Investment due diligence is the process by which investors conduct a comprehensive, in-depth and objective analysis and evaluation of a project or enterprise before deciding whether to invest in it. The purpose of investment due diligence is to reduce investment risk, improve investment returns, and identify potential value-added opportunities. Investment due diligence involves many aspects, such as finance, law, market, technology, management, etc., the core of which is the evaluation of business model and competitiveness. Business model refers to the logic of how an enterprise creates, transmits and acquires value, and competitiveness refers to the advantage and position of an enterprise in the market relative to its competitors. This paper will explore how to evaluate business models and competitiveness from the following four aspects: first, to determine the evaluation criteria and methods; second, to analyze the industry environment and trends; third, to identify the strengths, weaknesses and risks of business models; and fourth, to measure the source and sustainability of competitiveness. This article will also demonstrate the practical application of investment due diligence in the context of specific cases of Champ Consulting Services clients.

1. determination of assessment criteria and methods

The first step in assessing business models and competitiveness is to identify evaluation criteria and methodologies. Evaluation criteria refer to indicators or dimensions used to measure business models and competitiveness, and evaluation methods refer to tools or frameworks used to collect, analyze and present data and information. Evaluation criteria and methods should be selected based on the objectives, preferences and needs of investors, as well as the characteristics of the investee, industry characteristics and data availability.

A commonly used evaluation criterion is**Value proposition**, the unique value or solution that the business provides to its customers. The value proposition can be measured from the following aspects: first, customer demand, that is, what kind of problems the enterprise has solved or what kind of wishes the customer has met; second, product or service characteristics, that is, what kind of products or services the enterprise provides to meet customer needs; third, differentiation advantage, that is, what unique advantages or innovations the enterprise has compared with its competitors; fourth, revenue model, that is, how the business generates revenue or profit from its customers.

A commonly used evaluation method is**Business Model Canvas**, a graphical tool consisting of nine components to describe, analyze, and design business models. The nine components are: value proposition, customer segment, channel, customer relationship, revenue stream, key resources, key activities, key partners and cost structure. The business model canvas can help investors clearly understand the business logic of the investee and discover its potential advantages or risks.

2. analysis of the industry environment and trends

The second step in evaluating the business model and competitiveness is to analyze the industry environment and trends. The industry environment refers to the external factors that affect the operation and development of enterprises, such as market size, growth rate, competitive landscape, supply chain, regulations and policies. Industry trends refer to changes or evolutions in the industry environment, such as technological innovation, consumer demand, social culture, and environmental climate. The purpose of analyzing the industry environment and trends is to identify opportunities and threats to business models and competitiveness, as well as to assess their sustainability and adaptability.

A common analytical method is the Porter Five Forces model, which is an analytical framework consisting of five components to assess the degree of competition and profitability of the industry. These five components are: intra-industry competition, the threat of potential entrants, the threat of substitutes, the bargaining power of suppliers and the bargaining power of buyers. Porter's Five Forces model can help investors determine whether the industry in which the investee is invested is attractive and its relative position in the industry.

3. identify the strengths, weaknesses and risks of the business model

The third step in assessing business models and competitiveness is to identify the strengths, weaknesses and risks of the business model. Strengths and weaknesses are the strengths or weaknesses of a business model relative to competitors or industry standards, and risk is the uncertainty or challenges that a business model may face. The purpose of identifying the strengths, weaknesses and risks of a business model is to assess its ability to create and capture value, and to predict its future performance and development potential.

A commonly used identification method isSWOTanalysis, an analytical tool consisting of four components to assess the internal strengths and weaknesses of the business model (Strengths and Weaknesses) and external opportunistic threats (Opportunities and Threats）。SWOTAnalysis can help investors discover the core competencies of the investee and formulate corresponding strategies or action plans.

4. measure the source and persistence of competitiveness

The fourth step in assessing business models and competitiveness is to measure the source and persistence of competitiveness. Source refers to the underlying causes or drivers of competitiveness, and sustainability refers to the likelihood or ease with which competitiveness is maintained or enhanced. The purpose of measuring the source and sustainability of competitiveness is to assess its stability and superiority relative to competitors or changes in the industry, as well as to anticipate its future impact and value.

A commonly used measure isVRIOAnalysis, an analytical framework consisting of four components, is used to assess whether an enterprise's resources or capabilities have a competitive advantage. These four components are: value (Value), scarcity (Rarity), non-replicability (Inimitability) and organizations (Organization）。VRIOAnalysis can help investors determine whether the investee has a sustainable core competitiveness and how to use its resources or capabilities to achieve strategic goals.

Conclusion

This paper discusses how to evaluate business models and competitiveness from four aspects, namely, to determine the evaluation criteria and methods, to analyze the industry environment and trends, to identify the advantages and disadvantages and risks of business models, and to measure the source and sustainability of competitiveness. This paper also shows the practical application of investment due diligence in combination with the specific case of the clients of Shangpu consulting service. The purpose of this paper is to provide investors with a reference framework for evaluating business models and competitiveness, and to help them make more informed and effective investment decisions.

