Strategic Business Planning and

Governance

Prepared by Birasa
Nyamulinda PhD
Contents
Chapter one: Introduction........................................................................................................................................... 3
1.1. Background................................................................................................................................................. 3
1.2. Overall objective....................................................................................................................................... 3
1.3. Strategic plan defined. ............................................................................................................................ 3
1.4. Strategic planning process ...................................................................................................................... 4
1.4.1. Steps of strategic planning process.............................................................................................. 4
1.5. Developing Business Values ................................................................................................................ 7
1.6. Benefits of Strategic Business Planning............................................................................................. 7
Chapter two: Situation Analysis ................................................................................................................................ 9
2.1. Stakeholder analysis ...................................................................................................................................... 9
2.2. Engaging Stakeholders in the Strategic Planning Process ................................................................... 10
2.3. SWOT Analysis ............................................................................................................................................ 11
2.3.1. Swot analysis-framework................................................................................................................... 12
2.4. Sector or Industry analysis ......................................................................................................................... 13
Chapter three: Market Analysis ............................................................................................................................. 15
3.1. Market ........................................................................................................................................................... 15
3.2. Market analysis ............................................................................................................................................ 15
3.3. Sales planning .............................................................................................................................................. 16
3.4. Market Research .......................................................................................................................................... 17
3.4.1. Dimensions of Market research ......................................................................................................... 18
3.5. Target market............................................................................................................................................... 20
3.5.1. Market demand analysis ................................................................................................................... 21
3.6. Competitor analysis ..................................................................................................................................... 23
3.6. 1. PESTEL Analysis ................................................................................................................................... 23
Chapter four: Marketing plans .............................................................................................................................. 26
4.1. Determining market segments ................................................................................................................... 26
4.2. Milestones planning ..................................................................................................................................... 30
4.3. Marketing and promotion strategies ....................................................................................................... 30
4.4. Pricing strategy ............................................................................................................................................ 31
4.4.1. The marketing Mix............................................................................................................................... 31
4.5. Marketing Budget ........................................................................................................................................ 34
Chapter four: Governance and Management .................................................................................................... 36
5.1. Decision making in the SME. ...................................................................................................................... 36
5.2. Management Decision Making .................................................................................................................. 37
5.3. Advisers/Advisory Board ........................................................................................................................... 38
5.4. Board of Directors ....................................................................................................................................... 38
5.5. Succession planning ..................................................................................................................................... 38
5.6. Human Resources Planning ......................................................................................................................... 39
 5.7. Identifying Strategic Risks .......................................................................................................................... 39
5.7.1. How to develop a risk management approach. ................................................................................ 39
Chapter Five: Business Model Canvas .................................................................................................................. 41
5.1. Introduction.................................................................................................................................................... 41
5.2. Purpose of Business Model Canvas..................................................................................................... 42
4.3. Ways to apply Business Model Canvans .......................................................................................... 47
Chapter one: Introduction
1.1. Background
Achieving business success is a journey. One important tool to achieve that is the development

of a business strategic plan that gives a general direction of an organization. Developing

strategic business planning is vital for any entrepreneur wishing to grow and strengthen their

competitive landscape in the Global business environment. Basically, the whole process of

developing a strategic plan makes the entrepreneur pay particular attention to the key factors

that will determine the success of his/her venture, thus addressing promptly and mitigating

potential risks. The purpose of this manual is to guide the participants in developing goals of

their business and overall strategic plans.

1.2. Overall objective

To strengthen and develop the skills of the participants on the competences needed to
conceptualise and operationalize a business successfully.
1.3. Strategic plan defined.
Strategic planning is a process of looking into the future and identifying trends and issues

against which to align organizational priorities.

Essentially, a strategic plan is a roadmap to get to business goals. Without such guidance, there

is no way to tell whether a business is on track to reach its goals. The audience of a strategic

plan is the organization’s own team, and the purpose is to build alignment and decision-making

capacity for the future of the organization.

For everyone, strategic planning is about understanding the challenges, trends, and issues;

understanding who the key beneficiaries or clients are and what they need; and determining the

most effective and efficient way possible to achieve the mandate. A strategic plan may be

updated and revised at that time to reflect any strategic changes.

i. A strategic plan answers the following questions:

ii. What are my current capabilities, values, mission, and vision?
 iii. What are my goals, and what should I do to achieve them?
iv. Who does what, how and by when to get where I want to go?
1.4. Strategic planning process
The strategic planning process requires considerable thought and planning on the part of a

company’s upper-level management. Before settling on a plan of action and then determining

how to strategically implement it, executives may consider many possible options. In the end,

a company’s management will, hopefully, settle on a strategy that is most likely to produce

positive results (usually defined as improving the company’s bottom line) and that can be

executed in a cost-efficient manner with a high likelihood of success, while avoiding undue

financial risk.

1.4.1. Steps of strategic planning process.

Define mission and vision.

o Begin by articulating the organization's vision for the future. Ask, "What would success
look like in five years?
o Create a mission statement by describing organizational values and how you intend to
reach the vision.
Conduct a comprehensive assessment.
o The task here is to gather market data through research.
o Gathering data from internal and external environments and respective
stakeholders takes place at this time. Involving employees and customers in the
research.
o Conduct a SWOT analysis.
1.4.1.1. Developing vision statement

A business vision statement reveals, at the highest levels, what an organization most hopes to

be and achieve in the long term. Vision statements are essential because they reveal a common

goal and direction for your employees. It describes the desired long-term results of your

company’s efforts.

While developing vision statement, the following questions can guide a business:
o What do you hope for your stakeholders?
 o What ultimate impact do I want my brand to have on my community, my industry, or
the world?
o In what way will my brand ultimately interact with customers and clients?
o What will the culture of my business look like, and how will that play out in employees’
lives?
Tips on developing a vision statement for the business organization.

o You need to decide your time frame: five to ten years.

o Need to determine the expected outcome/impact of your business to the
community/client.
o Brainstorming: ask a range of employees in the company about their insight.
o Leverage on experts to cover any knowledge gap.
o State a concise and catchy statement.
o As this may involve some research works; you may need to look at your competitors’
vision statements to determine how you can differentiate your business from theirs
1.4.1.2. Developing Business Goals and Objectives

Goals and objectives are the outcomes the administration intends to achieve and are

documented in the strategic plan. Goals are high-level outcomes that translate the general aims

from the mission and vision statements into more concrete (and measurable) results. The

strategic plan will include goals which are long-term outcomes to provide focus for the

planning process. For instance, what does the organization or community want to achieve in

the next five or 10 years? Establishing goals will then lead to identification of objectives and

strategies to achieve the goals. Goals are identified from having taken a wide look around the

outside of the organization (an external analysis) and careful look inside the organization as

well (an internal analysis), and then identifying what are the most important issues to address.

Goals may refer to the entire organization, such as those concerning operating the organization,

such as staffing and office space. You may also have goals that arise from providing products

or services to your clients and stakeholders, such as volunteer training, community information

sessions, etc.
Tips for developing organization’s goals and objectives:
i. Assess the current state of the business, as well as industry, market, economic,
demographic, and other trends.
ii. Establish specific goals for the business to achieve based on the analysis of the business
and the factors that present opportunities for growth and threats that pose challenges.
iii. Put a timeline to each goal.
iv. Solicit input from employees at all levels of the organization to uncover new
opportunities, as well as to increase buy-in.
v. Determine who will participate in the goal-setting exercise.
vi. Establish when and how progress against goals will be measured, who to hold
accountable for reaching each business goal and how they'll be held accountable.
vii. Communicate the business goals to the entire organization, and align the roles,
responsibilities and deliverables assigned to business departments, teams, and
individual employees with the stated business goals.

1.4.1.3. Developing mission statement

Mission statements are the foundation of any strategic plan. Mission that offers a company a

sense of purpose and direction. The organization's mission statement describes who it is, what

it does and where it wants to go. Missions are typically broad but actionable. It answers the

question as to why a business exists. Also, it should clearly mention what the community or

world benefits from the existence of a business. Generally, mission statements answer the

following fundamental questions:

a. Why does your organization exist?

b. Who is being served by your organization?
c. How is your organization serving them?
A mission statement should always result in the following two important aspects:
o Should position your company in the mind of the customer.
o Should give your customers a reason to choose your company over every other
company or similar products.
Tips on developing a mission statement for the business organization.

i. You should ask first why your company/business exist and what values it presents to the
community and the world.
ii. Describe what your company/business does.
iii. Try to focus on your core competencies.
iv. Outline what you do for clients or customer and how.
v. Describe the community or targeted customers.
vi. Always try to be ambitious and ensure that you produce ambitious statements.
vii. Engage your management team, staff, or peers within the organization, or conduct a
quick survey just to gather ideas from them.
viii. Engage your staff and known customers and peers about the statement and gather their
feedback.
ix. Make sure your mission statement is original and not copied from another organization
and should imply exactly who you are.
x. Ensure that the statement creates a clear connection between the organization and the
staff.
xi. It should be short and concise and hard to forget.

