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The difference between the three levels

of strategy in an organization
Strategy is at the heart of any effective decision made by managers in an organization. A
carefully planned out and intentional strategy will provide guidelines that can inform what
business actions the employees of an organization need to take.

That could be a strategy to reach new customers, to enter a new market, or to rebuild a
workforce around a specific goal.

On the other hand, a lackluster strategy that’s been implemented without any thought can result
in a general lack of understanding among employees about a business and its environment.

organization takes place on three levels. The difference between the three levels of strategy in
an organization is the level at which they operate in a business. The three levels are corporate
level strategy, business level strategy, and functional strategy. 

These different levels of strategy enable business leaders to set business goals from the highest
corporate level to the bottom functional level.  

Levels of Strategy
Strategy can be defined as the effective path to achieving organizational goals and
objectives in the best possible way. In organizations, there exist three levels of strategy
namely corporate level, business level, and functional level.

All levels of strategies have a significant role in achieving the overall targets of the
organization. In a simple sense, the functional level strategy helps business-level strategy
and business to corporate-level strategy and corporate to achieve vision and mission – they
all are linked and managers need to carefully set strategies at each level.

Failure to develop an appropriate strategy means failing to run the organization. Here, we

will know three levels of strategy, and their sub-level strategies in detail.
The three levels of strategy are:

 Corporate level strategy

 Business level strategy
 Functional/Operational level strategy
These strategies can also be studied with a “hierarchy of strategy”, like Abraham Maslow’s
Hierarchy where corporate-level strategy is at the top of the hierarchy, business-level
strategy at the middle, and functional level strategy at the bottom.
Now. let’s understand in detail,
CORPORATE LEVEL STRATEGY
Corporate level strategy is the uppermost level of strategy made by top-level management
which sets the overall direction of the organization. It addresses the question of what
business are we in?
The corporate level strategy attempts to obtain synergy among employees, product lines,
business units, and other components of the organization believing that the whole is greater
than the aggregate of individuals.

The corporate strategy works based on what the organization wants to achieve overall and
sets strategies following the overall goals and objectives. Corporate-level strategies are set
deriving ideas from vision and mission statements.

Small and large multinational corporations can both benefit from corporate strategy.
Corporate strategy in a multi-business organization is concerned with geographic coverage,
diversity of products/services or business units, and resource distribution to various
segments or units of the firm.
As the organizational parent, the corporate headquarters works with diverse products and
business units as children. These business units are coordinated at the corporate level so
that the company as a whole succeeds as a family. As a result, it was determined that
corporate-level strategy is linked to an organization’s total scope and development. Its
constant goal is to bring value to various product lines and enterprises.

For making an effective corporate strategy the manager can go for its four different types
such as stability strategy, expansion strategy, retrenchment strategy, and mixed strategy.

Stability Strategy
The stability strategy is a strategy that tries to keep an organization’s existing activities going
without making any significant changes in direction. Maintaining existing products, markets,
and operations is a priority. A stability strategy can be beneficial in the short term, but it can
be harmful if used for an extended period of time.

Expansion/Growth Strategy
The growth strategy aims to increase sales, assets, profits, or a combination of the three. It
allows businesses to take advantage of the growth curve and lower the per-unit cost of
products sold, resulting in higher profitability. Due to the increased availability of financial
resources, organizational procedures, and external links, larger organizations tend to endure
longer than smaller companies.
Retrenchment Strategy
Both stability and expansion strategies are in aggressive nature but retrenchment is a
defensive nature of strategy. A retrenchment strategy is a business approach that tries to
diminish a company’s size or diversity.

It also entails cutting costs in order to maintain financial stability. It is used to limit the
diversity of the company’s operations or to reduce the overall scale of the company’s
operations. A retrenchment plan entails exiting specific markets or discontinuing specific
products or services.

