USP Performance & Business Environment Assessment

USP Performance & Business Environment Assessment

Construction of Value Chain Performance Evaluation System1

Front end

Market development index

Middle end

Technology innovation index

Production and operation index

Back end

Product quality indexMarketing Promotion

Index

Financial index Human resources index

Enterprise Culture System Index

USP

Upstream suppliers index

Downstream customers index

Internal value chain A1

External value chain A2

Performance

Value chain coordination index

Cooperator Competitor

Business Environment Analysis SuggestionsSWOT

Internal Value Chain2

Rationalized recommendation adoption rate C111

Customer complaint rate C112

Market development index B12

Market development cost rate C121

operating expense ratio C122

Infrastructure such as market development is strengthened.

Enterprise culture system index B11

Front end

Middle end

1. Technology innovation index B13

R & D cost rate C131

Number of R&D personnel C132

Product developing speed C133

Return on investment of new products C134

Emphasis on innovation is conducive to long-term development

2. Technology innovation index B14

Acceptable rate of product C141

Product life cycle C142

Production capacity is strong but service quality is low.

Corporate culture construction level is average.


Internal Value Chain2

Financial indexB17

Back end

1. Product quality index B15 Customer satisfaction C151

Internal quality C152

Product quality is not high and declining.

2. Marketing Promotion Index B16 Number of sales channels C161

Number of marketing methods C162

Number of Sales channels is small, marketing promotion ability is weak.

1. Profitability C171 Net interest rate Gross-profit ratio Cost and expense ratios

Profitability is being reduced.

2. Operation ability C172 Property rate of turnover

No significant change in USP operational capacity.

3. Debt paying ability C173 Assets-liability ratio Current ratio

Long-term and short-term solvency is being enhanced.


Internal Value Chain2Human Resource

Indicators B18

Financial index

4. Growth Ability C174 Income growth rate Profit growth rate

Growth capacity is declining.

5. Cash Flow Capacity C175 Cash ratio of operating income

Cash flow capacity is declining.

6. Owner’s Equity C176 Owner’s Equity

Equity is stable.

7. Risk Level C177 High risk business assets ratio Litigation cost ratio Contingent liability ratio Asset loss rate

Risk levels are low for the time

being.

8. Asset Size C178 Fixed assets All other assets

The total size of assets is small

and corporate structure is simple.

Employee knowledge level C181

Employee training input C182

Employee turnover rate C183

Both are constantly improving.


External Value Chain3Supplier indicator B21

Timely delivery rate C211

Supplier qualification rate of product quality C212

Quantity of suppliers C213

Customer indicator B22

Customer Satisfaction Index C221

Customer Retention Rate C222

Customer Acquisition Rate C223

Both customer satisfaction and customer retention rate decreased, while customer acquisition rate increased.

The quality of the products supplied by suppliers is declining.

Competitor indicator B23

Market share C231

Competitor size C232

Current period inventory C233

USP has many competitors, and it is at adisadvantage in the market competition.

Value chain synergetic index B24

Information validity C241

Information sharing rate C242

Value chain node enterprise loyalty C243

The rationality of profit distribution C244

The rate of Effective and Shared information is low, but corporate loyalty and rationality are strong.


（1） According to single factor fuzzy judgment, determine the single factor to establish fuzzy matrix𝑅𝑅11 = 0.00 0.06

0.00 0.130.20 0.60 0.140.26 0.46 0.15 …

（2） Weight coefficient matrix 𝑤𝑤11 = 0.51 0.49 𝑤𝑤12 = 0.51 0.49 …（3） Secondary fuzzy evaluatio 𝐵𝐵𝑖𝑖𝑖𝑖 = 𝑤𝑤𝑖𝑖𝑖𝑖 × 𝑅𝑅𝑖𝑖𝑖𝑖𝐵𝐵11 = 0.00 0.0943 0.2294 0.5314 0.1449 𝐵𝐵12 =0.00 0.4812 0.3649 0.1539 0.00 …

（4） First-level fuzzy evaluation matrix 𝑅𝑅1 =0.0000 0.0943 0.2294 0.5314 0.14490.0000 0.4812 0.3649 0.1539 0.00000.1530 0.3965 0.2950 0.1555 0.00000.0856 0.3384 0.5144 0.0616 0.00000.0000 0.3316 0.3405 0.2620 0.06590.0000 0.0275 0.2650 0.5710 0.13650.0378 0.1971 0.4064 0.2767 0.08200.0000 0.2345 0.4595 0.3020 0.0040

