fundamentals of strategic planning - helder ponte

FUNDAMENTALS OF STRATEGIC PLANNING

Helder Ponte

Links to Learning

Vancouver, BC

November 18, 2013

THE WORLD OF BUSINESS

04/10/2023

3

From Idea to Business

Monitoring Progress

Going Concern

Opening

Pre-Opening

Construction

Planning & Design

Financing

Legal Structuring

Business PlanMarket & Financial

FeasibilityBusiness Model

Business Idea

04/10/2023

4

How Organizations Evolve

Collaboration

Red Tape

Coordination

Control

Delegation

Autonomy

Direction

Leadership

Creative / Original Idea

What is an Organization?

An organization is an association of people who have come together to pursue some common purpose. Organizations may be legally structured as a person in law in the form of a corporation or society, a trust or a cooperative, or as a not incorporated association without legal status.

Owners, Shareholders & Members – The interest or participation of persons in organizations varies in the different forms of business organization, which can be either in the form of being the owner (in the case of a sole proprietorship), a partner (in the case of a partnership), a shareholder (in the case of a corporation), A member (in the case of a cooperative) a member (in the case of a society), or A trustee (in the case of a trust)

04/10/2023

6

What is a Business?

A business (or enterprise) is a profit-seeking activity which is organized and directed to provide goods and services to customers.

Entrepreneur is a person who runs a business and assumes all the risk and reward of a given business venture, idea, or good or service offered for sale. The entrepreneur is commonly seen as a business leader and innovator of new ideas and businesses processes and ventures.

The business firm is the basic operating unit of an economy; it consists of people Owners, management & employees), capital (which includes land, water, air, mineral & other resources), and other resources (knowledge, entrepreneurship, technology, operating systems, and social organization), needed for the business activity to be carried out.

Profit is the amount of money earned & left over in the business after the firm deducts all costs & expenses from its revenues, during a certain period of time.

Risk is the chance of loss. Business risk is the uncertainty of earning a profit, or meet certain performance expectations. Business risk is not constant in terms of activity and time; there are some business activities which are riskier than others, and, depending on the general business climate, business risk may vary.

Competition is the rivalry amongst the firms to attract customers in the hope of making a profit. Stakeholders are people or organizations that have the capacity exert some degree of influence

or power over the firm’s actions. Stakeholders include owners, customers, suppliers, employees, government agencies, and all the various groups who are potentially affected by a firm’s business decisions.

The Entrepreneur

The essence of entrepreneurship is the creation and building of a for-profit business or not-for-profit organization to meet the demand of a product (good or service), and the entrepreneur is the key person who leads the whole initiative.

The entrepreneur usually plays a variety of roles, but all converge toward a certain paramount goal. The key roles that the entrepreneur plays include the following: The entrepreneur is an inventor, since he/she is the one who comes up

with new products and processes, often combining previously unrelated elements or ideas.

The entrepreneur is and innovator, who develops a new way of doing something, or comes up with an innovative and practical use for a new product or process. The innovator is not an inventor; he/she adapts new inventions to new products or solutions.

The entrepreneur is a manager, who leads the business/organization team in setting goals and identifying ways in achieving them.

The entrepreneur is an administrator, who executes managerial strategies and sees that the business/organization achieves its goals.

04/10/2023Helder Ponte

8

Social Enterprise - 1

Social enterprise – People. Planet. Profit. – Social enterprise is the main form of economic activity in the social economy (also called the “Third Sector” or “Non-Profit Sector”, besides business and government), usually in the pursuit of human, environmental, and other not-for-profit endeavours.

A social entrepreneur is a person who pursues innovative ideas with the goal of solving a community problem or satisfying a community need. Like a business entrepreneur, the social entrepreneur is willing to take on risk and effort; however, they are directed at creating positive change in society.

Social enterprises are economic units that operate like businesses, however, they don’t seek a profit; instead, they operate for non-profit purposes. Social enterprises manage their operations to fill human and environmental needs not addressed by business or government.

To be a going concern (financially sustainable over the long-term), social enterprises must breakeven financially; however, they don’t follow the conventional business model; they earn revenue that is necessary to cover the cost of the services that they provide to their clients. Often, they provide their services at reduced cost or even at no cost to the clients that they serve. Larger social enterprises may engage in some activities (business segments) that are profit oriented, so they can use the profits realized in those activities to subsidize its main operations. Social enterprises also rely substantially on fundraising, private donations and government assistance.


9

Social Enterprise - 2

Social enterprises engage in activities that help communities and groups to enjoy higher levels of well-being and be more sustainable. The following are some examples of some of the activities that social enterprises engage: Addressing environmental issues Stimulating economic revitalization Promoting literacy and education Reducing poverty Providing access to health care Integrating immigrants Providing goods and services to underserved individuals, groups, and

communities Developing social and cultural capital Arts and cultural programming, and Sports and recreation programming

04/10/2023

10

The Most Important 5 Questions in Business - 1

The Most Important 5 Questions You Will Ever Ask About Your Organization, adapted from Peter F. Drucker (the guru of art and science of management), published by the Leader to Leader Institute: 1 – What is our mission?

What is our current mission? What are our challenges? What are our opportunities? Does the mission needs to be revised?

2 – Who is your customer? Who is our primary customer? Who are our supporting customers How will our customers change?

3 – What does the customer value? What do we believe our primary and supporting customers value? What knowledge do we need to gain from our customers? How will I participate in gaining this knowledge?

04/10/2023

11

The Most Important 5 Questions in Business - 2

4 – What are our results? How do we define results? Are we successful? How should we define results? What must we strengthen or abandon?

5 - What is our plan? Should the mission be changed? What are our goals?

04/10/2023

12

Resources

ResourcesPhysical, human, technological, & organizational

People(Labour)

Knowledge

Technology

Infrastructure

Capital (Money)

FacilitiesEquipmentLaw systems

Time

LandNatural

Resources

A resource is an untapped asset

04/10/2023

13

Stakeholders in a Business

FN CommunityOwners / Business

Partners

Board of Directors

Management

Employees

Customers

SuppliersCreditors

Regulators

Auditors

Advisors

Neighbours

Governments

04/10/2023

14

Business Environment

Business

04/10/2023

15

External Business Drivers

•Variations in currency value affect costs to both importers and exportersCanadian Dollar

•What competitors do or not do affects your businessCompetition

•Changes in demographics affect market targets, product life cycles, and marketing focusDemographics

•Volatility in financial markets create uncertainty in economic prospects, which affects investment and salesFinancial Markets

•Major changes in technology affect business strategiesTechnology

•Changes in price of inputs are major drivers in setting price of productsSupply Chain

•World politics and business cycle affect level of economic activity

Political & Economic Conjuncture

04/10/2023

16

BUSINESS FUNDAMENTALS

Key Functions in a Business

Function Key Tools

Governance & ManagementVision, mission, guiding principles, ownership structure, business strategy

Production/OperationsProduct development, inputs, facilities, equipment, production, quality control, management of residuals

Creativity / InnovationResearch and development of new solutions and products to meet consumer needs and preferences

MarketingSWOT, market, product, price, promotion, and place

DistributionInventories, transportation and warehousing

FinancialCapital and operating budgets, treasury, working capital, resource allocation, long-term financing, and profitability.

