1. FUNDAMENTALS OF
STRATEGIC PLANNING
Helder Ponte
Links to Learning
Vancouver, BC
November 18, 2013

2. THE WORLD OF BUSINESS

3. From Idea to Business
3
Monitoring Progress
Going Concern
Opening
Pre-Opening
Construction
Planning & Design
Financing
Legal Structuring
Business Plan
Market & Financial
Feasibility
Business Model
Business Idea
18/12/2013

4. How Organizations Evolve
4
Collaboration
Red Tape
Coordination
Control
Delegation
Autonomy
Direction
Leadership
Creative / Original Idea
18/12/2013

5. 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)

6. What is a Business?
6

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.
18/12/2013

7. 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.

8. Social Enterprise - 1
8




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.
Helder Ponte
12/18/2013

9. Social Enterprise - 2
9

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
Helder Ponte
12/18/2013

10. The Most Important 5 Questions in Business - 1
10

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 are our challenges?

What are our opportunities?


What is our current mission?
Does the mission needs to be revised?
2 – Who is your customer?


Who are our supporting customers


Who is our primary customer?
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?
18/12/2013

11. The Most Important 5 Questions in Business - 2
11

4 – What are our results?


Are we successful?

How should we define results?


How do we define results?
What must we strengthen or abandon?
5 - What is our plan?

Should the mission be changed?

What are our goals?
18/12/2013

12. Resources
12
A resource is an untapped asset
18/12/2013

13. Stakeholders in a Business
13
FN
Community
Government
s
Owners /
Business
Partners
Board
of
Director
s
Neighbours
Advisors
Management
Auditor
s
Employe
es
Custome
rs
Regulators
Creditors
Supplie
rs
18/12/2013

14. Business Environment
14
18/12/2013

15. External Business Drivers
15
• Variations in currency value affect costs to both importers and
exporters
• What competitors do or not do affects your business
• Changes in demographics affect market targets, product life
cycles, and marketing focus
• Volatility in financial markets create uncertainty in economic
prospects, which affects investment and sales
• Major changes in technology affect business strategies
• Changes in price of inputs are major drivers in setting price of
products
• World politics and business cycle affect level of economic
activity
18/12/2013

16. 16
BUSINESS FUNDAMENTALS
18/12/2013

17. Key Functions in a Business
Function
Key Tools
Governance & Management
Vision, mission, guiding principles, ownership
structure, business strategy
Production/Operations
Product development, inputs, facilities,
equipment, production, quality control,
management of residuals
Creativity / Innovation
Research and development of new solutions and
products to meet consumer needs and
preferences
Marketing
SWOT, market, product, price, promotion, and
place
Distribution
Inventories, transportation and warehousing
Financial
Capital and operating budgets, treasury, working
capital, resource allocation, long-term financing,
and profitability.
Personnel
Human resources development and management
Social Responsibility
Meeting the needs of communities and
stakeholders
Proactive to natural environment

18. Business Fundamentals
18



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.
18/12/2013

19. Vision - 1
19

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.
18/12/2013

20. Vision - 2
20
Dreams
Roots
Potentials
Vision
Interes
ts
Aspiratio
ns
Values
18/12/2013

21. From Vision to Outcomes
21
Outcomes
Actions /
Projects
Objectives
Goals
Values
Mission
Vision
18/12/2013

22. Mission
22



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.
6.
7.
8.
Concern for survival, growth, and profitability – is the organization committed to growth and financial
soundness?
Philosophy – What are the basic beliefs, values, and aspirations, and ethical priorities of the
organization?
Self-Concept – What is the organization distinctive competence or major competitive advantage?
18/12/2013
Concern for public image – Is the organization responsive to social, community, and environmental
concerns?

23. Vision vs. Mission
23
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?‖
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.
Change
May 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.
18/12/2013

24. Values, Guiding Principles & Standards
24



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.
18/12/2013

25. Responsible Business
25







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, interdependence, equity, long-term perspective, and long-term cumulative
effects that harm the environment.
Environmental Stewardship – The business conserves land, water & fresh air; protects natural ecosystems & 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.
18/12/2013

26. An Example of Business Fundamentals
26


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.
18/12/2013

27. An Example of Statement of Corporate Principles &
Responsibility
27

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.