…

𝑤𝑤1 = 0.03 0.04 0.27 0.15 0.17 0.11 0.15 0.08 … 𝐵𝐵𝑖𝑖 = 𝑤𝑤𝑖𝑖 × 𝑅𝑅𝑖𝑖R = 0.05982 0.287764 0.363043 0.246338 0.043335

0.169995 0.227937 0.432231 0.310452 0.005208 𝑤𝑤 = 0.61 0.39𝐵𝐵 = 𝑤𝑤 × 𝑅𝑅 = 0.10278825 0.26443147 0.39002632 0.27134246 0.02846547

V = 𝑉𝑉1,𝑉𝑉2,𝑉𝑉3,𝑉𝑉4,𝑉𝑉5 = 𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒,𝑔𝑔𝑔𝑔𝑔𝑔𝑔𝑔, 𝑎𝑎𝑎𝑎𝑒𝑒𝑎𝑎𝑎𝑎𝑔𝑔𝑒𝑒, 𝑏𝑏𝑎𝑎𝑔𝑔,𝑤𝑤𝑒𝑒𝑎𝑎𝑤𝑤= 100,80,60,40,20

Fuzzy Performance Evaluation of USP4𝑷𝑷 = 𝑩𝑩 × 𝑽𝑽 = 𝟔𝟔𝟔𝟔.𝟐𝟐𝟐𝟐𝟐𝟐𝟐𝟐𝟐𝟐𝟐𝟐𝟔𝟔In the Internal Value Chain

Corporate culture system index “ bad ”

Market development index “ good ”

Technical innovation index “ good ”

Production and operation index “ average ”

Product quality index “ average ”

Marketing promotion index “ bad ”

Financial index “ average ”

Human resources index “ average ”

In the External Value Chain

Supplier index “ average ”

Customer index “ bad ”

Competitor index “ average”

Value chain synergy index “ average ”

In ALL

Internal value chain index “ average ”

external value chain index “ average ”

The rank of performance evaluation of USP is

between average and good, with a average

bias.

CVP Analysis5

Service category SI BP SMM SI BP SMM

Exclusive consultant unit variable labor cost 150.00 250.00 - 150.00 250.00 -

Non-exclusive consultant unit variable

labor cost250.00 400.00 600.00 250.00 400.00 -

Unit sales commission① 253.81 189.57

Exclusive consultant fixed labor cost 700,000.00 1,000,000.00 - 600,000.00 900,000.00

Online platform and APP 2,000,000.00 1,200,000.00

Rent 520,000.00 500,000.00Training 400,000.00 100,000.00Interests 200,000.00 200,000.00

Wages and admin 1,550,000.00 1,500,000.00Total fixed cost 6,370,000.00 5,000,000.00

Note：Assuming that the market development expenses are all sales commissions, since the market development expenseshave increased from 200,000 yuan in 2017 to 500,000 yuan in 2018, it is reasonable to assume that the proportion of salesrelying on the sales commission program in the total sales volume has increased from 5% in 2017 to 10% in 2018.

2017：Average unit Sales Commission =500000/(19700*10%)=253.81（ Yuan/time ）

2018：Average unit sales commission =200000/(21100*5%)=189.57（ Yuan/time ）

CVP Analysis5

Labor cost:

SI+BP→total reduction by 520,000.00

SI+BP+SMM→Total growth rate=10.49%

Platform cost:

Salary of IT+IT infrastructure+Other→

Total growth rate=66.67%

The increase in income can’t meet the

increased costs. If it fails to achieve

effective cost reduction and efficiency

increase, USP will face greater

operational risks.

In 2018, USP’s overall operation

conditions deteriorated.

Drop in gross margin: USP has increased

development costs and technical staff

compensation.

Margin of safety reduction: The gap between

existing sales and the break-even point shrinks,

making USP less resistant to market downturns.

Comprehensive breakeven sales increased:

USP production and operation risk increased.

35.58% 39.10%

11,013,139.70 8,470,269.35

3,206,860.30 4,139,730.65

8470

11013

4140 3207

39.10%

35.58%

33.00%34.00%35.00%36.00%37.00%38.00%39.00%40.00%

02000400060008000

1000012000

2017 2018

Comprehensive breakeven sales

Margin of safety

Gross profit margin


CVP Analysis5

Unit: yuan2018 2017

SI BP SMM Dark Horse SI BP SMM Dark

HorseContributio

n margin3,091,113.

804,384,10

9.10749,238.

0023,840,6

69.693,025,475.7

54,417,797.8

0 - 23,502,650.34

Breakeven sales

3,949,860.23

5,514,314.67

1,548,964.80

5,693,719.03

3,526,480.10

4,943,789.25 - 9,955,423.