PersonnelHuman resources development and management

Social ResponsibilityMeeting the needs of communities and stakeholders

Environmental Stewardship Proactive to natural environment

04/10/2023

18

Business Fundamentals

Vision, mission, and values constitute together the fundamentals of an organization; they are the glue that holds the organization together. They describe what the organization is trying to do, how it wants to go about, and where the organization is headed. Knowing them helps to keep the organization on track. They provide an yardstick that can always be used to establish plans and measure performance.

The best time for articulating the fundamentals of an organization is at the outset of the organization’s life. The board of directors should make an effort to hold a strategy session as early as possible after the establishment of the entity, with the participation of all board members, chief executive officer, top management, and key staff.

For an organisation's vision and mission to be effective, they must become assimilated into the organization's culture. They should also be assessed internally and externally. The internal assessment should focus on how members inside the organization interpret their mission statement. The external assessment — which includes all of the businesses stakeholders — is valuable since it offers the perspective of how the community/society sees the organization.

04/10/2023

19

Vision - 1

Vision is the outline of what an organization wants to be. Vision is a long-term view and concentrates on the future, and is a source of inspiration for the organization. “Where do we want to go?”

The vision is what keeps an organization moving, even against discouraging odds. Vision is the most powerful motivator in an organization; if it is vivid and meaningful enough, people can do astounding things to bring it to realization; but if it is lacking, no amount of resources will be able to get people to perform with excellence. As the management guru Peter Drucker reminded us, a business is not defined by its name, statutes, constitution, and articles of incorporation – it is defined by the business; vision, mission, and values. Where there is no vision, people will perish, as only a clear vision and definition of mission, values and purpose of an organization makes possible clear and realistic business goals and objectives. A corporate vision is key in focusing, directing, motivating, unifying, and exciting an organization into superior performance. The job of the strategist is to identify and project a clear vision.

The Vision Statement defines the organization’s purpose; however, it does it in terms of the organization’s values. It states where the organization sees itself in the future; it focus in the organization’s future, where the organization wants to be. The vision statement draws a picture of the organization in the future; it is inspirational.

The vision statement is a declaration of where you are headed—your future state - to formulate a picture of what your organization's future makeup will be, and where the organization is headed.

04/10/2023

20

Vision - 2

Vision

04/10/2023

21

From Vision to Outcomes

Outcomes

Actions / Projects

Objectives

Goals

Values

Mission

Vision

04/10/2023

22

Mission

Mission – Mission is the raison d’etre (the fundamental purpose) of an organization (why it exists). The original intentions of the founders of an organization – what they wanted to achieve by starting the organization.

The Mission Statement is an enduring statement of purpose that distinguishes an organization from all others, succinctly describing why it exists and what it does to achieve its vision.

The Mission Statement answers the question: “Why do we exist?” – The mission statement defines the fundamental purpose of an organization and its primary and broad goals for which the organization was formed, and what it does to achieve its vision. Its prime function is internal and external (owners, management, staff, and the public), and it focus on the present. The Mission Statement usually includes the following components and corresponding questions that it provides an answer for:

1. Customers / clients?

2. Products and services?

3. Markets – geographically, where does the organization operates?

4. Technology – is the organization technologically current?

5. Concern for survival, growth, and profitability – is the organization committed to growth and financial soundness?

6. Philosophy – What are the basic beliefs, values, and aspirations, and ethical priorities of the organization?

7. Self-Concept – What is the organization distinctive competence or major competitive advantage?

8. Concern for public image – Is the organization responsive to social, community, and environmental concerns?

9. Concern for employees – Are employees a valuable asset for the firm? The Mission Statement must be reexamined and refreshed periodically for an organization to

remain dynamic.

04/10/2023

23

Vision vs. Mission

Mission Statement Vision Statement

About

What the fundamental purpose and primary objectives of the organization is; How the organization will get to where it want it to be

Where the organization wants to go or to be. Communicates the purpose and values that guide the organization.

Answer Answers the question: “What do we do?” Answers the question: “Why are we here?”

Time Present leading to the future Future only

Function

Lists the broad goals of the organization; prime function is internal; prime audience is leadership team.

It lists where the organization sees itself some years from now. It inspires the leadership team and workers to give their best; It shapes the understanding of those working for the organization on why their work there.

ChangeMay change, but still anchored on core values and vision

Should remain intact, even the environment changes dramatically. It speaks to what you represent; not what you do.

Sometimes people mistake the vision statement for the mission statement, and sometimes one is simply used as a longer term version of the other. However they are distinct:; the vision being a descriptive picture of a desired future state; and the mission being a statement of a rationale, applicable now as well as in the future. The mission is therefore the means of successfully achieving the vision. In other words, the vision statement answers the question “What do we want to become?”. The mission statement answers the question “ What is our business?”

04/10/2023

24

Values, Guiding Principles & Standards

Values – are guiding beliefs that the stakeholders of an organization hold about how things should be done; they are the things that the organization as a whole places in high regard: moral, spiritual, aesthetical, social, educational, economic, political, environmental, legal, health and safety, and recreational. Values drive an organization’s culture and priorities and provide a framework in which decisions are made, and they manifest everything an organization does as a group, and how it operates. Articulating values provides to everyone in the organization with guiding lights, ways of choosing among competing priorities, and guidelines about how people will work together.

Guiding Principles – How do we work together to reach the vision. Built upon values, these are statements that describe how we conduct ourselves. They communicate out our philosophy to others and help to set a positive tone in all we do - How we work together to reach the vision of the organization. Built upon values, guiding principles are statements that describe how we conduct ourselves; they communicate out to others, and help to set a positive tone in all we do.

Standards – are the minimum level expected/accepted behaviour in carrying out our daily business. Health and safety, resource protection, profit seeking are examples of activities that need standards. Over time these standards may be raised, as people in the organization meet their goals.

04/10/2023

25

Responsible Business

Economic Return – The business strives for reasonable profit, and other economic benefits such as increased business activity in a diversified local/regional economy, local procurement of goods & services, and local employment or training. In a not-for-profit scenario, profit is not a goal; quality of service at minimal cost is commonly a main goal.

Social Responsibility – The business communicates openly & honestly with stakeholders; respects community values; thinks globally but acts locally; supports community driven initiatives; is proactive in social change; and adopts & enforces a code of conduct for its directors, officers, managers and employees.

Sustainability – The business recognizes that there are ecological limits for all activities, inter-dependence, equity, long-term perspective, and long-term cumulative

effects that harm the environment. Environmental Stewardship – The business conserves land, water & fresh air; protects

natural eco-systems & biodiversity; saves energy; prevents pollution; uses renewable resources; implements recycling programs; and monitors cumulative long-term impacts on the environment.

Legal Responsibility – The business is a law-abiding corporate citizen; complies with all applicable laws; and rewards compliance and penalizes (or punishes) non-compliance.

Ethical Principles & Practices – The directors, management, and employees act ethically at all times; set and enforce rules to avoid conflict of interest; be firm against unethical practices. Ethical refers to pertaining to or dealing with morals or the principles of morality, pertaining to right or wrong in conduct, or being in accordance with the rules and standards for right conduct or practice.