Combination/Mixed strategy
When an organization operates in a variety of environments, separate strategic business
units and products follow a combination strategy. In other words, a firm is said to be
implementing a combination strategy if it uses stability, expansion, and retrenchment
strategies in its many strategic business units at the same time. It is primarily used to solve a
variety of environmental issues.

BUSINESS-LEVEL STRATEGY
Business strategy is the most common level of strategy we are discussing probably all of us
heard about it. Business level strategy is the which is designed to use the best use of
organizational competencies to gain a long-term competitive advantage over competitors.

Business strategy deals with the question of how do we compete? It aims to how to best
successfully compete with competitors so that competitive advantage will be gained.
It steers a strategic business unit (SBU) in the direction of competitive advantage. A strategic
business unit is a division of an organization that has a separate district external market for
goods and services from the other strategic business units.

It could be a distinct business or product such as Samsung selling smartphones, cameras,

TVs, microwaves, refrigerators, etc. The corporate strategy is followed by a business-level
strategy. As a result, there should be a clear link between SBU and business strategy.

Every distinct SBU requires different strategies to compete in the market. A manager can
usually go for a cost leadership strategy, differentiation strategy, and focus strategy in order
to get a competitive advantage against competitors. In other words, these are the types of
business-level strategy, they are:

Cost Leadership/Cost Reduction Strategy

The cost leadership/cost reduction strategy is a step in producing goods or services with
attributes that customers find acceptable at a lower cost than competitors.
This strategy typically involves selling standardized goods or services to the industry’s cost-
conscious clients. Cost leaders focus on lowering their costs in comparison to their rivals.

Differentiation Strategy
The differentiation strategy is an endeavor to produce goods or services that buyers
perceive as unique (at a reasonable cost). Differentiators, unlike cost leaders, target clients
for whom value is created in a way that sets the firm’s offerings apart from the competition.
As a result, product innovation is crucial to a differentiation strategy’s success.

Focus/Niche Strategy
The focus/niche strategy entails producing goods or services that cater to the needs of a
specific competitive segment. Firms use their core capabilities to fulfill the demands of a
certain industry segment, a different segment of a product line, a different geographic
market, or a specific customer group when they use a focus strategy.

FUNCTIONAL LEVEL STRATEGY

The functional level strategy also called operational level strategy is developed to run
effectively the day-to-day activities of the organization. Most operational strategies are no
longer than one year.

The functional level strategies aim to deal with the question of how do we support the
business-level strategy? A number of functions are carried out regularly to effectively run
the business as different functional departmental are created – production department, HR
department, marketing department, customer service department, etc. functional strategy
aims to bring effectiveness in such functional areas.
At the functional level, resources, work pressure, information, and manpower are
integrated to bring effectiveness to the business and corporate-level strategies. Functional
strategies are for short time usually less than one year. These strategies are related to
capability, efficiency, customer service, product quality, and marketing. All these functional
strategists support the business level and ultimately the corporate level strategy.

Production Strategy, marketing strategy, finance strategy, human resource strategy, and
research & development strategy – all are very important say parts or types of functional
level strategy. Effectiveness on all these functional types is required to run shorter activities
of the organization smoothly.

Hence…

All these three levels of strategy are crucial to set appropriately considering the
organizational capability and desired goals. While developing strategic decisions or different
strategies a manager should not forget each level of strategy helps other levels otherwise
desired goals will be difficult to achieve.
 Stakeholder -:
What is Stakeholder ?

A stakeholder can be defined as an entity (a person, group or organisation) which has a

stake in the organisation. This stake can be direct or indirect. Some of the major
stakeholders of an organisation are its employees, its directors, creditors, suppliers, the
owners, customers, the government and the community at large. The relationship between
the stakeholder and the organisation is two-fold. On one hand, the stakeholder has the
power to influence the decisions, policies, actions and practices of the organisation, while
on the other hand they also get influenced by these factors.