18/12/2013
To our Neighbours: We want participate fully in the local / regional economy.

28. 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.

29. 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.

30. Using Other People’s Help
Inside
Employees, partners,
business records and
documents, franchise
support
Semi-Inside
Outside
Customers, board of
directors, advisors,
mentors, lawyer,
accountant, banker, bank
manager, insurance
broker, suppliers,
distributors, and
business associates
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

31. 31
BUSINESS STRATEGY
18/12/2013

32. Business Strategy - 1
32

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.
18/12/2013

33. Business Strategy – 2
33


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.
18/12/2013

34. Uses & Value of Strategy
34

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
18/12/2013
Policies, Standards, and Procedures – for achieving goals and objectives

Monitoring, Evaluation and Updating – Compare actual results to planned; compare benefits to costs;

35. Strategic Planning
35
Fundamentals
Goals & Objectives
Environmental Scanning
• Vision, Mission, Values, Guiding Principles
• What you set to achieve
• 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.
18/12/2013

36. The Language of Strategic Planning - 1
36

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;
18/12/2013

37. The Language of Strategic Planning - 2
37






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;
18/12/2013

38. Strategic Management - 1
38

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.
18/12/2013

39. Strategic Management - 2
39

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.
18/12/2013

40. 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

41. Strategic Alliances & Partnerships - 2

The key points in negotiating a strategic alliance include:


Licensing of intellectual property

Technology exchange

Alliance fees and costs

Sales and marketing

Ownership of assets

Alliance financing

Alliance management structure

Equity investment, and


Agency and distribution rights
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.

42. Letter of Owners’ Expectations
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.

FN-Owned Business

Business autonomy

Stakeholders

Governance

Board of Directors

Directors

Investment

Profits

Accountability

Transparency
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.

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

43. The Logic Model
43
S i t u a t I o n
Inputs
Outcomes
Outputs
Investments
(materials, financial
& human resources)
What we Invest
Activities
Participation
What we Do
Who we
Reach
Short / Medium / Longterm
Intended changes
What Results
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).
18/12/2013

44. Logic Model Planning
44

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
Need
What is the issue or problem?
Goal
Activity
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
Final Outcome
What event or activity actually occurred?
What change occurred? Did you meet goals and
objectives?
18/12/2013

45. 45
ANALYZING THE BUSINESS ENVIRONMENT
18/12/2013

46. Situation Analysis
46




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.
18/12/2013

47. Stakeholder Analysis - 1
47

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
18/12/2013

48. Stakeholder Analysis - 2
48

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 Matrix
Stakeholder
Economic
Environmental
Philantropic
Social Action
Government
Business &
Industry
Communities /
Interest Groups
Environmental
Stewardship
18/12/2013

49. Mapping Stakeholder Interests
Stakeholder Matrix
Venn Diagram
A
Stakeholder
Interest
Influence
D
B
Power
C
Role
Community
Region
Regional
Businesses

50. PESTLE Analysis
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?
18/12/2013

51. SWOT Analysis
51

Strengths


What do we do well?

What relevant resources do we have access
to?


What advantages do we have?
What other people see as our strengths
Weaknesses


What do we do poorly?


What could we improve?

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?
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
18/12/2013

52. 5 C’s Analysis - 1
52

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.


• 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.


• Goals & Objectives: An analysis on the mission of the business, the industry of the business and
the stated goals required to achieve the mission.
• 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.
18/12/2013

53. 5 C’s Analysis - 2
53

The competitor analysis looks at the following criteria's:


• 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.


• 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.
• 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
18/12/2013

54. 5 C’s Analysis - 3
54


• Quantity and frequency of purchase


• Distribution channels (online, retail, wholesale, etc.)
• 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.
18/12/2013

55. 5 C’s Analysis - 4
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.
18/12/2013

56. Porter’s Five Forces Analysis *
56

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.
2.
3.
4.
5.
• The threat of new entrants New entrants affect the company’s profits as the consumers have more
variety to choose from.
• 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.
• Threat of substitute product of services: more than one firm producing similar or the same product
or service.
• Bargaining powers of suppliers: The company dependence on the resources the suppliers
provide, in order to create their product or services.
• 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"
18/12/2013

57. 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.