04/10/2023

26

An Example of Business Fundamentals

The following is an example of the vision, mission, and goals for an art museum, adapted from “The Five Most Important Questions You Will Ever Ask About Your Organization”, Peter F. Drucker, Leader to Leader Institute, 2008:

Vision: A city where the world’s diverse artistic heritage is prized and whose people seek out art to feed their mind and spirit.

Mission: To bring art and people together Goal 1: To conserve the collections and inspire partnerships to seek and acquire

exceptional objects Goal 2: To enable people to discover, enjoy, and understand art through popular and

scholarly exhibitions, community education, publications, and media. Goal 3: To significantly expand the museum’s audience and strengthen its impact

with new and traditional members. Goal 4: To maintain state-of-the-art facilities, technologies, and operations Goal 5: To enhance long-term financial security.

04/10/2023

27

An Example of Statement of Corporate Principles & Responsibility

To our Shareholders / Members: We will strive to realize good return on investment.

To our Customers: We are honest in providing the good or service that you receive from us. We will charge you a fair and competitive price; we honour the warranties that we provide you when you buy a product from us; and we will be transparent in all dealings with you. What you see is what you get;

To our Employees: To offer career opportunities, fair wages, dealing fairly with employees, and share with others the success of our business ventures.

To our Community: Be an active community partner and supporter of community initiatives. We support and encourage “Buy FN” and “FN first” procurement programs.

To our Partners: Together, we will achieve more.

To the Environment: We are stewards in sustainability practices in land, water and air, respect for life in nature, and committed to recycling programs.

To our Neighbours: We want participate fully in the local / regional economy.

To Ourselves: We are committed to excel in everything we do.

Key Advisors - 1

Entrepreneurs often recourse to the help of expert advisors in specific areas in which they don’t have the in-house knowledge or experience to undertake. Industry experts advisors to Board & Senior management usually include the following:

Banker – for financial advice to support the access to credit (capital, mezzanine, and operating financing, international transactions) and on financing options, and access to market and industry insights, as well as economic outlook information.

Accountant – for the setup of accounting systems, preparation of annual financial statements, taxation advice, business restructuring advice, business risk, and assessment of the value of a business.

Lawyer – advises on structuring business entities and arrangements to optimize benefits and minimize business risk; assists in the negotiation and preparation of agreements, provides tax planning advice.

Insurance broker – advice on risk management strategies and insurance coverage for business operations.

Information technology professional – advice on design, acquisition, installation, and use of information technology, with emphasis on computer and data security, e-commerce, and presence in internet, through website, blog, feed, and mobile telephone technologies.

Key Advisors - 2

Often, retired executives with extensive experience in business don’t mind to act as mentors or advisors to FN businesses; however, they are concerned with the liability that they assume if they become voting board members in a FN-owned corporation. They want to help, but they don’t want any risk. In situations such as these, the Board of Directors of a FN business, may want to enter into an arrangement whereby they can receive the advice of the retired executive, but not as members (full fledged, voting member of the Board of Directors, or ex-officio).

Real estate broker – assists in finding a buyer for real property (residential, commercial, or industrial), provide market insight, and advice on enhancing property value.

Personal financial advisor – offers advice to business owners on personal wealth management, estate planning strategies, tax, retirement and succession planning.

Using Other People’s Help

Inside

Employees, partners, business

records and documents, franchise support

Semi-Inside

Customers, board of directors,

advisors, mentors, lawyer,

accountant, banker, bank

manager, insurance broker,

suppliers, distributors, and

business associates

Outside

Research firms, trade publications, boards of

trade / chambers of commerce, colleges and universities, libraries,

better business bureaus, professional

associations, consultants,

government agencies, community futures

development corporations, Aboriginal business development

centres, Aboriginal business associations

04/10/2023

31

BUSINESS STRATEGY

04/10/2023

32

Business Strategy - 1

Strategic business planning is firm’s process of defining its strategy, or overall direction, and making decisions on allocating its resources to pursue the strategy. In order to determine the direction of the firm, it is necessary to understand its current position and the possible avenues through which it can pursue a particular course of action. Strategic planning deals with at least one of six key questions: 1. “Why are we in business?” – business fundamentals - mission, vision, guiding

principles and values; 2. “What are we dealing with?”- scan of the internal and external business

environment in which we operate – Competition, state of the economy, marketplace, technology, availability of resources (raw materials, equipment, facilities, human, financial (cost of money), knowledge base, time);

3. “How are we going to make money? - What is our business model?; 4. “Where are our markets? - customers, products, supply chain; 5. “What is our long-term strategy?”- for the next 3 to 5 years, or longer 6. “What are the things that we have to do in the next year?” what are our short-

term goals and objectives, if we are to achieve our long-range goals – tactical workplan;

7. “How do we know we are making progress and on track to achieve our goals?” – Evaluate assumptions and performance on a regular and frequent basis, and measure actual results achieved against milestones.

04/10/2023

33

Business Strategy – 2

Strategic planning is viewed as a process for determining where the organization is going over the next year or, more typically, 3 to 5 years (long term), although some extend their coverage up to 20 years. We must note that the longer the time span, the greater the probability of error or variance.

Strategy, narrowly defined in ancient Greek, means "the art of the general”: a combination of the ends (goals) for which the organization is striving and the means (policies) by which it is seeking to get there. A strategy is sometimes called a roadmap - which is the path chosen to plow towards the end vision. The most important part of implementing the strategy is ensuring the organization is going in the right direction which is towards the end vision.

04/10/2023

34

Uses & Value of Strategy

Strategy assists in the formulation of goals and objectives, and enables them to be adapted in light of information and experience. It is a form of management control, a plan which guides behaviour along a pre-determined course;

A clear strategy helps in the process of allocating resources, as it provides the rational for such allocation;

Strategy enables management to identify and prioritize key strategic issues which the organization may face in the future, and prepare appropriate action;

Strategy plays a useful role in both guiding the action of the constituent parts of an organization, as well as acting as an integrating mechanism to ensure that all units work in synch towards a common goal;

The formulation of business strategy is useful training ground for the development of future managers; Strategic objectives are achieved by changing the behaviour of employees, which is the essence of

organizational development programs which are necessary for the development and implementation of a strong corporate culture.

Strategic Planning: Fundamentals – Vision, Mission, Guiding Principles, Core Business Goals and Objectives – are what you set to achieve Mandate – Your scope and instructions to operate; your marching orders Environmental Scanning – Analyze the environment around the organization – SWOT Analysis Policies, Standards, and Procedures – for achieving goals and objectives Monitoring, Evaluation and Updating – Compare actual results to planned; compare benefits to

costs; stay current

04/10/2023

35

Strategic Planning

Fundamentals • Vision, Mission, Values, Guiding Principles

Goals & Objectives • What you set to achieve

Environmental Scanning • Analyze the environment around the firm

Mandate • Scope and instructions to operate

Policies, Standards & Procedures

• For achieving goals and objectives

Monitoring, Evaluation & Updating

• Compare actuals to planned; compare benefits to costs; stay current.

04/10/2023

36

The Language of Strategic Planning - 1

Purpose – is the fundamental reason for the existence of a business or organization; Vision – is the ultimate state or goal that the organization is striving toward; Mission – tis he particular aim that sets the business or organization apart from others

with the same purpose; the mission statement is an action oriented formulation of the organization’s reason for existence. It serves to define how an organization proposes to get5 from where it is to where its wants to be.