1.5. Developing Business Values

The values statement depicts the priorities in how the organization carries out activities with

stakeholders. The board and manager should regularly reference the values statement to

provide guidance to the nature of how the organization and its programs should operate. Typical

common core values include integrity, honesty, fairness, and respect. A few points to consider:

o What are the principles, standards, and actions considered worthwhile in the
organization.
o Includes how people treat each other, how groups conduct business and what is most
important to the organization.

1.6. Benefits of Strategic Business Planning

According to (McNamara, 2007); Strategic plan serves a variety of purposes in organization,

including to:
1. Involve stakeholders so that everyone is involved in the planning exercise.
2. Clearly define the business’ vision or purpose of the organization– create a mission
and vision.
3. Establish realistic goals and objectives consistent with the mission.
4. Identify strategies to be carried out in a defined time frame within the organization’s
capacity for implementation.
5. Communicate those goals and objectives to the organization’s constituents.
6. Develop a sense of ownership of the plan,
7. Ensure the most effective use is made of the organization’s resources by focusing the
resources on the key priorities.
8. Provide a base from which progress can be measured and establish a mechanism for
informed change when needed.
9. Bring together of everyone’s best and most reasoned efforts have important value in
building a consensus about where an organization is going.
10. Provides clearer focus of organization, producing more efficiency and effectiveness.
11. Bridges staff and board of directors (in the case of corporations)
12. Builds strong teams in the board and the staff (in the case of corporations)
13. Provides the glue that keeps the board together (in the case of corporations) Strategic
Planning
14. Produces great satisfaction among planners around a common vision.
15. Increases productivity from increased efficiency and effectiveness.
Chapter two: Situation Analysis
This chapter introduces the methods used in scanning information needed for the preparation

of a strategic plan. A situational analysis refers to a collection of methods that managers use to

analyze an organization's internal and external environment to understand the organization's

capabilities, customers, and business environment. It includes a thorough examination of

internal and external factors affecting a business. It creates an overview of the organization that

will lead to a better understanding of the factors that will influence its future.

Previous research findings, policy documents, and matters related to business dynamics needs

analyses and evaluations provide a starting point for a situation analysis. Although there are

likely to be many sources of information, rigorous and systematic analysis is required to

understand their underlying relationships with the core business of the company.

Conducting a situation analysis for a company is very important due to the following reasons:
o Develop a shared understanding of the problem in its various dimensions.
o Helps to identify business opportunities and risks.
o Identify the key stakeholders involved.
o Identify any knowledge or information gaps.
o Select those elements that the programme or project would be best placed to address.
o Identify potential partnerships.
o Gather lessons learned and evidence from similar initiatives.
o Begin to delineate key objectives.
2.1. Stakeholder analysis

Stakeholder analysis can be defined as a process of systematically gathering and analyzing

qualitative information for understanding a system by identifying the key actors or stakeholders

in the system and assessing their respective interest in that system.

Stakeholder analysis also refers to a range of tools for the identification and description of

stakeholders on the basis of their attributes, interrelationships, interests and knowledge related

to a given issue or resource, and ability to affect the policy process (through power and/or

leadership).
Stakeholder analysis aims to identify the stakeholders likely to be affected by the activities and

or influence the activities of the company - and to understand the nature of those effects in both

directions. It is a vital tool for identifying those individuals, groups and organizations that have

significant and legitimate interests in the product or service of the company, as well as their

level of influence on the successful planning and implementation of the company goals.

Stakeholder analysis helps to understand the characteristics, motivations, expectations and

constraints of different stakeholders and their potential impacts on the company activities.

A strategic plan must articulate a vision that is based on stakeholder consultation and shared

views. As part of the strategic planning process, it is necessary to identify the organization’s

key stakeholders. Conceptually, a stakeholder is a person, group, or organization that has an

interest in the value your company creates, can influence it, or is affected by what the company

does. There are both internal and external stakeholders. They include employees of the

company, government ministries and agencies, tax authority, private sector institutions, and

nongovernmental agencies, etc.

2.2. Engaging Stakeholders in the Strategic Planning Process

Internal stakeholders have an interest in the success of the company/organization and know

how the administration functions. They are critical to the strategic planning process. They often

understand the impediments to success and have firsthand institutional knowledge of the

organization environment. Internal stakeholders include staff within the company, owners, and

shareholders of the company.

External stakeholder: are those who do not have a direct tie to the company. They are not

employees and do not have any direct financial interest in the profit or loss of the company.

Instead, they have an interest in how the company affects the community or a part of the

community. Their opinions are important in the early stages of planning to bring insight to
 understanding the operating environment. Examples of external stakeholders include the

private sector federation, law chambers, cooperative organizations, banks etc. While the

external stakeholder has no direct financial stake in the company, they do have an interest in

the success, failure, and direction of a company. They are critical to the overall success of

businesses growing in any community.

2.3. SWOT Analysis

It is a technique that enables organisations or individuals to move from everyday problems and

traditional strategies to a fresh prospective. A SWOT anaysis examines the Strengths and

Weaknesses of a company (internal environment) as well as the Opportunities and Threats

within the market (external environment). SWOT analysis looks at your strengths and

weaknesses, and the opportunities and threats your business faces. SWOT can help your

company face its greatest challenges and find its most promising new markets.

A SWOT analysis looks at both current and future situations, where they analyze their current

strengths and weaknesses while looking for future opportunities and threats. The goal is to

build on strengths as much as possible while reducing weaknesses. A future threat can be a

potential weakness while a future opportunity can be a potential strength. This analysis helps a

company come up with a plan that keeps it prepared for a number of potential scenarios.

Basica elements of the SWOT analysis

S-Strengths
Internal
W-Weaknesses Environment

O-Opportunities
External
T-Threats Environment
 2.3.1. Swot analysis-framework

Strengths (internal, positive factors) Opportunities (external, positive factors)

o Characteristics of the business or individual that give o Underserved markets for specific products
it an advantage over others in the industry. o Few competitors in your area
o Positive tangible and intangible attributes, internal to o Are external attractive factors that represent
an organization or individual reasons your business is likely to prosper.
o Qualities that separate you from your competitors o Chances to make greater profits in the
o Internal resources such as skilled, knowledgeable environment - External attractive factors that
staff represent the reason for an organization to exist
o Tangible assets such as intellectual property, & develop.
capital, proprietary technologies, etc. o Emerging needs for your products or services
o Beneficial aspects of the organization or the o Arise when an organization can take benefit of
capabilities of an organization, process capabilities, conditions in its environment to plan and execute
financial resources, products and services, customer strategies that enable it to become more
goodwill and brand loyalty profitable.
o Organization should be careful and recognize the
opportunities and grasp them whenever they
arise.
Weaknesses (internal, negative factors) Threats (external, negative factors)
o Characteristics that place the firm or individual at a o External elements in the environment that could
disadvantage relative to others cause trouble for the business - External factors,
o Detract the organization from its ability to attain the beyond an organization’s control.
core goal and influence its growth. o Arise when conditions in external environment
o Weaknesses are the factors which do not meet the jeopardize the reliability and profitability of the
standards we feel they should meet. However, organization’s business.
weaknesses are controllable. They must be minimized o Emerging competitors
and eliminated. o Changing regulatory environment
o Things your company lacks. o Changing customer attitudes toward your
o Things your competitors do better than you company

Tips on developing a SWOT analysis for the business organization.

o Set up your quadrants—either on a whiteboard or projector.
o As a company or organization designate a leader or group facilitator who has good
listening and group process skills, and who can keep things moving and on track.
o Introduce the SWOT method and its purpose in your organization. This can be as simple
as asking, "Where are we, where can we go?" If you have time, you could run through
a quick example based on a shared experience or well-known public issue.
o Mark things that MUST be addressed immediately.
o Mark things that should be researched further.
o Mark things that that should be planned for the future.
Also, ask these questions:
1. What do your customers love about your company or product(s)?
2. What does your company do better than other companies in your industry?
3. What do your customers dislike about your company or product(s)?
4. What problems or complaints are often mentioned in your negative reviews?
2.4. Sector or Industry analysis
Industry analysis is a tool that enables a company to understand its position relative to other

companies that produce similar products or services like it. While considering the strategic

planning process, a company must understand the overall industry’s forces. Thus, industry

analysis techniques in a strategic plan enable businesses to identify threats and opportunities.