Case analysis

In order to better illustrate the evaluation methods and ideas of this paper, this section will use the example of a new energy vehicle company served by Shangpu Consulting as an example for a brief case study. The company is an innovative company focusing on electric vehicles and autonomous driving technology. It has independently developed core technologies and patents. It has launched a number of high-performance, high-high quality, and high-intelligence electric vehicle products in domestic and foreign markets, and has won A number of industry awards and user recognition. The company is seeking a round of financing to expand production scale, increase market share, accelerate technological innovation and enhance brand influence.

1. determination of assessment criteria and methods

Based on the needs and preferences of investors, as well as the characteristics of the investee and the characteristics of the industry, the following two evaluation criteria and methods were selected in this case:

-Value proposition: used to evaluate what unique value or solution the business offers to customers, as well as its differentiation and revenue model relative to competitors.

-Business model canvas: used to describe, analyze and design the business model of the enterprise and to discover its potential advantages or risks.

2. analysis of the industry environment and trends

According to the Porter Five Forces model, the following analysis of the new energy vehicle industry in which the company is located is carried out in this case:

-Intra-industry competition: The industry is highly competitive, with major competitors including traditional automakers, other new energy vehicle manufacturers, and shared travel platforms. Competitive factors include product performance, brand image, pricing strategy, channel coverage, and service quality.

-Threat of potential entrants: The industry has high barriers to entry, mainly due to the need for large capital investment, technological innovation, policy support, etc. However, with the promotion of technological progress, market demand, environmental awareness and other factors, the industry is still likely to attract more new entrants, especially innovative enterprises from the Internet, electronics or other fields.

-Threat of substitutes: There are few substitutes in this industry, mainly including traditional fuel vehicles and public transportation. However, with the increasing demand of consumers for environmental protection, energy saving, intelligence and other aspects, as well as the impact of the price decline and performance improvement of new energy vehicles, the threat of substitutes in the industry will gradually weaken.

-Supplier bargaining power: Suppliers in this industry have strong bargaining power, mainly because the supply of key components and raw materials (such as batteries, chips, etc.) required for new energy vehicles is relatively tight, and the technology content is high, which is difficult to replace. Therefore, suppliers in this industry have a greater influence on the cost, quality, and efficiency of new energy vehicle manufacturers.

-Buyer's bargaining power: The buyer's bargaining power in this industry is weak, mainly because of the strong demand in the new energy vehicle market and the high degree of product differentiation, which is difficult to compare. Therefore, buyers in this industry have less influence on the price, brand and service of new energy vehicle manufacturers.

To sum up, the industry has a certain attraction, but also faces a lot of challenges and changes. The enterprise needs to constantly innovate and optimize its business model and competitiveness to adapt to the industry environment and trends.

3. identify the strengths, weaknesses and risks of the business model

AccordingSWOTAnalysis, the case of the enterprise's business model for the following identification:

-Advantages: The company has self-developed core technologies and patents, such as battery management systems, autonomous driving systems, etc., and provides high-performance, high quality, and highly intelligent electric vehicle products to meet customers' environmental protection, energy saving, comfort, and safety. Demand. The company also has strong brand influence and loyalty, and has established a solid customer relationship and reputation through a combination of online and offline channels and service models.

-Disadvantages: The company is facing high cost pressures and capital requirements, such as parts procurement, production equipment, research and development investment, etc., resulting in relatively high prices of its products, making it difficult to cover a wider range of markets and customers. The company also faces greater technical and legal risks, such as battery safety and autonomous driving compliance, which may affect its product quality and reputation.

-Opportunities: The company can use its technological and brand advantages to develop more innovative products and services, such as smart connected cars, driverless travel platforms, etc., to meet customer needs and experiences at a higher level. The enterprise can also take advantage of its channel advantages and service advantages to expand its market share and coverage, such as entering more domestic and foreign markets, establishing more sales outlets and charging stations, etc.

-Threats: The company needs to deal with competitive pressures from various sources, such as traditional automakers transforming new energy vehicles, other new energy vehicle manufacturers improving product performance and brand image, and sharing travel platforms to reduce travel costs. The enterprise also needs to deal with the challenges of changes from many aspects, such as the upgrading brought about by technological progress, the personalized customization brought about by consumer demand, and the change of consumption concept brought about by social culture.

To sum up, the enterprise has certain value creation ability and value capture ability, but there are also many uncertainties or challenges. The company needs to continuously optimize and improve its business model and competitiveness to deal with internal strengths and weaknesses and external opportunities.

4. measure the source and persistence of competitiveness

AccordingVRIOanalysis, this case measures the competitiveness of the enterprise as follows:

-Value: The enterprise has high value because it provides products and services that meet customer needs and expectations, as well as differentiated advantages and revenue models relative to competitors.

-Scarcity: The company has a certain degree of scarcity because it has self-developed core technologies and patents, as well as strong brand influence and loyalty, which are difficult to be easily copied or imitated by other companies.

-Non-replicability: The company is highly non-replicable because it has years of technological accumulation and innovation capabilities, as well as unique corporate culture and organizational capabilities, which are difficult to be easily simulated or surpassed by other companies.

-Organization: The enterprise has a good organization because it can effectively use its resources and capabilities to achieve its strategic goals and vision, as well as adapt to market changes and customer needs.

In summary, the company has a sustainable core competitiveness because it has four elements: value, scarcity, non-replicability and organization. The enterprise needs to continuously maintain and enhance its competitiveness in order to achieve its long-term development and success.