Values – are philosophy and the core beliefs of an organization Guiding Principles – How the business operates in accordance with its values; Goals – are statements that identify broad areas of intended achievement; goals represent

the general end toward which an organization’s effort is directed. The goals of an organization must be consistent with its mission and vision. A goal is a desired future state that the organization attempt in an organized manner to realize. Goals are important because an organization exists for a purpose, and goals define and state that purpose. Goals specify future ends; plans specify today's means.

Objectives –are directions, methods, processes, or steps used to achieve the goals of the organization; objectives are statements that identify a number of specific areas of intended achievement for each goal that has been set. Objectives are specific ends which the business must achieve to carry out its mission.

Strategy – is the framework for the overall action of a business – A strategy is an unified picture of the business’ course by ensuring that its objectives are convergent and complement one another, and how resources will be used to attain them;

04/10/2023

37

The Language of Strategic Planning - 2

Policy – are general rules that are put in place to guide daily decisions made in carrying out business. A policy is a general guide to aid managers in making decisions by placing limitations on possible courses of action and focus on intended outcomes. Policies are developed and built on the foundation of vision, mission, values, guiding principles, and standards.

Workplans – are detailed plans for the short-term; usually one year. Procedures – are detailed set of instructions for performing an action; a collection of

processes and guidelines for conducting business on a daily basis. Procedures describe who is responsible for what, when, where, why, and how. Procedures bring policies to life.

Program – is a plan which includes a set of policies, procedures, and rules, together with other resources (people, financial resources, activities) and other elements necessary to implement a desired course of action. A program is how we organize our work by activity or by target client, delivery systems for goods and services. Program activities may be organized by activity or by target client/customer. The implementation of programs and activities move us towards the realization of our vision.

Project – is a special program of a sequence of tasks structured in a certain way for the attainment of one single outcome, to be achieved with the use of specific resources, over a specified period of time (start, duration, precedence, and end dates);

Organizational Chart – is a diagram that depicts the formal structure of a business and its components at a given point in time;

04/10/2023

38

Strategic Management - 1

Strategic Management is the art/science of formulating, implementing and evaluating strategies that enable an organization to realize its fundamentals and achieve its goals and objectives.

Strategic management allows an organization to be proactive, rather than reactive in shaping its own future, as it allows the organization to initiate and influence (rather than just to respond to), and thus to exert control over its own destiny.

The language of Strategic Management: Environmental scanning is the process of conducting research and

assimilating external information. External opportunities and threats are economic, social, political, cultural,

demographic, environmental, legal, technical, governmental, and competitive trends that can significantly impact (benefit or harm) and organization in the future.

Internal Strengths and Weaknesses are controllable activities within an organization that are performed especially well or poorly.

Competitive Intelligence – the more information and knowledge an organization can obtain from its competitors (or operating environment), the more likely the organization can formulate and implement effective strategies.

04/10/2023

39

Strategic Management - 2

SMART Goals – Specific, Measurable, Actionable/Achievable/Agreed upon, Realist/Relevant, Time-based (timely)

Long-Term Objectives – are specific results that an organization seeks to achieve in pursuing its basic mission. Goals and objectives are essential for organizational success because they provide direction, aid in evaluation, create synergies, reveal priorities, allow coordination, and provide a basis for effective planning, organizing, motivating, and controlling activities. Objectives should be challenging, measurable, consistent, reasonable, and clear.

Strategies – are the means by which long-term objectives are achieved. Business strategies may include geographic expansion, diversification, acquisition, product development, market penetration, retrenchment, divestiture, liquidation, and joint venture.

Annual objectives are short-term milestones that an organization or group must achieve to reach long-term objectives. Annual objectives should be measurable, quantitative, challenging, realistic, consistent, and prioritized. In a large organization, annual objectives should be established at the corporate, divisional, and functional levels.

In the context of strategic management, policies are means by which annual objectives will be achieved. Policies include guidelines, rules, and procedures established to support the efforts to achieve the stated objectives; they are guides to decision-making and address repetitive and recurring situations.

Strategic Alliances & Partnerships - 1

An increasing number of businesses form strategic alliance with other businesses for a wide number of reasons, including develop or access new markets, improve products and services, diversify product lines and markets, optimize supply chain, enhance production capacity, reduce or share risks, access new technologies, access bigger and better distribution channels, and strengthening customer and supplier relationships.

The parties usually enter first into an Memorandum of Agreement or Letter of Intent, and proceed later to enter into a Strategic Alliance/Partnership Umbrella Agreement, which typically includes the following provisions/agreements: Distribution Agreement – i.e. Canadian retailer and US manufacturer License Agreement – Patent holder and manufacturer Co-marketing Agreement – businesses offering compatible, non-competing

products and services Research & Development Agreement – Major pharmaceutical company investing

in start-up biotech firm Technology Sharing – small environmental research company and major

engineering consulting firm Customer Alliance – Preferred sourcing deal between major purchaser and office

supplies retailer. * Adapted from “The Definite Guide to Successful Alliances & Partnerships”, General Content Corporation, and Royal Bank of Canada, 2002

Strategic Alliances & Partnerships - 2

The key points in negotiating a strategic alliance include: Agency and distribution rights Licensing of intellectual property Technology exchange Alliance fees and costs Sales and marketing Ownership of assets Alliance financing Alliance management structure Equity investment, and Exit strategy

Although both parties in a strategic alliance work towards some common business goals, it is important that the strategic alliance not be structured like, and not be seen as an agency arrangement or as a general business partnership.

Letter of Owners’ Expectations

FN-Owned Business Business autonomy Stakeholders Governance Board of Directors Directors Investment Profits Accountability Transparency

High-level performance expectations Wealth creation Financial return on investment FN management strategy FN employment strategy FN procurement strategy FN public interest Capacity building Succession planning Asset building Service standards Ethical conduct

The Purpose of the Letter of Owner’s expectations (LOE) is to outline the expectations that a FN government has on how First Nation-owned businesses will work together to meet their respective goals, roles and responsibilities.

The LOE sets standards of conduct and transparency, and aids in keeping business and politics more clearly separate from each other and more successful in reaching their goals.

04/10/2023

43

The Logic Model

Inputs

Investments(materials,

financial & human resources)

Outputs

Activities Participation

Outcomes

Short / Medium / Long-term

Intended changes

What we Invest

What we Do

What ResultsWho we Reach

S i t

u

a t

I o

n

The Logic Model is a systematic and visual way to present and share the understanding of the relationships among an organization’s resources (inputs), the activities to be implemented (outputs),and the changes or results the organization hopes to achieve over time (outcomes).

04/10/2023

44

Logic Model Planning

The Logic Model is one of the most common approaches used in organizational planning. The Logic Model answers in a structured approach the following questions:

Question Explanation Activity

Need What is the issue or problem?

Goal What is the target?

Objective How will you get there?

Activities What do you have to do to achieve each objective?

Success Indicators How will measure success?

Evaluation Method What tools will you use to measure?

Partners Who will you need to work with?

Resources What resources to you require?

Timeframe When will you start and complete each activity?

Outputs What event or activity actually occurred?

Final Outcome What change occurred? Did you meet goals and objectives?