Stakeholders Meaning in Business

The stakeholder can thus be defined as "an individual, a group, or an organisation that
gets affected or affects the actions, policies, or objectives of the organisation." 

For example, the product marketing of an organisation affects its customers (better

products), employees (greater salaries, incentives), suppliers (orders for raw material,
packaging), creditors (credit for the growth plans of the organisation), owners (returns on
equity), the government (increased corporate taxation revenue), etc.
Types / Classification of Stakeholders in Business

On the basis of relationship with the organisation, stakeholders can be classified into two
(Internal and External Stakeholders) major groups. Types of stakeholders are as follows :
1) Internal stakeholders 
2) External stakeholders

Internal Stakeholders

The people that are inside the organisation, or those who work directly with the
organisation, are known internal stakeholders. Some major internal stakeholders are as
follows : 

1) Shareholders : 
Shareholders are the individuals or companies who hold the shares of the organisation.
Hence they are called the "owners of the business". Shareholders are treated as the
members of the organisation. These shareholders invest in the organisation so as to help it
in realizing its objectives. The organisation's prime responsibility is to fulfill the interests of
shareholders. The shareholders get the share in the profits as a return on the investments
made by them.
2) Workers/Employees : 
Workers or employees are the people who work in the organisation, and in return expect
remuneration, benefits, security, etc. The relationship between employees and the
organisation is based on the employment contract. Employees contribute their time and
efforts for the benefit of the organisation, which in turn poses certain obligations on the
organisation. It becomes the responsibility of the organisation to fulfill its duties regarding
its employees. One of the major responsibilities of the organisation towards its employees is
to treat them as human beings and acknowledging their significance as a valuable resource
for achieving organisational goals.
3) Management : 
Management of an organisation affects the organisation as well as other stakeholders.
Management is related with the organisation through an implicit or explicit contract. The
major responsibility of the management is to maintain the operations of an organisation as
well as to make strategies for the well-being of the organisation. Management is responsible
for harmonising the different entitlements of the stakeholders.

External Stakeholders 

The individuals, groups or companies that are outside the organisation and work indirectly
with the organisation are known as external stakeholders. External stakeholders can
influence and be influenced by the changes in the organisation. Some of the key external
stakeholders are as follows :

1) Customers :
Customers or consumers are the people or organisations that purchase the products of an
organisation. Hence, customers are one of the main sources of revenue for any business. As
these earnings are re-invested in various business activities, therefore, customers are the
key asset involved indirectly in the new product/service development process. They
maximize the sales of the organisation by purchasing its products and by spreading a
positive word-of-mouth. Hence, satisfying customers is one of most important goals for an
organisation to survive in the long-run.
2) Suppliers : 
Suppliers are those individuals or business owners that supply raw materials or semi-
finished goods to the organisation for the final production process. Some suppliers that
deliver finished goods to the customers are called distributors. The quality and value of end
product is defined by the material provided by the suppliers. Therefore, business dealings
with the suppliers should be treated wisely by the organisation. It is very important for the
organisation to develop good relations with the suppliers through which the production
costs can be minimised while productivity and quality can be maximised.
3) Creditors : 
The companies that provide raw materials or semi-finished goods on credit to the
organisation are called as creditors. If the organisation does not pay the due amount in
time, then the business is at a risk of losing its competitive edge, as judicious relation
between the organisation and its suppliers is one of the major sources of success. In
dissatisfaction, the suppliers can affect the case of business of an organisation by
discontinuing the supply of goods or by supplying poor quality goods.
4) Competitors : 
The organisation is grateful to its competitors as it is towards its stakeholders. Any
competitive strategy adopted by the firm can positively or negatively affect the operations
of its competitors and vice versa. Hence, an organisation should always adopt ethical
measures for survival in the competitive market.
5) Government : 
Government regulates the activities and policies of the organisations by formulating various
laws and posing restrictions. One of the prime responsibilities of an organisation is to abide
by the laws governing its activities. Management should formulate the strategies
considering the laws enforced by the government. Management can affect and in-turn gets
affected by the taxes, laws, and duties imposed on the business. Management can help the
government by practicing fair trade, paying taxes timely, and not indulging in unfair trade
practices.
6) Society/Community : 
Society or community in which the organisation exists also affect its operations. The
management is responsible for educating and informing the society as well as ensuring its
well being by raising the standard of living of the society at large. The organisations should
not adopt measures that can harm the society like discharge of hazardous waste and
pollutants.

