Wednesday, May 27, 2015

What is a Pure Play Business Model?

In financial management, a pure play is a company that either has, or is very close to having, a single business focus. Coca-Cola is an example of a pure play in this context because it retails only beverages. On the other hand, PepsiCo is not a pure play because it also owns the Frito-Lay snack foods brand. The opposite concept is a conglomerate.

The pure play approach or pure play method is a method for estimating the cost of capital for a proposed new project or product line. It involves examining other companies, which are pure plays in the proposed line of business and inferring a cost of capital based on their capital structures (e.g. Debt-to-Equity ratio) and betas.

In e-business terms, a pure play is an organization that originated and does business purely through the Internet; they have no physical store (brick and mortar) where customers can shop. Examples of large pure play companies include Amazon.com (in its initial business when it was only involved in retail products) and Netflix (in content). With a much lower barrier to entry, the Internet affords smaller companies the ability to compete with much larger brands due to typically lower overhead and marketing costs.


---Hope this was helpful!
-Nick
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About the Author: Nicholas Coriano is a Business Consultant and Planning Guru.  He is a graduate of The University of Connecticut Business School and the John Marshall Law School in Chicago.  He has worked at Merrill Lynch, The New York Stock Exchange and as an Investor Relations Agent & Consultant to Micro Cap Companies and Penny Stocks.  He is the founder and author of The MicroCapCompany.com a blog focused on providing information and advice to Micro Cap Company Executives and Investors.  You can also find him blogging about Social Media, SEO, Web Development and Tech on PushYourRank.com

About MicroCapCompany.COM: MicroCapCompany.COM (The Blog) is a blog focused on providing articles, news and information on the micro cap sector and start-ups.  The Blog is a free service offered by Cervitude™ Investor Relations (a micro cap investor relations firm) and offers compensated research reports and business plan writing services for micro cap companies and penny stocks.  If there is a particular topic you would like to see covered on The Blog, email CervitudeNetwork@gmail.com, If you would like to advertise on The Blog, click here. 

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