04/10/2023

45

ANALYZING THE BUSINESS ENVIRONMENT

04/10/2023

46

Situation Analysis

Situation analysis is a method managers use to analyze both the internal and external environments of an organization in order to understand the firm’s own capabilities, customers and business environment. As described by the American Marketing Association, a situation analysis is "the systematic collection and study of past and present data to identify trends, forces, and conditions with the potential to influence the performance of the business

and the choice of appropriate strategies.” The situation analysis consists of several methods of analysis: The Stakeholders’

Analysis, 5Cs Analysis, SWOT analysis and Porter Five Forces analysis. A Marketing Plan is created to guide businesses on how to communicate the benefits of their products to the needs of potential customer. The situation analysis is the second step in the marketing plan and is a critical step in establishing a long term relationship with customers.

The situation analysis looks at both the macro-environmental factors that affect many firms within the environment and the micro-environmental factors that specifically affect the firm. The purpose of the situation analysis is to indicate to a company about the organizational and product position, as well as the overall survival of the business, within the environment. Companies must be able to provide a summary of opportunities and problems that may be encountered within the environment in order to gauge an understanding of their own capabilities within the market.

04/10/2023

47

Stakeholder Analysis - 1

Stakeholder Analysis is the identification of a project’s key stakeholders, an assessment of their interests, and the ways in which those interests affect the project risk or viability. SA is a process & encompasses 5 steps:

1. Identify stakeholders in relation to the project – Owners, employees, community, government, suppliers, & others: Primary stakeholders – people & groups ultimately affected Secondary stakeholders - instrumental in bringing project to fruition Key stakeholders – those who can significantly influence or are important to the success

of the project Depending on their interests in a project, some stakeholders will support it; some will

oppose it. 2. Prioritize stakeholders’ importance in terms of role, influence, & power – Use

Stakeholder matrix model. 3. Understand the interests, needs & expectations of the key stakeholders in terms of the

project – what their agenda is. 4. Identify & develop appropriate strategies for stakeholder participation & develop action

plan 5. Monitor changes in stakeholder interests & importance 6. Statement of corporate principles and responsibility Identification of stakeholders

Interests Influence Power

04/10/2023

48

Stakeholder Analysis - 2

Role Core business Who are your organization’s stakeholders? Who has power? Who has influence? Why is each group important? How are they going to be affected? Do they help or hinder you in your efforts to go green? What are their interests? What benefits and threats can your initiative bring to them? Prioritize and rank stakeholders based on levels of importance and interest

Stakeholder Economic Environmental

Philantropic Social Action

Government

Business & Industry

Communities / Interest Groups

Environmental Stewardship

Stakeholder Matrix

Mapping Stakeholder Interests

Stakeholder

Community

Region Regional Businesses

Interest

Influence

Power

RoleC

Venn Diagram

A

BD

Stakeholder Matrix

04/10/2023

50

PESTLE Analysis

P – Political – Current and potential influences from political pressures; key political drivers.

E – Economic – Local, regional, national and international climate & impact;

S – Social – Changes & trends in society & groups; societal attitudes; lifestyles changes; changes in demographics.

T – Technological – How emergent technologies will impact the company.

L – Legal – How current & impending legislation affect the business/project

E – Environmental – how environmental impact & consideration will affect the business/project?

PESTLE Analysis

04/10/2023

51

SWOT Analysis

Strengths What advantages do we have? What do we do well? What relevant resources do we have

access to? What other people see as our strengths

Weaknesses What could we improve? What do we do poorly? What should we avoid?

Opportunities What are the good opportunities available

to us? What are the interesting trends that we

are aware? Useful opportunities can come from:

Changes in technology & markets Changes in government policy Changes in social partners Changes in demographics Changes in lifestyle

Threats What obstacles do we see as

limiting or blocking us from proceeding?

Are we monitoring the competition? Are specifications for your business

changing? Is technology change threatening

your position? Do you have debt or cash-flow

problems? Could any of your weaknesses

seriously threaten your business?

04/10/2023

52

5 C’s Analysis - 1

5C Analysis - The 5C analysis (company, competitors, customers, collaborators, and climate) is considered to be the most useful and common method in analyzing the market environment due to the extensive information it provides to a business.

1 - Company - The analysis of the company allows for the evaluation of the company's objectives, strategy and capabilities. These areas indicate to an organization about the strength of the business model or whether there are areas for improvement, as well as how well an organization will fit with the external environment. • Goals & Objectives: An analysis on the mission of the business, the industry of the

business and the stated goals required to achieve the mission. • Position: An analysis on the Marketing strategy and the Marketing mix. • Performance: An analysis on how effectively the business is achieving their stated

mission and goals. • Product line: An analysis on the products manufactured by the business and how

successful it will be in the market. 2 - Competitors - The competitor analysis takes into consideration the competitors

position within the industry and the potential threat it may pose to other businesses. The main purpose of the competitor analysis is for businesses to analyze both the current and potential nature and capabilities of a competitor in order to be prepared against competition.

04/10/2023

53


The competitor analysis looks at the following criteria's: • Identify competitors: Businesses must be able to identify competitors within their

industry. Identification of whether competitors provide the same service/products to the same customer base will be useful in gaining knowledge on direct competitors. Both direct and indirect competitors must be identified, as well as potential competitors that may enter the market.

• Assessment of competitors: The competitor analysis looks at competitor goals, mission, strategies and resources. This will allow for a thorough comparison on the goals and strategies of both competitors and organization.

• Predict future initiatives of competitors: An early insight into the potential activity of a competitor will help a company be prepared against competition.

3 - Customers - Customer analysis can be vast and complicated. Some of the important areas that a company analyzes includes: • Demographics • Advertising most suitable for the demographic • Market size and potential growth • Customer wants and needs • Motivation to buy the product

04/10/2023

54


• Distribution channels (online, retail, wholesale, etc.) • Quantity and frequency of purchase • Income level of customer

4 - Collaborators are useful for businesses as they allow for an increase in the creation of ideas, as well as an increase in the likelihood of gaining more business opportunities. The following type of collaborators are: • Agencies: Agencies are the middlemen of the business world. When businesses need a

specific worker who specializes in the trade, they go to a recruitment agency. • Suppliers: Suppliers provide raw materials that are required to build products. There

are seven different types of Suppliers: Manufacturers, wholesalers, merchants, franchisors, importers and exporters, independent crafts people and drop shippers. Each category of suppliers can bring a different skill and experience to the company.

• Distributors: Distributors are important as they are the 'holding areas for inventory'. Distributors can help manage manufacturer relationships as well as handle vendor relationships.

• Partnerships: Business partners would share assets and liabilities, allowing for a new source of capital and skills.

Businesses must be able to identify whether the collaborator has the capabilities needed to help run the business as well as an analysis on the level of commitment needed for a collaborator-business relationship.

04/10/2023

55


5 - Climate - In order to fully understand the business climate/environment there are usually many different factors that can affect a business, and if researched well it will contribute to a company that can respond well to change. An analysis on the climate is also known as the PEST analysis.

The types of climate/environment firms have to analyse are: • Political and regulatory environment: the analysis of how active the

government regulates the market with their policies and how it would affect the production, distribution and sale of the goods and services.

• Economic Environment: the analysis of trends regarding macroeconomics, such as exchange rates and inflation rate, can prove to influence businesses.