94

Margin of safety

2,300.00 2,007.00 451.00 102,802,088.18 3,447.00 3,020.00 - 84,178,10

0.50

Marginal contributio

n ratio60.61% 61.57% 37.46% 57.04% 57.63% 60.02% - 64.82

Specific Operation of SI, BP and SMM

Marginal contribution rate ：BP>SI>SMM

SI /BP：The overall operating performance deteriorated.The marginal contribution rate increased.

5000 8000

5500 2200

2017 2018

SI sales ratio

Non-exclusive consultant

Exclusive consultant

USP expects SMM to increase to 10% of the total market value in the next 3 years, with sales increasing at a rate of 60% in the next two years.

SMM uses part-time consultants, which have higher labor costs than signing exclusive contracts.

SI & BP have great operational risks and are likely to suffer losses. SMM increased revenue and became a new profit growth point in 2018. As SMM sales increase, variable costs will increase significantly, reducing

total profits.

55007000

3700 1900

2017 2018

BP sales ratio

Non-exclusive consultant

Exclusive consultant


Long and Short Term Decisions5

9,909.00 8,610.00 3,200.00

500.00 800.00 1,000.00

198.28 308.53 600.00

15.00 20.00 25.00

7,800.00 6,800.00 0

2,109.00 1,810.00 3,200.00

20.11

24.57

16.00

Short-Term-Constrained Resource Decisions (2019)

1,024,500.00 1,920,000.00 3,120,000.00 4,200,000.00 5,136,000.00

9,654,058.92

Long-term-Net Present Value Decision

Note：Market development cost is 500,000.00The sales commission ratio is 10%Unit sales

commission= 500000（9909+8610）/0.1

=270.00

It is estimated that 200 people in the company will work 250 days a year and a total of 40w working hours a year.

Note：Invest 2 million in 2018, with a discount rate of 8%.The sales volume of SMM in the first two years increased by 60%, assuming 50%, 30%, and 20% respectively.


USP Performance Issues Summary6Front End Increased investment in the market development and staff

training, payed attention to infrastructure construction.

→Positive The cost of platform negatively affected the efforts to innovate.

→Negative

Middle End The safety margin of SI and BP decreased, and there is a large

operating risk and a high possibility of loss. Increased revenue cannot cover the cost with constant price;

→Negative

The variable labor cost reduced by SMM is greater than the fixed labor cost increased.

Compared with traditional law firms, USP charges lower fees, provides simplified services and has cost advantages.

→Positive

Back End Falling customer satisfaction reduced corporate credibility. Single sales channels, unappealing marketing and product pricing,

no competitive advantage; The sales model lacks pertinence and is easy to lose customer.

→Negative

Finance SI and BP have underperformed in 2018. The introduction of

SMM have not generated significant revenue. The uncontrolled cost leads to the decline of USP's profitability and growth capacity.

→Negative

Corporate culture management system Single service positioning, simple customer group and lacking

core competitiveness.

→Negative

HR metrics In 2018, the consultant turnover rate declined and the

employee incentive system implemented by USP was effective.

→Positive


USP Performance Issues Summary6

Upstream supplier: USP does not have enough consultants and the quality of service is not high.

→Negative The reduction of consultant turnover in 2018 ensures the stability of upstream suppliers.

→Positive Downstream customers: customer satisfaction declines, customer retention rate and customer acquisition rate

are difficult to break through.

→Negative

USP has no partners, but many strong competitors.

→Negative

Vertical value chain

Horizontal value chain


External Shocks7

Government Policy Many incentives for entrepreneurship. The strategy of mass entrepreneurship and innovation.

Market capacity Reform of the business system is

comprehensively advanced. In the last five years, China set up

72.929 million new market entities and 21.609 million new enterprises.

Internet Development The impact of disintermediation,

flattening and equalization of the Internet.

The Internet ecology has improved and its penetration rate has risen.

USP's targeted customer group：College students planning to start a business

The policy directly increases the number of potential customers.

It provides USP with more potential sales and development opportunities.

USP completed the development and maintenance of online platform and APP: Outside the confines of traditional business

To some extent, it has avoided the loss of customers who are keen on the Internet.

Performance Evaluation SuggestionsSWOT

Market Structure7

The absolute cost barrier in the start-up services industry is very low.

USP's competitors are entering the

market. As traditional service providers enter the

industry with a lot of capital, the barriers to entry in the future are becoming higher.

Industry concentration is low and unstable.

At present, the national entrepreneurial service enterprises show a trend of diversification.

USP is small in size, which makes it

difficult to compete with traditional enterprises in capital and resources.