An industry analysis provides statistics about the market potential of your business products

and services. This section of your plan needs to have specific information about the current

state of the industry, and its target markets. An industry analysis may contain reference

materials such as spreadsheets, pie charts, and bar graphs in order to represent the data.

Tips on developing a industry analysis for the business organization.

i. Identify your industry/sector and provide a brief overview.

o You may need to explore your industry on a local, regional, provincial, national,
and/or global level. Be sure to define relevant industry codes. Provide statistics
and historical data about the nature of the industry and growth potential for
your business, based on economic factors and conditions.

ii. Summarize the nature of the Industry.

o Include specific information about growth patterns, fluctuations related to the

economy, and income projections. Be sure to document recent developments,
news, and innovations. Also, discuss marketing strategies, and the industry's
prevalent operational and management trends.

iii. Provide a forecast for your business.

o Compile economic data and industry predictions at different time intervals (5,
10, 20 years). Be sure to cite sources. Note: the type and size of the industry will
determine how much information you will be able to find about a particular
industry. Define if it is new and emerging, growing, maturing or declining.

iv. Identify government regulations that affect the industry.

o Include any recent laws pertaining to your industry, and any licenses or
authorizations you would need to conduct business in your target market. This
section may include information about fees and costs involved.
v. Explain your unique position within the Industry.

o Once you have completed your Competitive Analysis (in the next section) you
can list the leading companies in the industry and compile an overview of data
of your direct and indirect competition. This will help you communicate your
unique value proposition.

vi. List potential limitations and risks

o Write about factors that might negatively impact your business and what you
foresee in the short-term and long-term future. Outline what you know about
the driving forces: new regulations, technology, globalization, competitors,
changing customer needs.
Chapter three: Market Analysis
Question: what is a Market?
3.1. Market
A market is a medium that allows buyers and sellers of a specific good or service to interact in

order to complete a transaction or sale. The market may either be a physical marketplace where

people come together to exchange goods and services in person, such as a bazaar or shopping

center, or a virtual market where buyers and sellers do not directly interact, such as an online

market. The geographic boundaries of a market may vary considerably, for example a food

market in a single building, the real estate market in a local city, the consumer market in an

entire country, or the global market for diamonds.

3.2. Market analysis

A market analysis is a quantitative and qualitative assessment of a market. It looks into the size

of the market both in volume and in value, the various customer segments and buying patterns,

the competition, and the economic environment in terms of barriers to entry and regulation.

Much of the market information can be gathered and organized once and periodically updated,

say every five years or when a significant change takes place.

This is one of the most important sections of the strategic plan as it examines the marketability

of the product or services and convinces readers that there is a potential market for the product

or services. If a significant market for the product or services cannot be established, then there

is no need to carry investment. Typically, market analysis will assess the potential sales of the

product, absorption and market capture rates and the project's timing. The importance of market

feasibility is obvious as no investment will be worth its while if its product cannot be sold at

competitive prices so as to realize the capital and operating costs from sales proceeds.

The challenge for any business is to gain a sufficiently detailed understanding of the

fundamentals of a market. Without this insight, it is unlikely that marketing strategies will

prove effective or that marketing objectives will be met.

3.3. Sales planning

Questions:
o Why is sales planning important?
o Why does sales volume matter?
Sales planning is the process of defining sales targets and creating a strategy that meets goals

and achieves sales and marketing results. The sales plan works in collaboration with the

marketing plan and the business plan. The marketing plan details the strategies while the

business plan sets the initial intentions for the company. Annual or quarterly sales plan updates

ensures the plan stays on course and allows for changes. Ideally, sales planning addresses six

factors that encompass a winning sales strategy:

1. Create a situational analysis.

o By gathering data and analyzing trends, sales plans assess the current situation to
outline strategies based on historical data. Data and trend analysis can identify
obstacles and build on the strengths of the sales plan.
2. Identify objectives and goals.
o Effective sales planning defines company sales targets to include the interests of
both the consumer and the business. Sales goals aim to increase revenue, launch a
new product or increase brand awareness.
3. Set a strategy.
o When setting a strategy, sales teams outline individual roles and responsibilities
based on team member strengths and abilities.
4. Set a sales budget
o Sales planning defines the budget(s) for the project and outlines how and when
revenue is spent or generated. Setting and adhering to a budget allows sales teams
to use resources effectively while keeping the company within its financial
constraints.
5. Develop communication and engagement.
o Effective sales teams understand the objectives of the company and the goals of the
sales plan to carry out tasks according to expectations. Communication provides
clear direction for sales teams and engages team members to meet their specific
goals or milestones. Involve stakeholders in the sales planning process to ensure
sales plans are comprehensive and integrate relevant departments.
6. Set controls and measurements.
 o Controls and measurements determine the direction a company is moving, or
whether it's time to change strategies and consult past sales data for insight. Controls
determine the metrics used to gauge success, while monitoring the progress of the
sales plan promotes strategic improvement.
Tips for sales planning
o Understand your customer: For a company to effectively sell a product or service to
a consumer, it's crucial to understand the needs of the consumer.
o Define the obstacles: List the pros and cons of your competition to strategize how to
improve on their strengths while outlining how to avoid negative impacts.
o Consult with key people and encourage feedback: Sales plans are a conglomeration
of ideas and concepts from a range of sales and marketing team members.
o Set realistic goals: Use the SMART method to set sales goals and consider celebrating
each success with team members to encourage success.
o Define the value: Consumers choose products for the benefit, rather than the features.
Sales plans define the value of a product or service and what it will do for the consumer.
o Define milestones: To define milestones, make comparisons between the business and
standards of the industry.
o Focus on your niche: A niche defines the company's current market position and
identifies its competitors. Effective sales plans consider how to expand the niche.

3.4. Market Research

Market research is the process of gathering information about your target market and customers

to verify the success of a new product, help your team iterate on an existing product, or

understand brand perception to ensure your team is effectively communicating your company's

value effectively.

Market research is an indispensable tool in the strategic planning process, serving as the

foundation for informed decision-making. By collecting and analyzing data on market trends,

consumer behavior, and competition, businesses can gain valuable insights that shape their

marketing strategies, product development initiatives, and overall business strategy.

Market research provides critical information about your market and your business landscape.

It can tell you how your company is perceived by the target customers and clients you want to
reach. It can help you understand how to connect with them, show how you stack up against

the competition, and inform how you plan your next steps.

For many businesses, market research is a key component in developing marketing strategy

by providing a fact-based foundation for estimating sales and profitability. The competitive

environment you face is increasingly challenging. It’s safe to assume that your competitors are

conducting research to gain their own advantage. That may be the best reason of all to make

market research a key part of your business growth strategy. Market research can also play an

important role in the process of developing your products and services, bringing them to the

marketplace, and marketing them to consumers. Overall, market research occupies a pivotal

position within the strategic planning process, enabling businesses to make informed decisions

that drive success.

3.4.1. Dimensions of Market research

1. Identifying Market Opportunities

At the heart of strategic planning lies the identification of market opportunities. Market

research empowers businesses to analyze market trends, consumer behavior, and competition,

enabling them to uncover untapped gaps in the market. By identifying these opportunities,

organizations can develop innovative products or services that fulfill unmet consumer needs,

thereby capitalizing on emerging markets or creating new ones. Data collection techniques,

may include surveys, focus groups, and market trend analysis, to uncover these hidden

prospects.
2. Understanding Consumer Needs and Preferences

Market research plays a pivotal role in understanding the ever-evolving needs and preferences

of consumers. By employing various research methodologies, including quantitative and

qualitative data collection, businesses can gather critical insights into consumer behavior,

attitudes, opinions, demographics, and psychographics. Armed with this knowledge,

organizations can develop products and services that align with consumer desires and design

marketing campaigns that effectively resonate with their target audience.

3. Assessing Competition

An integral part of strategic planning is assessing the competitive landscape. Market research

enables businesses to collect data on competitors’ products, pricing strategies, marketing

campaigns, and market share. This comprehensive analysis equips organizations with a deeper

understanding of their competitors, empowering them to develop strategies that differentiate

their offerings and effectively compete in the market. The techniques used include competitor

analysis, industry reports, and market share assessments, to provide businesses with a

comprehensive understanding of the competitive landscape. For instance, by uncovering that a

competitor is offering a similar product at a lower price point, the research findings can assist

a business in refining its pricing strategy or emphasizing the quality and unique features of its

offering to stand out in the market.