Social/cultural environment: Interpreting the trends of society; which includes the study of demographics, education, culture etc.

• Technological analysis: the analysis of technology will help improve on old routines and suggest for new methods in being more cost efficient. In order to stay competitive and gain an advantage over others, businesses must have sufficient knowledge on the technological advances.

04/10/2023

56

Porter’s Five Forces Analysis *

Porter's Five Forces Industry Analysis - The Porter models involves scanning the environment for threats from competitors and identifying problems early on in order to minimize threats imposed by competitors. This model can apply for any type of business, from small to larger sized businesses. It is important to take note that the Porter’s five forces model are not just for businesses, but can also be applied to a country to help gain insight into creating a competitive advantage in the global market.

The ultimate purpose of the Porter's five forces model is to help businesses compare and analyze their profitability and position with the industry against indirect and direct competition.

1. • The threat of new entrants New entrants affect the company’s profits as the consumers have more variety to choose from.

2. • Bargaining power of buyers: The companies influence on the buyer to purchase their product or how much the buyer depends on the product being produced by the firm.

3. • Threat of substitute product of services: more than one firm producing similar or the same product or service.

4. • Bargaining powers of suppliers: The company dependence on the resources the suppliers provide, in order to create their product or services.

5. • Rival among existing competitors: Rivals fighting to be dominant in the market, in order to stay in business and maximize profit.* Summary Adapted from Michael Porter "The Five Competitive Forces That Shape Strategy"

Phases of a Project

Preliminary Marketing, Financial & Technical Feasibility Business Plan, Legal Structuring & Financing Planning & Design Construction of Facilities Pre-Opening Marketing & Training Going Concern (Implementation) Monitoring & Evaluation Project Closing & final report

Each phase of a project incurs certain benefits & costs that must be included in the Economic & Social Benefits Analysis. The implementation and monitoring and evaluation phases are ongoing. The project closing and final report are prepared after the project has been completed.

MANAGEMENT PLANNING

What is Management?

Mangers ensure that employees perform the activities for the continued success of a business.

Managers achieve goals and objectives of a business through the coordination of material and human resources.

Functions of management: Planning – Setting goals and objectives, and plan for achieving them with the resources

available; Organizing – Coordination of human and material resources to achieve organizational

objectives by establishing a formal structure of tasks and authority relationships; Directing – Guiding the action and performance of subordinates to achieve organizational

goals and objectives Controlling – Ensuring that actual performance is proceeding according to plan and that

organizational goals are being met. Managerial Skills:

Human skills – Understand the needs and ability to motivate employees and foster team building;

Conceptual skills – Mental ability to perceive the organization as a whole, and how parts work together to achieve goals;

Technical skills – to perform the actual mechanics of a job; it may include tools and specialized knowledge

Basic Functions of Management

Function Description Stage

PlanningPlanning consists of all managerial activities related to preparing for the future. Specific tasks include setting goals & objectives, devising strategies, forecasting, and developing policies. Planning is the cornerstone of effective strategy formulation, and essential for its implementation, largely because organizing, motivating, staffing & controlling activities are all dependent upon good planning.

StrategyFormulation

OrganizingOrganizing includes all those managerial activities that result in a structure or task & authority relationships. Specific areas include organizational design, job analysis, job specialization, job description, span of control, unity of command, coordination, and job design.

Strategy Implementation

MotivatingMotivating involves efforts directed toward shaping human behaviour. Specific topics include leadership, organizational design, communication, work groups, behaviour modification, delegation of authority, job enrichment, job satisfaction, needs fulfillment, organizational change, and managerial morale.


StaffingStaffing activities are center on personal or human resource management. Included are wages & salary administration, employee benefits, interviewing, hiring, training, firing, management development, employee health & safety, affirmative action, equal employment, union relations, grievance procedures, employee discipline, and public relations.


ControllingControlling refers to all those managerial activities directed towards assuring that actual results are consistent with planned results. Key areas include quality control, financial control, sales management, inventory management & control, costs control, analysis of variances, rewards and sanctions.

Strategy Evaluation

The Management Team

The management team is comprised of the core group of those individuals responsible for the operation and success of the company. The Board of Directors should not get involved in the micro-management of the Company. The BoD has only one employee – the Chief Executive Officer (CEO). The management team is usually comprised of the Chief Executive Officer (CEO) (General Manager), the Chief Operating Officer (COO), and the Chief Financial Officer (CFO).

The CEO is the top manager and is typically responsible for the entire operations of the company. The CEO is accountable to the Board of Directors and is responsible for implementing the decisions of the Board. In some companies the CEO is a member of the BoD and his/her title may be President. All senior managers report directly to the CEO, who in turn reports to BoD. The Directors must no get involved in the day-to-day operations of the company.

In some companies these top management positions are called President and Vice-Presidents, which may include a VP of Operations, a VP of Marketing, a VP of Administration (or Corporate Affairs), a VP of Human Resources, and a VP of Information Technology (or Chief Information Officer); in non-profit corporations or societies the CEO is sometimes designated as Executive Director. The CEO runs de day-to-day business of the company.

The Chief Financial Officer (CFO) is responsible for the overall financial management & health & integrity of the organization, which includes all financial transactions and data, including revenues, costs & expenses, capital acquisitions, treasury management, budgeting, taxation, reporting to governments, and audit.

The Chief Operating Officer (COO) is responsible for the operations of a company, and is usually responsible for production, purchasing, personnel, marketing & sales.

04/10/2023

62

Corporate Policy Framework

Board Governance and Committees Administrative policies Financial management and control policies Human resources policies Risk management policies Investment policies Social Responsibility policies Environmental stewardship policies Ethical conduct and conflict of interest policies

04/10/2023

63

Business Policy Development - 1

A policy is a governing principle; it allows the Board of Directors to delegate to others (management, staff, volunteers, and agents) the authority to act on behalf of the organization. A policy allows them to know what the Board of Directors want, and what it is expected of them.

A policy is intended to accomplish the following: To bring a reasoned approach to a particular matter or issue To provide consistency, overall fairness, and predictability to decisions To encourage full consideration of all relevant factors before a decision is made on the

merits of a particular matter To carve out areas of specific responsibility and accountability, so that those who know

the job best are the ones who have responsibility to do it. There are a number of types of policies that are common among not-for-profit

organizations, including: Governance Policies – letters of patent; memoranda of association; trust deeds, or

similar documents; bylaws; board structure decision making processes (e.g. committees); board governance policies; administrative policies; rules of procedure or rules of order; ethical conduct; conflict of interest policies & procedures; communications policies; privacy, confidentiality, and access to information policies.

04/10/2023

64

Business Policy Development - 2

Strategic Planning Policies – development and administration process for vision and mission statements, statement of goals and objectives, planning framework, strategic plans, business plans, workplans, budgets and other resource allocation policies.