Other similar firms will compete for USP's market resources.

The sharing of innovation services is strong and the technical content is low. Once a model is profitable, other firms copy it.

Product differentiation is difficult to achieve.

Product differentiation USP's service is relatively unitary, so there

is a risk of customer loss. The increased price sensitivity of consumers

when choosing between similar services presents a challenge to cost control.

Market concentration

Barriers to entry


Market Behavior7

USP didn't invest enough in marketing, so it does not have an advantage in the face of high marketing investment from competitors.

Technical talents are the most important part for enterprises to attract customers;Companies in the industry compete for scarce talent through pay strategies.

Marketing spending

The main competitors are 36Kr, Innovation Works, Lenovo Star and Chaos Research. 36Kr's marketing expenses in 2019 Q4 were 49.7 million yuan, up 109.3% from the same period last year.

With no major shareholders or partners, USPis struggling to remain competitive in the market.

As a small enterprise, USP is difficult to survive alone in the face of the suppression of large enterprises in the market.

Talent competition USP reduces its employee turnover by

entering into exclusive agreements with consultants;

If USP cannot invest more in labor costs, it will lead to a brain drain.

Vertical integration

There are many small enterprises in this industry, and the integrated development is an irresistible trend.


Market Behavior7

Service competition

I.Healthy service competitionII.Vicious service competition

USP does not have a clear advantage in terms of quality of service, and it does not take steps to retain existing customers and attract new ones.

Price competition

Industry market competition space is large, and price competition is the main means;

Enterprises compete for the market share, making the price vicious competition degree to intensify.

USP has no advantage in price competition. Although the unit price of SI and BP is not expected to increase in the future, the excessively large reduction will result in the consequence that the revenue cannot cover the cost.

Specialized market segmentation Entrepreneurial service agencies are divided

into tutoring and training type, sharing office type, financing service type, professional service type, media platform type and maker incubation type.

The industry in which USP is located continues to expand into vertical segments, which increases the degree of competition in the entrepreneurial service industry.


Market Performance7

The industry average net sales interest rate for 2017-2018 is 10.73%.

The overall profit level of the industry is low and the market competition is fierce.

Risk management

ability

ProfitabilitySocial

benefits

USP's average net profit margin in these two years is 16.28%, and its profitability is higher than the industry average.

The industry as a whole is now in second phase , and USP has entered third phase: profitability will increase due to economies of scale.

The industry will improve the success rate of entrepreneurs and increase the job opportunities.

Promote the efficiency of resource allocation.

USP helps customers to solve entrepreneurial difficulties and promotes the development of the industry.

We will help college graduates start their own businesses successfully and relieve the pressure on employment.

USP reduces employee turnover and creates incentives by signing exclusive agreements with consultants.

SI and BP teams are independent from each other, with clear job responsibilities and authority division.

The IT team is composed of professional engineers, which ensures the professionalism and perfect human resource control.

Imperfect industry internal governance structure; lack of risk management mechanism; imperfect human resource control; poor information communication; imperfect supervision mechanism.


USP has a stable staff structure by signing exclusive agreements with some consultants. Reduce business

risks; Avoid high-paying

competition with other companies.

Client :student entrepreneurs

Service:novel service andtailor-made for entrepreneurial enterprises;

Cost :USP charges lower fees compared with traditional law firms, And the service has been simplified.

SWOT Analysis——S8

1 2 3 4

Rich customer resourcesGood market reputation Stable staff structure Customer targeted

Service customizationLow cost

High technology investment

Guarantee platform operation

Retain internet customers

In 2015, the country vigorously promoted entrepreneurial innovation, USP entered the entrepreneurial service market, attracting a large number of investors and achieving success;

Revenue growth rate in 2018USP : 12.77%,The industry average : 5%USP is much higher under the strong competitive environment.

USP completes IT work independently instead of outsourcing to :achieve better quality control;enhancement of the security of the platform;and improvement of customer satisfaction.

Performance Evaluation Business Environment Analysis Suggestions

SWOT Analysis——W8

The consultants in the industry are generally freelance workers.

The labor relationship is unstable, which easily prevents the normal operation of USP.

2. Strong non-substitution of staff and high churn rate

Because of small size, it is difficult to adopt a low-cost strategy for USP

USP's increased revenue cannot meet theincreased costs.

1. Insufficient labor cost control

Customer satisfaction declined in 2008, and the servicequality was low;

Marketing promotion and product pricing have not attracted customers, so there is a threat of customers looking for alternatives.

4. Decline in customer satisfaction

The service provided by USP lacks core competitiveness.

The current sales channels are extensive and scattershot, which is prone to risk of losingcustomers.