4. Testing Product Concepts

Market research plays a crucial role in testing and validating product concepts. By collecting

data on consumer reactions, preferences, and perceptions towards potential new products,

businesses can gain valuable insights into their viability and potential success in the market.

Techniques include concept testing, surveys, and focus groups, to evaluate consumer responses
to product concepts. This iterative process allows organizations to identify potential issues,

make necessary adjustments, and optimize the product’s chances of success prior to its launch.

5. Evaluating Marketing Campaigns

Market research serves as a critical tool for evaluating the effectiveness of marketing

campaigns. By collecting data on consumer engagement, conversion rates, brand awareness,

and other key metrics, businesses can gauge the impact and success of their marketing efforts.

Techniques in this category include surveys, data analytics, and customer feedback analysis, to

evaluate marketing campaigns comprehensively. This allows organizations to gain a deeper

understanding of what is working and what requires adjustment, enabling them to optimize

their marketing strategies and improve campaign performance.

While conducting market analysis for a strategic plan; the following should be considered:
5. Demographics and segmentation
When assessing the size of the market, your approach will depend on the type of business you

are selling to investors. If your business plan is for a small shop or a restaurant then you need

to take a local approach and try to assess the market around your shop. If you are writing a

business plan for a restaurant chain, then you need to assess the market a national level.

Depending on your market you might also want to slice it into different segments. This is

especially relevant if you or your competitors focus only on certain segments.

3.5. Target market

The target market is the type of customers you target within the market. This section is relevant

when your market has clear segments with different drivers of demand. This is where the

company indicates what groups of customers (‘customer segments’) are most likely to be

interested in the offer, compared with the competition – here you should refer to your direct

competitors by name.
Dividing potential customers up into segments is crucial because it is usually not feasible to

adapt your marketing specifically to each individual customer. The selection must be made

according to reasonable criteria, so that it leads to customer groups that can be addressed with

the same marketing concept.

When dividing up private customers into segments, the following features can be considered,

for example, depending on the particular product:

o Socio-demographic features such as sex, age, occupation, income, place of residence

etc.
o Psychographic features such as lifestyle, opinions and basic attitudes, expectations of
the product, purchasing and consumption behaviour, etc.
o Geographic features such as country, region or density of population
(town/city/country).

Generally, specify who your target group is and why. Do your customers have special

requirements? Why will your customers be purchasing from you? And why will some

customers not? What is important to the customers: quality? price? service?

3.5.1. Market demand analysis

Demand analysis is the research conducted by companies that aim at understanding customer

demand for a certain product. Businesses generally use it to determine whether they can

successfully enter the market and obtain the expected profit. During this process, the

management decides on cost allocation, production, advertising, pricing.

Companies use market demand analysis to understand how much consumer demand exists for

a product or service. This analysis helps management determine if they can successfully enter

a market and generate enough profits to advance their business operations. While several

methods of demand analysis may be used, they usually contain a review of the basic
components of an economic market. It is important to understand the market demand and the

desires of people before introducing a product or service to consumers.

3.5.1.1. Market identification

The first step of market analysis is to define and identify the specific market to target with new

products or services. Companies will use market surveys or consumer feedback to determine

their satisfaction with current products and services. Comments indicating dissatisfaction will

lead businesses to develop new products or services to meet this consumer demand.

3.5.1.2. Business Cycle

Once a potential market is identified, companies will assess what stage of the business cycle

the market is in. Three stages exist in the business cycle: emerging, plateau and declining.

3.5.1.3. Product niche

Once markets and business cycles are reviewed, companies will develop a product that meets

a specific niche in the market. Products must be differentiated from others in the market so they

meet a specific need of consumer demand, creating higher demand for their product or service.

Many companies will conduct tests in sample markets to determine which of their potential

product styles is most preferred by consumers.

3.5.1.3. Growth potential

While every market has an initial level of consumer demand, specialized products or goods can

create a sense of usefulness, which will increase demand.

3.5.1.4. Competition
An important factor of market analysis is determining the number of competitors and their

current market share.

Question: why demand analysis is so important for an agri-business?

What Should a Market Analysis Include?
• Size of Industry – How big is the overall industry?
• Projected Growth Rate of Industry – Is the industry growing or shrinking? How fast?
• Target Market – Who are you targeting with this product or service?
• Competition – How many businesses are currently in the same industry?
3.6. Competitor analysis

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 a competitor's current and potential nature and capabilities

so they can prepare against competition. The competitor analysis looks at the following criteria:

o Identify competitors: Businesses must be able to identify competitors within their

industry. Identifying whether competitors provide the same services or products to the

same customer base is useful in gaining knowledge of direct competitors. Both direct

and indirect competitors must be identified, as well as potential future competitors.

o Assessment of competitors: The competitor analysis looks at competitor goals, mission,

strategies and resources. This supports a thorough comparison of goals and strategies

of competitors and the organization.

o Predict future initiatives of competitors: An early insight into the potential activity of a

competitor helps a company prepare against competition.

3.6. 1. PESTEL Analysis

A PESTEL analysis is a tool that allows organizations to discover and evaluate the factors that

may affect the business in the present and in the future. PESTEL Analysis involves the

examination of the Political, Economic, Social, Technical, Environmental and Legal Factors

that affect the business. A similar framework is used to consider the divverent external issues

which may create opportunities or threats to the enterprise.

Item Description
Political factors include current and projected economic growth; inflation and interest
rates; job growth and unemployment; labor costs; impact of globalization;
disposable income of consumers and businesses; likely changes in the economic
environment
Economic factors include current and projected economic growth; inflation and interest
rates; job growth and unemployment; labor costs; impact of globalization;
 disposable income of consumers and businesses; likely changes in the economic
environment
Social factors include demographics (age, gender, race, family size); consumer attitudes,
opinions, and buying patterns; population growth rate and employment patterns;
socio-cultural changes; ethnic and religious trends; living standards.
Technological factors affect marketing in (1) new ways of producing goods and services; (2) new
ways of distributing goods and services; (3) new ways of communicating with
target markets.
Environmental factors are important due to the increasing scarcity of raw materials; pollution
targets; doing business as an ethical and sustainable company; carbon footprint
targets.
Legal factors include health and safety; equal opportunities; advertising standards;
consumer rights and laws; product labeling and product safety.

PESTEL analysis is vital for the development of a business strategic plan. The analysis provides

context about the company’s trajectory, brand positioning, growth objectives, and productivity

risks (such as a pandemic). It can assist in evaluating existing goods and services and defining

new product development. Furthermore, can reveal problematic changes in business models

that may negatively affect employment opportunities in the future. It can spot skill shortages,

new job roles, wage reductions, and displacements.

In marketing, before any kind of strategy or tactical plan can be implemented, it is fundamental

to conduct a full situational analysis. This analysis should be repeated every six months to

identify any changes in the macro-environment. Organisations that successfully monitor and

respond to changes in the macro-environment can differentiate from the competition and thus

have a competitive advantage over others.

The framework is also used to identify potential threats and weaknesses which are used in a

SWOT analysis when identifying any strengths, weaknesses, opportunities, and threats to a

business.

Tips on developing PESTEL analysis for the business organization

o Take the first component of PESTEL – Political
o Find trends that could potentially influence your organization in the context of this
component.
o Discuss with your team the possible implications for your organization.
o Note down the relevant findings as strategic hypotheses.
o Process to the next component of PESTEL
Chapter four: Marketing plans
A marketing plan is a roadmap that helps an organization or a business company to set goals,

understand the target audience and optimize the impact of its marketing campaigns. Basically,

a good marketing plan helps an organization to communicate the “big” strategy and the

different tactics involved.

4.1. Determining market segments

Market segmentation is a process that consists of sectioning the target market into smaller

groups that share similar characteristics, such as age, income, personality traits, behavior,

interests, needs, or location.

These segments are placed into distinctive groups depending on needs, behavior, and those

requiring customized products or marketing programs. Segmentation assumes different groups

will respond to different marketing mixes involving products, price, promotion, and place.

Segmentation assists in identifying the most profitable segments, as well as specific

information on each segment in terms of decision making. For example, in the hotel market,

guests who want the most luxurious accommodation regardless of price make up one segment,

while those who are looking for affordable rooms at well-known international chains make up

another segment, and customers who will take the lowest cost room regardless of quality make

up a third segment. Companies must focus on one segment rather than trying to offer a product

that addresses the needs of all customers.