Operational Policies – financial management (cash & treasury management, internal control procedures, banking arrangements, internal audit); regulatory compliance management; human resources management; program management; asset protection; risk management (including insurance and indemnification); investment policy. The process to develop policy usually includes the following steps:

1. Identification of the need or legal requirement

2. Terms of reference for policy development, format & research

3. Review of legal requirements and standards that are applicable

4. Drafting the policy

5. Discussion of the draft policy by the parties involved

6. Final review of the policy

7. Approval by the governing body (usually the board of directors)

8. Development of implementation plan

9. Approval of the implementation plan, which may require resource allocation

10. Evaluation of the implementation of the policy and its cost and effectiveness

11. Revision & update of the policy

Responsibility Hierarchy

Shareholders – are the owners of a corporation (they own shares); they elect the Board of directors

Board of Directors – elect a chairperson and other corporate officers, and hire the CEO. The Board of directors is responsible for the overall operation of the company.

Senior Management – usually selected by the CEO, Senior management runs the day-to-day operations of the company. Top management team is comprised of Chief Executive Officer, Chief Financial Officer, Marketing VP, Chief Operating Officer, Chief Information Officer, and other executives

Middle Management – Senior management hire middle managers, and middle management, in turn, hire lower levels f middle-management, supervisors, and frontline staff

Supervisors – oversee line workers Frontline Staff – people who do the work on the ground.

Functional Organization of a Business

Board of DirectorsPresident

/ CEOMarketing

Production & DistributionController

Treasurer

Finance

Human Resources

Administration & Information Technology

04/10/2023

67

BUSINESS PLANNING

04/10/2023

68

Planning

Of the five key management functions — planning, organizing, staffing, leading and controlling - planning is the most fundamental, as all other functions stem from planning. Before a manager can tackle any of the other functions, he or she must first devise a plan. A plan is a blueprint for goal achievement that specifies the necessary resource allocations, schedules, tasks, and other actions.

The word planning incorporates both ideas: It means determining the organization's goals and defining the means for achieving them. Planning allows managers the opportunity to adjust to the environment instead of merely reacting to it. Planning increases the possibility of survival in business by actively anticipating and managing the risks that may occur in the future. In short, planning is preparing for tomorrow, today. It's the activity that allows managers to determine what they want and how they will achieve it. Planning no only provides direction and a unity of purpose for organizations, it also answers six basic questions in regard to any activity: What needs to be accomplished? When is the deadline? Who will be responsible for it? Where will this be done? How will it get done? How much time, energy, and resources are required to accomplish this goal?

04/10/2023

69

What is Business Planning?

Planning for the start-up, continuation, expansion, financing or restructuring of a business.

Business planning must engage those who will implement the plan; not be prepared by an outsider and brought into the business for others to implement without coaching.

Business planning usually encompasses all aspects of a business (marketing, financing, governance, human resources, purchasing, operations, information, and communications).

04/10/2023

70

Five Elements of Effective Plans *

The right decisions in planning are better achieved when we take into account the following:

Abandonment – The first decision is whether to abandon what does not work, what has never worked – the things that have outlived their usefulness and their capacity to contribute.

Concentration – is building on success, strengthening what does work; put your efforts in your successes

Innovation – Look for tomorrow’s success and innovations. What are the opportunities, the new conditions, the new emerging issues? Do they fit you? Do you really believe in this? However, before you go into something new, find out what it requires; what does the customer value? What is the state of the art? How can we make a difference?

Risk Taking – Planning always involves decisions on where to take the risks. Some risks you can afford to take, and some decisions may carry great risk, but you cannot afford not to take it. You need to balance the short with the long.

Analysis – It is important to know what you don’t know, when you are not yet sure whether to abandon, concentrate, go into something new, or take a particular risk. You need to conduct an analysis before making (or recommending) a final decision.

* Adapted from “The Five Most Important Questions You Will Ever Ask About Your Organization”, Peter F. Drucker, Leader to Leader Institute, 2008

04/10/2023

71

Business Model - 1

A Business Model is the plan devised by an organization (business or not-for-profit) to generate revenue and, in the case of a business, make a profit from operations. The business model describes the way in which a company makes money; how an organization creates (delivers value to its customers), delivers (entices customers to pay for value), and captures value (convert those payments into profit). In essence, the business model answers the question “How do you plan to make money?”; how a business appropriates the maximum value of the products that it creates.

The business model approach gained focus in the last few years because of the many different ways that the internet offers opportunity to make money. Facebook, Google, Amazon, and eBay are all internet-based businesses that use unique business models, in which the way the revenue is generated is different for each of them. Some businesses generate revenues through online direct sales (Amazon), others by selling advertising space in their high-traffic websites (Google and Facebook), and others by playing the role of a market between people who have things to sell and those who want to buy them (eBay).

The business model includes the components and functions of the business, as well as the revenues it generates and the expenses it incurs. The business model reflects what customers want, how they want it, how a business reaches them, how the product is differentiated, how is priced, how is sold, how is delivered, and how the business can organize itself to best meet those needs, get paid for doing so, and make a profit. The business model also considers how customer support is provided, and how to achieve the maximum customer satisfaction.

04/10/2023

72

Business Model - 2

The business model attempts to clearly identify the following: What customer need, problem, or challenge is the business attempting to solve? Who are the target customers? How will we reach., acquire, and keep customers? How unique is the product? How do we differentiate it from similar products offered

by the competition? How do we generate revenue?

A business model can be simple or very complex. A restaurant's business model is to make money by cooking and serving food to hungry customers. A website's business model might not be so clear, as there are many ways in which these types of companies can generate revenue. For example, some generate revenue by providing a free service and then selling advertising to other companies, while others might sell a product or service directly to online customers.

There are four main categories of business models: Creator – an enterprise that manufactures a product or provides a service, and sells

it at a price that cover all costs incurred in the process of transforming the product into something of value to customers, plus a margin for profit.

Distributor – buys the product from the creator for resale to customers, and makes money on the spread between total costs and sales revenue.

04/10/2023

73

Business Model - 3

Landlord – owns the asset or product and rents or leases it to customers, making money on the spread between the acquisition and maintenance costs of the asset and rent (or) lease revenue.

Broker – matches buyers and sellers, taking a commission or other fee as payment. A business may sell a variety of goods and services, but for simplification purposes of

developing the business model, the business focus only on the key products that it creates. The business model takes the value of a product and identifies the target market that

values the product; it then defines the valuable products that the business will create for those markets, the process that will generate revenue from the sales of those products, and the steps required to remain competitive against business counterparts, but it does not identify how the business will capture value or the processes and systems required to accompany those steps.

The business model and the business plan are interdependent from each other. The business model explains the flow of money within the company, and the (more detailed) business plan explains the structure needed to achieve that flow of money (i.e. business operations, ownership and management, departments, staffing, location, facilities, equipment, marketing strategies and financial management). One can say that the business plan is completely dependent on the business model. If you change the business model, the business plan also needs to be changed to reflect the change in the way that the business captures value. On the other hand, if you change certain components of the business plan (e.g. production process, market, human resources or administration), you may have to make changes in the business model.

Business Model Canvas - 1 *

The Business Model Canvas is an intuitive business planning development tool developed in 2010 by Alex Osterwalder and Yves Pigneur. The Business Model Canvas takes an intuitive and visual approach to building a business model on a canvas. The canvas is divided into nine areas and each of the following elements is placed in one of the nine areas:

1. CS - Customer Segments – To build an effective business model, a company must identify which customers it tries to serve. An organization may serve one or more customer segments. Types of market segments: Mass Market, Niche Market, Diversify, multi-sided platform, and custom relationship. In turn customer relationships include Personal assistance, Dedicated personal assistance, Self-service, Automated services, Communities, and Co-creation.

