Economics)
- Capability development
- Innovation routines
- Learning curves
- Adaptation, diversification, path dependence