Note:
o The largest, or highest growth segment may not be right for every company. Smaller
companies with fewer resources may want to concentrate on smaller segments to
maximize returns and increase their customer base.
o In addition, the strategic goals of the company should be considered when determining
appropriate segments to ensure that long term planning harmonizes with the selection
of segments to target. Stay true to your mission, vision, and values
Market for product is big and diverse making it difficult for companies to be able to satisfy

every customer. Companies need to identify a certain set of customers within a market and

work towards satisfying them. This set of identification is market segment.

The market segmentation task has to follow a scientific process.

I. The first task is to group customer according to product and service they want.
II. The second task is to analyze customer by summarizing demographic, lifestyle
and usage pattern, which helps in the definition of market segment.
III. The third task is due diligence of the market for growth potential, competition and
other factors.
IV. The fourth task is the profitability of market segment.
V. The fifth task is to undertake positioning activity for pricing and marketing
programs.
VI. The sixth task is to explore different positioning and marketing strategies to
explore the market to its full potential.

Knowing your market segmentation will help you target your product, sales, and marketing

methods. It can help your product development processes by guiding how you build product

offers for various groups, such as males versus women or high-income versus low-income.

These segments can be used to optimize products, marketing, advertising, and sales efforts.

Segmentation allows brands to create strategies for different types of consumers, depending on

how they perceive the overall value of certain products and services. In this way, they can

introduce a more personalized message with the certainty that it will be received successfully.

4.1.1. Types of market segmentation

Market segmentation is the process of breaking up a large market into smaller groups of

customers with similar needs, traits, or ways of behaving.

Geographic segmentation
Geographic segmentation consists of creating different groups of customers based on

geographic boundaries.
The needs and interests of potential consumers vary according to their geographic location,

climate, and region. So, geographic segmentation is valuable. Understanding geographic

segmentation allows you to determine where to sell and advertise a brand and where to expand

a business.

Demographic segmentation

Demographic segmentation divides the market through different variables. Demographic

segmentation includes age, gender, nationality, education level, family size, occupation,

income, etc.

Demographic segmentation is one of the most widely used forms of market segmentation since

it is based on knowing how customers use your products and services and how much they are

willing to pay for them. Surely demographic segmentation is very important.

Psychographic segmentation

Psychographic segmentation consists of grouping the target audience based on their behavior,

lifestyle, attitudes, and interests.

To understand the target audience, market research methods such as focus group, surveys,

interviews, and case studies can successfully compile psychographic segmentation

conclusions.

Behavioral segmentation

Behavioral segmentation focuses on specific reactions, i.e. consumer, patterns, and how

customers go through their decision-making and purchasing processes.

The public’s attitudes towards your brand, how they use it, and their awareness are examples

of behavioral segmentation. Collecting behavioral segmentation data is similar to how you

would find psychographic data. This allows marketers to develop a more targeted approach.

4.1.2. Market segmentation objectives

Product: Creating successful products is one of the main objectives of organizations and one

of the reasons why they conduct a market segment. This allows you to add the right features to

your product and will also help you reduce costs to meet the needs of your target audience.

Price: Another market segmentation objective is establishing the right price for your products.

Identifying which is the public that will be willing to pay for it.

Promotion: It helps you target each segment’s members and select them in different categories

so that you can direct your strategies appropriately.

Place: The ultimate goal of segmentation is to decide how you offer a product to each group

of consumers and make it pleasant to them.

Tips for conducting a good market segmentation strategy.

Step: 1 – Define your market: At this point of the segmentation, you should focus on
discovering how big the market is, where your brand fits, and if your products have the capacity
to solve what it promises.

Step: 2 – Segment your market: This step consists of choosing which of the types best suits
your brand.

Step: 3 – Understand your market: Ask your customers the right questions, depending on the
type you choose. You must know your target customer in detail. You can use online surveys to
get their answers.

Step: 4 – Build your customer segments: After collecting responses, you need to perform data
analysis to create dynamic segments unique to your brand.

Step: 5 – Test your strategy: Ensure you have correctly interpreted your survey data by testing
it with your target audiences. This will help you to revisit your market segmentation strategies
and make the necessary changes.

Step: 6 – Implement the strategies: Once the marketing plans have been tested and improved,
put them into action on a larger scale.
Step: 7 – Evaluate the performance: Evaluate how well each segment and marketing strategy
is doing and make changes as needed.

Step: 8 – Continue to improve: It is an ongoing process, so keep improving the segmentation

criteria and marketing strategies based on customer feedback and changing market conditions.

4.2. Milestones planning

Milestones are essential events in a project or business activity, the delay of which often has a

negative impact on the further scheduling of the activities. The milestone plan makes delays

transparent and the effects visible at a glance for all parties involved.

Milestone planning is a specific way of organizing your project. It targets outcomes, progress,

external dates, and customer collaboration to achieve project goals. In other words, milestones

identify a checkpoint along the timeline of your project. The goals of milestone planning

include:

o Rough scheduling for the entire business.

o Making essential events in the business more transparent.
o Overview of delays and their possible impact on other dates.
o Performance progress orientation.
o Creation of intermediate goals for employee motivation
The milestone plan provides information about time-critical events in the project, the adherence

to which is of great importance for the project, because otherwise, for example, the deadline is

delayed or other deadlines cannot be met.

In addition, the milestone plan provides clear information on which of these essential deadlines

have been met, which have been postponed and how far, and how this delay will affect future

milestones. In this way, the schedule situation of a project can be captured at a glance.

4.3. Marketing and promotion strategies

The marketing strategy refers to the strategic planning and long-term actions of any

organization with the purpose of achieving defined goals. Promotional strategies play a vital

role in the marketing mix (product, price, placement, and promotion), and they revolve around:
 o Target audience. Who you are selling for, and what are their interests.
o Budget. How much you are willing to invest in promotion.
o Plan of action. What strategy you are adopting to reach your objectives and make
sales.

Promotion refers to the methods you will use to advertise and sell your products and services.

Promotional methods may include the following examples.

Channel Outcome
Website Most businesses will benefit from having a website to attract customers and
promote their product or service.
Social media Customers can interact with you and find out more about what you provide.
You can share experiences and knowledge to build your business profile and
attract new customers.
Videos Share experiences and knowledge to build your reputation. Customers love
watching videos and you can capitalise by creating engaging video content for
your target market and uploading it to channels like YouTube.
E-newsletter What makes email unique is that your loyal customers have asked you to
market to them so they can stay informed about what your business is doing.
Word of mouth Encourage customers to share their experience of your product or service
through online consumer review sites. Your loyal and happy customers should
become ambassadors for your business.
Loyalty programs Give customers a reason to stick with your business.
Print advertising Let your market know what you do and how to buy from you. There are many
publications offering paid advertising for small businesses, including local
newspapers, industry specific publications, and business and consumer
magazines.
Brochures and flyers Brochures and flyers are an important marketing tool. They should focus on
what your business offers and how customers can buy it.
Mail-outs or letter If your business services a limited area, letter drops can sometimes be an
drops effective tool. People receive a lot of junk mail, so you will need to ensure your
letter or card stands out.

4.4. Pricing strategy

4.4.1. The marketing Mix.

The term marketing mix (also known as the four Ps) defines a product’s unique selling points

in comparison to the competition and helps focus efforts on the target market. The marketing

mix includes the four categories required to successfully market a good or service: product,

price, promotion, and place.

 Product – A good or service that fulfills customers’ needs or requirements. You must have a

complete understanding of your product and why it is unique before you can successfully

market it. Consider the product from the customer’s perspective to satisfy both current and

potential customers.

Price- After the product is created you must set a price, or simply- determine how much the

goods or services will cost. The price will impact profit margins, demand, perception of the

product, and the overall marketing strategy. Historically, price has been the major factor

affecting buyers’ decisions and their opinions impact how much companies can charge.

Companies must accurately calculate the cost of production plus other associated costs,

including overhead, or run the risk of setting a price that is below what it actually costs to

supply or produce the product. This situation is extremely problematic and will inevitably result

in the company going out of business. Prices can also be set based on the perceived value to

customers who may be willing to pay a premium for certain benefits. Also, prices should be

compared to competitors, as well as overall supply and demand. We will cover financial

considerations, setting prices, and other calculations later on in the training.

Cost based pricing.