2. VP - Value Propositions – It seeks to solve customer problems and satisfy customer needs with value propositions. The value proposition is the collection of goods and services a business offers to meet the needs of its customers. Value Propositions may be quantitative (based on price and efficiency), or qualitative (based on overall customer experience and outcome). Elements of Value Proposition include newness, Performance, Customization, “Getting the job done”, Design, Brand/Status, Price, Cost reduction, Risk reduction, Accessibility, and Convenience/usability.

3. CH - Channels – Value propositions are delivered to customers through communication, distribution, and sales channels. Channels are the company’s interface with customers. Channel phases include 1. Awareness, 2.Evaluation, 3. Purchase, 4.Delivery, and 5. After Sales. Channels are touch points that play an important role in the customer experience.

* Adapted from Business Model Generation, Alex Osterwalden and Yves Pigneur

04/10/2023

75


4. CR - Customer Relationships – Customer relationships are established and maintained with each customer segment.

5. RS - Revenue Streams – revenue streams result from value propositions successfully offered to customers.

6. KR - Key Resources – the key resources that are necessary to create value for the customer.

7. KA - Key Activities – Key activities are the most important activities in executing a company’s value proposition;

8. KP - Key Partnerships – Some activities are outsourced and some resources are acquired outside the enterprise

9. CS - Cost Structure – The business model elements result in the cost structure.

04/10/2023

76


Customer Segments

Cost Structure

The business model elements result in the cost structure

Revenue Streams

Revenue streams result from value propositions successfully offered to customers

ValueProposition

It seeks to solveCustomers problems

And satisfy customer

Needs with value proposition

Key Partners

Partners & suppliers;

Some activities areoutsourced and

someresources are

acquired outside of the

organization

KeyResources

Are assets required to offer and deliver the components of

the canvas

ChannelsValue

propositionsare delivered to

customers through

communication, distribution, and sales channels

Key Activities

CustomerRelationshi

ps

are established and

maintained with each customer

segment

* Adapted from Business Model Generation, Alex Osterwalden and Yves Pigneur

An organization serves one or

several customer segments

04/10/2023

77

Business Model, Strategic Plan, Business Plan, & Workplan

A Business Model is the set of systems and protocols that a company uses to convert its products into value to its customers, and how the company generates revenue and earns a profit.

A Strategic Plan is a high-level outline of where an organization is going and how it will get there.

A Business Plan is a document that describes the nature of a business, summarizes its operational, sales and marketing, and the financial objectives goals, and contains the details showing how these objectives are to be achieved. The Business Plan is a road map that provides direction to the key internal stakeholders of a business or organization.

A Workplan is a more detailed statement of how a business or organization is going to implement the goals and objectives set in the Business Plan, for a specific time period (usually less than a year). The workplan is often in matrix format, identifying what will be done, when, by whom, with which resources, and the final outcome.

04/10/2023

78

Annual Planning Cycle

Business Plan Business Model Operations Marketing Financial Human resources Green Plan

Fiscal Calendar Budget development & approval process

Provisional budget Annual budget

Annual Workplan Quarterly reports Semi-Annual Review Annual Report Annual audited financial statements

04/10/2023

79

Planning & Reporting Framework

Businesses operate continuously, but it is useful to divide up the operation into years (fiscal year), and assess its performance in annual cycles. The following is only a sample of tasks and activities that a business may develop and implement within a fiscal year: Fiscal year and planning calendar

and agenda Board development plan Letter of owners’ expectations Annual update of the 5-year

strategic business plan FN management and employment

development plan Risk management plan Health and safety plan

Succession plan Annual workplan Annual budget and cash-flow

forecasts Monthly financial reports Semi-annual review (evaluation)

of operations Annual staff evaluations Organizational audit every three

years Annual audited financial

statements Annual general meeting Annual report


80

Business Plan Template - 1

Title Page – Company name and logo, contact information, date and business plan copy number.

Table of Contents Page Executive Summary –

Opening paragraph – the background of the business and how it is so unique Business Model paragraph – the problem or gap in the market that you are

addressing, your product solution, and your revenue model, how you are going to make money;

Market Opportunity paragraph – The size of the market opportunity, your competitive landscape, your go-to-market strategy, and barriers to entry;

Team and Strategy paragraph – a brief summary about the background of each principal, key manager, and advisor.

Financial Summary paragraph – financial highlights, funding request, planned use of proceeds, and previous rounds of funding.

Corporate Fundamentals – Vision & Mission Statements, Mandate, Guiding Principles, Core Business, Responsible business.

Company Summary – Business description, milestones, and business history (if applicable) Corporate profile, business direction, & organization chart.


81


Opportunity and Feasibility Analysis Products (goods and services) description – Customer problem, core features

and benefits, proprietary assets, product life cycle, and product road map. Market opportunity Analysis of business risk SWOT Analysis, Stakeholders Analysis, Marketing & financial feasibility

analysis Overview of economic, social, and political environment (Triple Bottom Line -

People, Planet, and Profits) Marketing Plan

Products & services, Marketing team, Who is the customer, Market, Competitive analysis, Marketing strategies, Marketing communication plan, Budget, Four Ps of Marketing Mix: Product, Price, Place, & Promotion, Breakeven Analysis.

Target market profile Growth strategy Competitive analysis - Competition, competitive advantage, and barriers to

entry Business Model – Value chain, product/market fit, revenue model, and

scalability Sales and Marketing Strategy – Positioning, pricing strategy, sales strategy,

marketing strategy, strategic relationships, and sales forecasts


82


Organization, Management, and Ownership Organization chart Business organization and legal structure Board of directors and management team Mentors, coaches and advisors and professional support (accountant, lawyer,

insurance broker, and IT expert). Strategic Alliances and Operating Systems

Human Resources, Operations and Facilities Plan Location(s), facilities, layout, equipment, key employees & strategic partners,

pre-opening activities, and operations and production plan. Green Plan

A conventional business plan aims to demonstrate the marketing, financial and technical feasibility of a business venture; A Green business plan accounts for the environmental impact and strategies.

Commitment to environmental stewardship – preserves and enhances environmental quality; reduction of ecological footprint; reduction of greenhouse gases and pollutants; use of renewable energy and energy-efficiency measures; conservation of natural resources and energy; recycling programs; reduction of carbon emissions; waste reduction.


83


Financial Plan Capital requirements Start-up &working capital requirements Pro-Formas (monthly for the first two years, quarterly for year 3, and

annual to year 5) - Balance Sheet, Income Statement, Statement of Cash-Flow, and Statement of Capital; Equity & Debt requirements;

Debt Security; Ratios & Breakeven & Sensitivity Analysis; Weighted Average cost of Capital; Capital Budgeting and Discounted Cash-Flow Analysis - Net Present

Value (NPV), Internal Rate of Return (IRR), Future Value (FV). Appendices & Schedules

Bios/resumés of principals and key managers and employees Legal documents – agreements/contracts, patents and evidence of

other intellectual property, distribution agreements, franchise agreements, and other relevant documents.

fundamentals of strategic planning - helder ponte

Business

business entrepreneur

business risk

business activity

business firm

forprofit business

business leader

business activities

world of business