 Stakeholders brought into any decision or project development from the get-go are
able to help provide ideas and help create potential solutions
 Stakeholders come from varying backgrounds, and so they look at issues from
differing perspectives
 Effective engagement with stakeholders allows organizations to identify groups who
may not support the project.
 Knowing who does and does not support the project allows for an opportunity to
better understand the motivations, influences and behaviours of those who are in
opposition
 Stakeholder interest in an organization can relate to productivity, environment,
quality, technology, as well as financial, regulatory, welfare, or ethical issues
 Prioritizing your stakeholders is important because it helps you understand where to
invest your resources.
 It helps organizations to identify who the key decision makers are at any given
moment, so that it can be ensured that the organization is engaging with the right
people, at the right time
 Stakeholder engagement helps organizations to proactively consider the needs and
desires of anyone who has a stake in their organization, which can foster
connections, trust, confidence, and buy-in for your organization's key initiatives
 Key stakeholders affecting decision making and strategic planning are:

 Customers – internal, external, direct and indirect.

  Suppliers and vendors

 Government

 Competition

 Interest groups

 Shareholders and Board

Scenario planning –
 Scenario planning is making assumptions on what the future is going to be and how
your business environment will change overtime in light of that future.
 More precisely, Scenario planning is identifying a specific set of uncertainties,
different “realities” of what might happen in the future of your business.
 It sounds simple, and possibly not worth the trouble or specific effort, however,
building this set of assumptions is probably the best thing you can ever do to help
guide your organization in the long term.
 For example, Farmers use scenarios to predict whether the harvest will be good or
bad, depending on the weather. It helps them forecast their sales but also their
future investments.  
 Military institutions use scenario planning in their operations to cope with any
unlikely situations, anticipating the consequences of every event. In this case,
scenario planning can mean the difference between life and death.  
 Scenario planning might not have such dire consequences in your organization, but if
not done, you risk opening the door to increased costs, increased risks, and missed
opportunities.

So how to use scenario planning?

The idea is very simple: Scenario planning  aims to define your critical uncertainties and
develop plausible scenarios in order to discuss the impacts and the responses to give for
each one of them. If you are aware of what could happen, you are more likely to deal with
what will happen.
As you can see from the above illustration, scenario development process holds 4 critical
steps. After identifying the driving forces and critical uncertainties for the months or years
to come, the goal is to develop 4 distinct scenarios that are most likely to happen. The best
way to perform all of these steps is to organize workshops during which all the participants
brainstorm together, it will help you find creative solutions.

The process to create your own scenarios is very simple. You will have to:

 Identify your driving forces: 

To begin with, you should discuss what are going to be the big shifts in society, economics,
technology and politics in the future and see how it will affect your company.

 Identify your critical uncertainties:

Once you have identified your driving forces and made it a list, pick up only two (those that
have the most impact on your business). For example, two of the most important
uncertainties for agribusiness companies are food prices and consumer demand.  

 Develop a range of plausible scenarios:

The goal is now to form a kind of matrix with your two critical uncertainties as axis (see the
above example). Depending on what direction each of the uncertainties will take, you are
now able to draw four possible scenarios for the future.  

 Discuss the implications:

During this final step, you should discuss the various implications and impacts of each
scenario and start to reconsider your strategy: set your mission and your goals while taking
into account every scenario.
TYPES OF SCENARIO PLANNING

The following are some types of scenario planning:

Quantitative scenarios: The quantitative scenario approach looks at the best and worst
cases of a financial model by altering variables, assuming that key variables identified have
fixed relationships.