Design a good Set price based

Determine Convince buyers of
product. on cost
product costs. product value

Value based pricing

Assess customer needs Determine costs that Design product

Set market price to match
and value perceptions can be incurred to deliver value
customer perceived value
at target price

Source: Principles of Marketing, Philip Kotler, and Gary Armstrong

Questions: How do you determine your prices? Do you know your overhead or total fixed costs to operate
your business? How much money does it cost you each month to simply turn on the lights and sit in the office?
Or to put it another way, if you don’t generate any revenue for one month how much money will you lose?
Promotion – includes all of the efforts and activities required to explain the benefits of the

product to customers. Once a company has created a product and determined a price it is

necessary to communicate directly with potential customers to stimulate interest, address

competitors, and increase sales.

Generally, through promotion, the company aims to provide enough information about the

product to motivate customers to purchase. Promotions cost money! Ideally it is recovered from

sales- return on investment, and customer loyalty.

Place – Also called placement or distribution, defines the process and methods used to bring

the product or service to the customer, or simply how and where your product is purchased. It

focuses on where the business is located, where the target market is placed, how best to connect

these two, how to store goods, and how to eventually transport them. Today, many initial

interactions with clients begin online, though the place where products are purchased may be

a retail store or an office where the business operates.

While the marketing mix consists of factors a company can directly impact, there are external

environmental factors that are uncontrollable. Companies should respond and adapt their mix

elements based on the following external conditions:

o Competitive environment – The number of firms competing in the target market.

o Demographic environment – The features of a country that can be statistically described
such as age, gender, and religion that impact decision making.
o Economic environment – The financial and economic conditions in a country that
determine supply and demand for products.
o Physical environment – Availability, use, and disposal of natural resources.
o Political and legal environment – Laws and restrictions from the government regarding
competition, consumer protection, or societal welfare.
o Social/cultural environment – What is acceptable in one culture may not be acceptable
in another.
o Technological environment – Capability and access to technology, including ease of
conducting online commerce.
Tips on Price Strategies

o Economy pricing strategy - involves always charging low prices. A company needs to
develop high efficiency in order to sustain low prices without making losses.
o Market penetration strategy – involves charging low prices at the beginning and
increase it with time as you get more sales. Risky since product can be perceived as low
quality
o Market skimming –charging high prices when entering the market and lowering the
prices gradually.
o Premium pricing – always charge high prices.

4.5. Marketing Budget

Marketing budget is about determining what will be the cost of undertaking the activities that

you have planned to implement your strategies and achieve your objectives. A marketing

budget is the amount of money a business allocates to different expenses in promoting its

products or services. These budgets can apply to either individual departments or the entire

business. Businesses usually allocate a marketing budget for set periods, either annually or for

every quarter.

Businesses use marketing budgets to determine how much they can spend promoting products

and services. A marketing budget influences the range of marketing projects or activities a

company can undertake in a fixed period.

Businesses need a marketing budget because it's just one of many budgets across a business so

the business can operate efficiently and effectively. Effective budgeting can help a business use

extra capital throughout the fiscal year with little risk to the company's finances. Extra capital

from finance planning can help a business allocate funding where it's needed most. For

example, it can hire more employees during slower seasons or prepare more equipment for

production or service lines.

With a well-developed marketing budget, you can help to create marketing activities that align

with business goals and track progress in line with spending. It can give a business potential
 flexibility when operating projects and changing any details requiring financial adjustments. A

marketing budget helps give teams the preparation they need for creating effective projects that

bring more profit to a business. The following should be considered while working calculating

a marketing budgeting:

Item Description
Company revenue How much a company makes affects the amount department leaders can spend
on marketing projects. Finance teams are responsible for calculating both gross
and estimated revenue and can help business leaders estimate how much money
they actually have and how much they may accumulate during the fiscal year
Overall expenses When planning a marketing budget, leaders assess the total costs of the
company per quarter. These include the costs of internal teams, contractor
groups, part-time employees and departmental expenses. Leaders typically
evaluate the costs of all departments, even those unrelated to marketing, before
allocating the marketing budget.
Brand awareness Depending on the size and age of the business, a company may have various
marketing needs. New companies typically need more marketing efforts and
campaigns so marketing teams can establish a brand audience and gain loyal
customers.
Chapter four: Governance and Management

Governance is a system that provides a framework for managing organisations. It identifies

who can make decisions, who has the authority to act on behalf of the organisation and who is

accountable for how an organisation and its people behave and perform.

Governance enables the management team and the board to run organisations legally, ethically,

sustainably, and successfully, for the benefit of stakeholders, including shareholders, staff,

clients and customers, and for the good of wider society. Evidence suggests that good

governance improves business performance and increases the chances of a company’s long-

term survival.

Question to participants: what is governance according to you? What is the governance

structure would propose for your business? Why is it important?

5.1. Decision making in the SME.

This section addresses the strategic principles of decision making and role in determining the

corporate future:

Transparency: Transparency is an essential component at all levels of operation in a business

entity; especially at the top management level, where major decisions are made and where

major plans are formulated. Keeping the investors and other stakeholders informed helps build

a relationship of trust and solidarity that results in the rewards of a higher valuation and easy

access to funding.

Accountability: Accountability, in essence, means a willingness or an obligation to accept

responsibility for one’s action. Accountability gives the shareholders confidence in the

business that, in any case, that leads to an unfavourable situation in the company, the ones

responsible are dealt with in an appropriate manner. Accountability establishes a system in

place where everyone is held accountable for their respective work and associated duties.

Generally it holds two things:

o Ensures that the management is accountable to the Board.

o Ensure that the Board is accountable to the shareholders.

Independence: The ability to make decisions while being free from any sort of constraint or

without any influence is what independence is. And this is something that has proven to be

crucial to the smooth operation of businesses as well. It allows the person to act with integrity

and make decisions and form judgments bearing in mind the best interests of the stakeholders.

This is the reason companies appoint independent directors, so as to ensure that there is no

force of hand being used or that the director does not have any personal interests with the

company thereby hampering his ability to make decisions freely.

Businesses need to gradually transition decision making from highly centralized (the owner)

in Stage 1 to more distributed and collaborative, relying on a professional executive team and

trusted external advisers (or advisory board). Later, select advisers may be invited to serve on

the board of directors, to provide guidance to and oversight of the executive team. At the same

time, owners have to ensure that the business has the “depth” of expertise required to take it

into the future. This can be achieved through the development of appropriate human resources

policies, including succession plans.

5.2. Management Decision Making

The decision-making style needs to evolve with the company. Successful leaders not only

empower talented managers to excel in their areas of direct responsibility but also encourage

them to work collaboratively as a team. The decision-making style varies widely between

companies—and even from decision to decision within the same company. The CEO/MD

remains the chief decision maker but might choose to consult colleagues on some decisions.

For decisions involving areas where others have better expertise or where everybody’s full
commitment is important, the Manager or CEO might choose to make decisions by consensus

or majority vote. With time, good executive committees develop formal decision-making rules

for different types of business areas, to clarify expectations, authority, and responsibilities.

5.3. Advisers/Advisory Board

External advisers (trusted fellow entrepreneurs, mentors) can be highly beneficial in the SME

development. They can provide expertise that the company may lack in certain areas, unbiased

advice, and external perspectives free of conflicts of interest—as well as new

business connections. In most jurisdictions, members of an advisory board do not assume legal

responsibility for operations, as shareholders retain full control of what type and amount of

company information to share and how to use the advice given by the advisory board. The

advisory board should establish effective meeting processes, similar to those outlined for the

board of directors below.

5.4. Board of Directors

A formal board of directors is the definitive means for engaging external expertise, setting

strategy, and strengthening the management control function. It is also an important vehicle for

SME owners who plan to relinquish their role in active management—for further

professionalizing the business or passing it to the next generation. By becoming chair of the

board of directors, the founder can have strategic input and retain control of the business

without having to be constrained by the day-to-day operations.

5.5. Succession planning

Succession planning can be defined as the process of identifying and developing people within

an organization to fill key business leadership positions in the future or to replace key persons

in the event of sudden absence. This is done to ensure business sustainability and resilience

in crisis.
5.6. Human Resources Planning
Develop a simple means of communicating to staff the key decisions, policies, and strategies.

Document HR-function job descriptions to ensure that all key roles are being addressed

(or outsourced). Develop internal (or outsource) expertise on management reporting and

analytics—to help with cost control and strategic decision making. Accurate and timely data

are important for effective decision making.