3. Single service groups, and lack of targeted sales model


SWOT Analysis——O81. Entrepreneurship counseling periodization and business integration are important trends in the future

USP can achieve an asset-lightbusiness model focused on servicequality by Providing expertise Broadening financing channels Developing industrial resources

3. Improve services, sales channels and marketing methods Expand sales channels Optimize service process Use media resources to promote Settle in a large entrepreneurial service platform Use a variety of methods to carry out promotional activities Focus on customer’s requirements and subdivide service

categories

2. Platform-based entrepreneurial service organizations have gradually become mainstream formats

USP can provide customers with all-round and comprehensive services, which will bring more business opportunities and resources.

4. Adopt a centralized management strategy

It is difficult for USP to compete on price shortlyafter its establishment.

USP can adopt a centralized competition strategyto develop SI and BP while gradually shifting its emphasis to SMM, which has a brighter prospect.


03

02

04

01

SWOT Analysis——T8

3. Market concentration is low and unstable

Although USP launched a new business in 2018 to diversify risks, it is inevitable that competitors will imitate to seize USP's market resources.

1. Threat of new entrants

Because of national policy support and low entry barriers, more and more competitors are entering the industry, so USP face greatercompetitive pressure.

2. Severe competition among competitors in the industry

The industry has a relatively high degree of marketization.

Traditional companies have a large marketshare and pose a greater threat to USP,and may compete on price to threaten newly established small companies like USP

4. The tussle for talent

Although USP signed exclusive contracts with consultants to reduce brain drain, large companies may dream up newperks and incentives to wage a fiercewar for talent.


SMM

Increase the contribution margin ratio. When the sales volume exceeds X, try to sign

exclusive contracts with consultant; Achieve an asset-light business model

focused on services by providing professional technology, broadening financing channels, and developing industrial resources ;

Obtain more revenue by providing more detailed and better professional and intermediary services.

Note: X=

basic salary(commission for each service before exclusive contract is signed − commission for each service after exclusive contract is signed)

SI and BP

Give more publicity, especially for BP; Reduce cost (especially fixed cost) while keeping

the unit price unchanged; Increase the number of exclusive consultants and

reduce the number of part-time consultants.

Online platform

Pay a reasonable cost in platform maintenance.

Competitive strategy

Adopt a centralized competition strategy, shift

the emphasis to SMM.

Suggestions9

Performance Evaluation Business Environment Analysis SWOT

Employee

Improve employee welfare under

the premise of reasonable cost.

Accounting

Put the cost of online

platform and mobile

APP that meets the

capitalization conditions

into the cost of

intangible assets, for the

annual amortization can

be tax-deductible to

increase net profit.

Increase investment in employee

training and enhance service

quality to improve customer

satisfaction.

• Make targeted improvements by

distributing questionnaires to

customers and collecting their

suggestions on company services.

Use more exclusive

consultants instead of part-time

consultants.

Suggestions9


Marketing

Establish promotion channels for colleges and universities, and recruit "campus ambassadors" with strong communication and execution capabilities；

Distribute advertisements on social media and use official accounts to shoot company daily Vlogs for promotion.

（1）Publicity

Carry out promotion by reduce price during the graduation season, in which many students may choose to start a business;

Have more repeat customers by managing cards and offering service terms of providing real-time adjustment services with market changes. Customers can enjoy discounts if they prestore funds in the card.

（2）Promotion

Pricing

Adjust the pricing of SI, BP, and SMM from 500 yuan per time, 800 yuan per time, 1,000 yuan per time to 999.98 yuan per time or 998 yuan per time. This is a psychological strategy.

（1）Mantissa pricing

Establish a customer scoring system and increase the price of services provided by consultants who have better feedbacks, so that customers may think that the price discrepancies are worth;

Adopt a product portfolio pricing strategy and launch package services for the three major businesses, with an average price lower than the price of a single service.

（2）Grade pricing strategy

Suggestions9


Adopt a customer-specific

competitive strategy and segment

existing services to attract

customers. For example, services

can be subdivided into advertising,

promotion, design, and execution

of entrepreneurial plans.

Focus on customer’s requirements Subdivide service categories

Strengthen communication with

customers and actively accept

feedback of customers.

Optimize project workflow

Customers are more willing to

consume in the entrepreneurial

service platform of large enterprises

that has been certified by a third party

and has guarantees of third-party.

Enter the platform

Include middle-aged

entrepreneurs, entrepreneurs who

are difficult to keep up with social

hot spots or are restricted by

economic factors.

Expand customer base

Suggestions9


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USP Performance & Business Environment Assessment

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