58. MANAGEMENT PLANNING

59. 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

60. Basic Functions of Management
Function
Planning
Organizing
Motivating
Staffing
Controlling
Description
Planning 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.
Organizing 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.
Motivating 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.
Staffing 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.
Controlling 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
Stage
Strategy
Formulation
Strategy
Implementation
Strategy
Implementation
Strategy
Implementation
Strategy Evaluation

61. 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 micromanagement 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.

62. Corporate Policy Framework
62

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
18/12/2013

63. Business Policy Development - 1
63

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 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 bring a reasoned approach to a particular matter or issue
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.
18/12/2013

64. Business Policy Development - 2
64

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
18/12/2013

65. 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.

66. Functional Organization of a Business
Marketing
Controller
Production &
Distribution
Treasurer
Board of
Directors
President
/ CEO
Finance
Human
Resources
Administration
& Information
Technology

67. 67
BUSINESS PLANNING
18/12/2013

68. Planning
68


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?
18/12/2013

69. What is Business Planning?
69

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).
18/12/2013

70. Five Elements of Effective Plans *
70






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,
18/12/2013
2008

71. Business Model - 1
71

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 internetbased 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.
18/12/2013

72. Business Model - 2
72

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.
18/12/2013

73. Business Model - 3
73

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.
18/12/2013

74. 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.Business Model Generation, Alex Osterwalden and Yves Pigneur
Adapted from Channels are touch points that play an
important role in the customer experience.

75. Business Model Canvas - 2 *
75
4.
5.
6.
7.
8.
9.
CR - Customer Relationships – Customer relationships are established and maintained
with each customer segment.
RS - Revenue Streams – revenue streams result from value propositions successfully
offered to customers.
KR - Key Resources – the key resources that are necessary to create value for the
customer.
KA - Key Activities – Key activities are the most important activities in executing a
company’s value proposition;
KP - Key Partnerships – Some activities are outsourced and some resources are acquired
outside the enterprise
CS - Cost Structure – The business model elements result in the cost structure.
18/12/2013

76. Business Model Canvas - 3 *
76
Customer
Relationships
Key Partners
Partners & suppliers;
Some activities are
outsourced and some
resources are
acquired outside of
the
organization
Key Activities
Key
Resources
Are assets required
to offer and deliver
the components of
the canvas
Value
Proposition
It seeks to solve
Customers
problems
And satisfy
customer
Needs with value
proposition
are established and
maintained with
each customer
segment
Customer
Segments
Channels
Value propositions
are delivered to
customers through
communication,
distribution, and
sales channels
An organization
serves one or
several customer
segments
Revenue Streams
Cost Structure
The business model elements result in the cost structure
Revenue streams result from value propositions
successfully offered to customers
18/12/2013
* Adapted from Business Model Generation, Alex Osterwalden and Yves Pigneur

77. Business Model, Strategic Plan, Business Plan, &
Workplan
77

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.
18/12/2013

78. Annual Planning Cycle
78

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
18/12/2013

79. Planning & Reporting Framework
79

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


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
Risk management plan

Succession plan
FN management and employment
development plan


Health and safety plan
18/12/2013

80. Business Plan Template - 1
80

Title Page – Company name and logo, contact information, date and business plan copy
number.

Table of Contents Page

Executive Summary –


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.


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;


Opening paragraph – the background of the business and how it is so unique
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)

Helder Ponte
Corporate profile, business direction, & organization chart. 12/18/2013

81. Business Plan Template - 2
81

Opportunity and Feasibility Analysis


Market opportunity

Analysis of business risk

SWOT Analysis, Stakeholders Analysis, Marketing & financial feasibility analysis


Products (goods and services) description – Customer problem, core features and
benefits, proprietary assets, product life cycle, and product road map.
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, Helder Ponte 12/18/2013
pricing strategy, sales strategy, marketing
strategy, strategic relationships, and sales forecasts

82. Business Plan Template - 3
82

Organization, Management, and Ownership


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).


Organization chart
Strategic Alliances and Operating Systems
Human Resources, Operations and Facilities Plan


Location(s), facilities, layout, equipment, key employees & strategic partners, preopening 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
Helder Ponte 12/18/2013
resources and energy; recycling programs; reduction of carbon emissions; waste

83. Business Plan Template - 4
83

Financial Plan


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 requirements
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.
Helder Ponte
12/18/2013