5.7. Identifying Strategic Risks

Managing risk is a key part of effective strategic planning. This flows from the top of the

organization, where Enterprise Risk Planning is one of the key tools of senior leadership. Risk

management can be defined as the identification and mitigation of risks, which would hamper

the execution of a strategy.

1. Strategic risks are:

o Possible/known risks from the external environment.
o What might happen in the external world in the context of politics, economics,
social issues, technology, the environment/climate, legalities, security/safety,
religion, and regulations?
2. Possible/known risks in the internal environment.
o What might happen in the internal organizational environment in the context of
funding, human capital, processes, projects, service quality, and service
timeliness?
3. Risks affecting the composition of the strategy.
o Which risks need to be part of selecting strategic objectives?
4. Risks affecting strategic initiatives.
o Which risks could prevent the successful execution of the strategy?
5.7.1. How to develop a risk management approach.
Identification: The most common approach to risk identification is to interweave it into the

strategic planning processes – specifically the external and internal input gathering steps. Risks

can be identified via surveys, management team brainstorming, or other sources (e.g. expert

sources). In addition, risk identification should become an ongoing activity.

Prioritization: The most common approach is to rank risks by 1) their likelihood of occurring

and 2) the potential negative impact on the strategy. The highest scoring risks should then be
clearly identified as either drivers of strategic objectives (e.g. build the strategy around the

risks) or as considerations for strategic initiatives (e.g. be prepared for their occurrence when

executing the strategy). Risks that exist but are not likely or impactful should not be included

in a risk management plan. Also, not all risks will be identified, as it is impossible to ‘know

what one cannot know.

Mitigation: For those identified risks that are likely and could cause significant impact, a

mitigation plan should be articulated that outlines either a) what will be done to prevent or

minimize the likelihood, or b) what would be done in the future to minimize its impact if the

risk occurs.

Monitoring: For most organizations, an annual risk management plan review may be sufficient

to both refresh the risks and to update the mitigation plans. However, many risks are event

dependent. So, it is important to review a particular risk at the point in time when it might occur

to 13 ensure the mitigation plan is put into action (i.e. develop a special calendar that reminds

managers or leaders to check on the status of a particular risk).

Chapter Five: Business Model Canvas

“A major mistake made by many start-ups around the world is focusing on the
technology, the software, the product, and the design, but neglecting to ever figure out the
business. And by “business” we simply mean how the company makes money by acquiring and
serving its customers” Reid Hoffman

Questions: consider your product/service; then:

o Which problem are you solving?
o And whose problem is this?
o what” that makes customers turn to you, over your competitors?
o Are customers willing to pay, or do you need an alternative revenue model?
5.1. Introduction
Business Model Canvas is a strategic management and lean startup template for developing

new or documenting existing business models. It is a visual chart with elements describing a

company’s or product’s value proposition, infrastructure, customers, and finances. It assists

companies in aligning their activities by illustrating potential trade-offs.

The Business Model Canvas provides entrepreneurs, business owners, and strategists with a

tool to analyze, structure, and evolve a business while always keeping the bigger picture front

of mind.

It illustrates what the business does, for and with whom, the resources it needs to do that and

how money flows in and out of the business. It can be used to design new models or to analyse

current models. One advantage to the Business Model Canvas is that it is not a linear

description. This allows for the effects of alterations in one area to be clear, making it easier to

play around with changes to current or potential models.

 Business canvas model

Key partners Customer Customer

Key activities Value propositions relations segment
8 7 4
2 1
3
Key resources
Channels
6

Cost structure Revenue streams

9 5

The business model canvas (BMC) contains nine boxes representing core elements of a

business and may serve as an excellent pitch deck template to attract investors or talk to

customers. The sections are: customer segments, value proposition, channels, customer

relationships, revenue streams, key resources, key activities, key partners, and cost structure.

Each section is filled in with information about the company’s business model.

The left side of the BMC focuses on your business and internal factors of your enterprise which

you can control like Key Activities, Key Resources, Key Partners, and Cost Structure.

The right side of the canvas represents external factors and things you can’t influence directly

like your Customer Segments, Customer Relationships, Distribution Channels, and Revenue

Streams. The center of the framework is the Value Proposition, which serves as an exchange

point between your business and your customers.

5.2. Purpose of Business Model Canvas

The purpose of business model preparation is to use the canvas as a tool for strategic

management and entrepreneurship. It gives you the ability to describe, design, test, invent, and

pivot your business model. The visual chart of the business canvas model includes 9 building
blocks which are key activities, key resources, key partners, value propositions, customer

segment, channel, customer relationships, and cost structure and revenue stream. BMC is

currently a standard that is used by both startups and large corporations. The BMC is concerned

with the external customer as well as the internal operations. The business model, which argues

that the interaction between your organization and your customer is critical, brings together

both external and internal factors. As a result, it will help me take my business to the next level

of success.

If everyone wants their organization to reach its aims and objectives, we must gather data and

develop a strong business strategy. A business model canvas, in my opinion, can assist our

company in improving its recognition. With the help of the BMC, we can develop a

comprehensive view of our business value proposition, operations, customers, and finances.

Furthermore, the Business Model Canvas aims to save time by allowing us to send messages

in the canvas template with just a single word. The BMC is used to determine target market

segments and how to reach them. This is quite useful in determining where we should focus

our time and effort in order to create and build our business.

Furthermore, the business model canvas is built in such a way that the entire team, as well as

investors, can know it. The business model canvas was also utilized to get any bank loan,

including capital loans and other sorts of loans. In a nutshell, the Business Model Canvas is

another design that aid a company focusing on and communicating its goals. Furthermore, it’s

used to help to understand better your goal which should be along with your business activities.

The main purpose of a business canvas is to describe how your business intends to make money,

which is the main goal of any business. Business canvases are great tools that allow you to

effectively visualize and assess your business concept on a single page.

 Business model canvas explained.
Elements Questions to be answered
Customer Segments 1. For whom are you creating value?
Defines the different groups of people or organizations an 2. Who are your most important
enterprise aims to reach and serve. customers?
Customers comprise the heart of any business model. Without 3. Who are your most important
(profitable) customers, no company can survive for long. In order to customers?
better satisfy customers, you may need to group them into distinct
segments with common needs, common behaviors, or other
attributes. A business model may define one or several large or small
Customer Segments. However, you must make a conscious decision
about which segments to serve and which segments to ignore. Once
this decision is made, then a business model can be carefully
designed around a strong understanding of specific customer needs.
Customer groups represent separate segments if:
o Their needs require and justify a distinct offer.
o They are reached through different Distribution Channels
o They require different types of relationships.
o They have substantially different profitabilities.
o They are willing to pay for different aspects of the offer.
Note: Sometimes customer segments may be mutually dependent.
For example, funders of a certain business will only get involved if
your business falls into their targeted segments of people. Examples
includes funding targeting youths, women, disabled, etc, so they will
only engage in your business if the company caters for such group of
people.
Value propositions. 1. What value do we deliver to the
Describes the bundle of products and services that create value customer?
for a specific Customer Segment. 2. Which one of your customer’s
The Value Proposition is the reason why customers turn to one problems are you helping to solve?
company over another. It solves a customer problem or satisfies a 3. What value do you deliver to the
customer need. Each Value Proposition consists of a selected bundle customer?
of products and/or services that caters to the requirements of a 4. Which one of your customer’s
specific Customer Segment. In this sense, the Value Proposition is an problems are you helping to solve?
aggregation, or bundle, of benefits that a company offers 5. Which customer needs are you
customers. Some Value Propositions may be innovative and satisfying?
represent a new or disruptive offer. Others may be similar to existing 6. What bundles of products and services
market offers, but with added features and attributes. are you offering to each Customer
A good Value Propositions address specific customers’ ‘pains’ or Segment?
problems and offer them ‘gains’ by meeting a need. It has a good fit
in practice with the profile of potential customers.
Channels 1. Through which Channels do our
Describes how a company communicates with and reaches its Customer Segments want to be
Customer Segments to deliver a Value Proposition. reached?
Communication, distribution, and sales Channels comprise a 2. How are we reaching them now?
company's interface with customers. Channels are customer touch 3. How are our Channels integrated?
points that play an important role in the customer experience. 4. Which ones work best?
In this section you should think about and summarise the ways you 5. Which ones are most cost-efficient?
will reach your Customer Segments. Word of mouth, advertising and How are we integrating them with
social media are all common Channels. There may also be other customer routines?
ways that are important to you such as community or business
networks. How will you maintain contact with customers if an
ongoing relationship is important, as it might be with funders for
instance? It’s worth capturing how you’ll approach this so you can
see the implications on Key Resources and staff costs.
Channels serve several functions, including:
o Raising awareness among customers about a company’s
o products and services
o Helping customers evaluate a company’s Value Proposition
o Allowing customers to purchase specific products and
services.
o Delivering a Value Proposition to customers
o Providing post-purchase customer support
Customer relationships 1. What type of relationship does each of
Describes the types of relationships a company establishes with our Customer?
specific Customer Segments. 2. Segments expect us to establish and
A company should clarify the type of relationship it wants to maintain with them?
establish with each Customer Segment. Relationships can range 3. Which ones have we established? How
from personal to automated. costly are they?
Customer relationships may be driven by the following motivations: 4. How are they integrated with the rest
o Customer acquisition. of our business model?
o Customer retention
Note: This aspect describes the kind of relationships customers want
or expect with you and the type of relationships you want to make
with them. This often relates to the values of your organisation as
well as to how you see your organisation working in practice
Key resources 1. What Key Resources do our Value
Describes the most important assets required to make a Propositions require?
business. 2. What Key Resources do our
Every business model requires Key Resources. These resources allow Distribution Channels require?
an enterprise to create and offer a Value Proposition, reach markets, 3. What Key Resources do our Customer
maintain relationships with Customer Segments, and earn revenues. Relationships require?
Different Key Resources are needed depending on the type of 4. What Key Resources do our Revenue
business model. Key resources can be physical, financial, Streams require?
intellectual, brand, trust, data, or human. Key resources can be
owned or leased by the company or acquired from key partners.
Note: If there are resources you need in an ideal world but can’t get
immediately can your Key Partners supply these? Do you really need
all things you list here or could others provide them?
Key activities 1. What Key Activities do our Value
Describes the most important things a company must do to make Propositions require?
its business model work. 2. Our Distribution Channels?
In some ways this is one of the most obvious parts of the canvas. 3. Customer Relationships?
What do you need to do to deliver your Value Proposition, to 4. Revenue streams?
develop the Customer Relationships you want and to bring in
Revenue Streams?
Every business model calls for a number of Key Activities. These are
the most important actions a company must take to operate
successfully. Like Key Resources, they are required to create and
offer a Value Proposition, reach markets, maintain Customer
Relationships, and earn revenues. And like Key Resources, Key
Activities differ depending on business model type.
Key partnerships 1. Who are our Key Partners?
 Describes the network of suppliers and partners that make 2. Who are our key suppliers?
the business model work. 3. Which Key Resources are we acquiring
from partners?
The Key Partners section lists those people or organisations you 4. Which Key Activities do partners
need to work with to carry out your activities and reach your perform?
customers. These might be people with whom you work in formal or
informal alliances, collaborations, partnerships or joint ventures.
They might also be people you could categorise as suppliers.
Sometimes Key Partners can provide things you don’t have within
your Key Resources such as workshop spaces. Sometimes they can
perform Key Activities that you don’t do yourselves such as
distributing books you publish.

Companies forge partnerships for many reasons, and partnerships

are becoming a cornerstone of many business models. Companies
create alliances to optimize their business models, reduce risk, or
acquire resources.
You can distinguish between four different types of partnerships:
o Strategic alliances between non-competitors
o Competition: strategic partnerships between competitors
o Joint ventures to develop new businesses
Note: It’s useful to think about what role Key Partners play in the
fundamentals of your business, as well as the ‘added value’ partners
often bring. Be clear where you can structure them into your
business model and where doing so might bring risks.
Cost structure 1. What are the most important costs
Describes all costs incurred to operate a business model. inherent in your business model?
This building block describes the most important costs incurred 2. Which Key Resources are most
while operating under a particular business model. Creating and expensive?
delivering value, maintaining Customer Relationships, and 3. Which Key Activities are most
generating revenue all incur costs. Such costs can be calculated expensive?
relatively easily after defining Key Resources, Key Activities, and Key 4. Cost structure: What are the most
Partnerships. Some business models, though, are more cost-driven important costs? Are they:
than others. o Fixed
Note: It is useful to cluster types of costs so you can see the o Variable
proportions spent on staffing, programme, fundraising and other
common areas.
Revenue streams 1. For what value are our customers really
Represents the cash a company generates from each willing to pay?
Customer Segment (costs must be subtracted from revenues 2. For what do they currently pay?
to create earnings). 3. How are they currently paying?
Revenue Streams are considered as arteries of any business. A 4. How would they prefer to pay?
company must ask itself, For what value is each Customer Segment 5. How much does each Revenue Stream
truly willing to pay? Successfully answering that question allows the contribute to overall revenues?
firm to generate one or more Revenue Streams from each Customer
Segment. Each Revenue Stream may have different pricing
mechanisms, such as fixed list prices, bargaining, auctioning, etc.
A business model can involve two different types of Revenue
Streams:
o Transaction revenues resulting from one-time customer
payments.
 o Recurring revenues resulting from ongoing payments to
either deliver a Value Proposition to customers or provide
post-purchase customer support.
Income from particular customers may be worth noting if they
represent a significant proportion of overall income.
Note: Revenue is how your customer rewards you for the value that
you create. Don Jones.

4.3. Ways to apply Business Model Canvans

1. Strategic Planning/Development.

One of the primary ways we've seen organizations use the BMC is in their regular strategic

planning and development cycles. They use it to create a blueprint of their strategy. The BMC

provides a very clear foundation and direction for the conversation at hand, whether done in a

corporate offsite with the executive team or done around the board room table.

2. Retrospective/Outlook.
When used as a strategic plan users apply the BMC to describe what they’ve done the past year

and what they intend to do in the year ahead. If there are changes in the business model or

entirely new building blocks to be developed, then they would indicate that with colour coding.

3. Strategic Planning per Business Unit.

The canvas are being used for strategic planning per business unit, because it gives you an

overview of what the different business units are doing. The BMC works as a shared language

across business units and provides you with a snapshot of your organization's business model

portfolio.

4. Understanding Competition.
The BMC is widely used to understand competition. By sketching out the business model of

each one of your competitors you gain a better understanding of their strengths, limits,
constraints, and what they can or can't do. This increased understanding of your competitive

landscape will allow you to act accordingly and design a better business model.

5. Portfolio of Business Models

A particularly interesting area for application of the BMC is the idea of developing a portfolio

of business models, ranging from improving existing business models all the way to inventing

new business models.

A business model portfolio helps you understand and highlight with which business model you

are making cash today and with which business models you’re going to make cash in the future.

Beyond growth and cash generation the portfolio approach also helps you understand synergies

and potential cannibalization between the different business models.

6. Understanding Customers.
The BMC is also used by organizations to sketch out the business models of their customers.

By better understanding their customer’s business model they can develop better value

propositions and/or better explain their solutions in the context of their customer's business.

7. Investment Decisions
The BMC increasingly used to make better investment decisions. Once you've sketched out a

business model(s) and you understand the underlying business opportunity, you have a better

understanding of where you should allocate resources. This is true both for improving existing

business models to inventing entirely new business models. The Canvas makes business

opportunities explicit and can serve as a guide to how those resources get allocated.

Tips on how to fill Business model canvas.

To start your Business Model Canvas you will need to breakdown and analyze each of the 9
building blocks.
A good way to approach this is to gather the heads from marketing, sales, operations,
finance, and manufacturing (if product-based) and pencil-in a morning where you can all
meet together.
Then, after drawing a mock canvas onto a whiteboard, proceed to dissect and discuss each of
the 9 building blocks as they relate to your business. You can use sticky notes to better
organize your thoughts around the canvas.
We recommend you complete each block in the following order:
1. Customer Segments
2. Value Propositions
3. Channels
4. Customer Relationships
5. Revenue Streams
6. Key Resources
7. Key Activities
8. Key Partners
9. Cost structure
It can be worth assessing your Business Model Canvas from time to time to see how it is

evolving. Sometimes Customer Segments or Key Activities change over a period of time,

almost without conscious strategic decision. This might be the result of changes in the market

or in staffing. There may be opportunities to make more of this or to react more consciously if

you feel less positive about the implications. Sometimes stepping back to look at your model

can highlight something that you’d not noticed - be it threat or opportunity, strength or

weakness. This puts you in a better position to respond. It may help you understand and

communicate your value better to those who need what you offer or can help. The Business

Model Canvas is not so much a prescriptive recipe for success as a portrait of your company.

Considering how you might take control of that picture will help you keep designing what you

do and how you do it.