Operational scenarios: Operational, or event-driven, scenarios look at the short-term

effects a circumstance may have on an organization.

Normative scenarios: Normative scenarios are a goal-oriented type of scenario planning

often used to help organizations reach their desired operation.

Strategic management scenarios: Also referred to as "alternative futures," this type of

scenario focuses on the environment where consumers buy their products.

Probability-based scenarios: Probability-based scenarios look at trends to determine the

likelihood an event may occur.
Interactive scenarios: Interactive scenarios describe the interaction with select variables or
parties in a competitive "gaming" atmosphere.

2-
4-
 Blue Ocean and Red Ocean Strategies
 Strategy Canvas and Value Curves

 Four actions framework

 Business Models

 Business models for the internet economy

 Internet strategies for traditional businesses

 Virtual value chain

 Strategic management & Sustainability

 Threats to sustainability

 Integrating social and environmental sustainability

 Triple bottom line – people, planet and profit

 Ethics and strategic management

 Role of CSR in strategic management

Blue Ocean:
 A blue ocean is considered a yet unexploited or uncontested area.

 The term was coined by Chan Kim and Renee Mauborgne in the book Blue Ocean Strategy:
How to Create Uncontested Market Space and Make the Competition Irrelevant.

 Blue ocean firms tend to be innovators of their time

 Companies need to build their blue ocean strategy in the sequence of buyer utility, price,
cost, and adoption

 Those who pursue a blue ocean strategy attempt to achieve both - differentiation and a low
cost, opening up a new market space

Red Ocean
 Red oceans are all the industries in existence today – the known market space, where
industry boundaries are defined and companies try to outperform their rivals to grab a
greater share of the existing market. Cutthroat competition turns the ocean bloody
  The Green Ocean is an evolution of the Blue Ocean by capturing new social markets.

 Its essence is a culture that uses its human intellectual capital to develop environmentally
sustainable products by the society for the society

Value Curves:
A Value Curve is a diagram which shows where value is created within an organisation’s products or
services,

It also depicts graphically how a company can create new market spaces and provide value to
customers against competition

 Shows current landscape of competition

 Allows a company to see where competitors are heavily investing and how different
products are being positioned to customers.

 Then it helps a company to use this information to find market space, which does not
compete with existing competitors.

 Can they target a blue ocean ?

 Value: Value may also be expressed as a straightforward relationship between perceived
benefits and perceived costs

 Functional

 Social

 Psychological

 Monetary

Strategy Canvas
 A strategy canvas is a line graph that plots a business's key factors (such as price, customer
service, convenience, etc.) against the level to which those factors meet customer needs.

 The key factors are set on the horizontal axis (x), and the level of value offered is set on the
vertical axis (y)

 The idea is to identify the current state-of-play in any industry and use it as a starting point
to drive action to change.

 This helps businesses determine which factors of competition they should invest in.

 It is particularly helpful when developing a differentiation business strategy.

 Companies can plot their own competing factors and analyze them against their competitors

 It can therefore, at the same time:

 Provide a snapshot of the current conditions, called state of play

 Help increase value propositions

 Help identify strengths and weaknesses

 Process:

 Identify competition

 Identify factors of competition / parameters of comparison

 Evaluate self and competition

 Create a strategic profile on a strategy canvas

 The speed of the plane at the price of the car—whenever you need it

 - Southwest Airlines

 https://hbr.org/2002/06/charting-your-companys-future
Balanced Scorecard:
 Kaplan & Norton:

 The Balanced Scorecard is a strategic planning and management system used to

align business activities to the vision and strategy of the organization by monitoring
performance against strategic goals

 Created in 1992, they focused on providing a balance to the financial data, because
they thought that traditional performance measurement that only focuses on
accounting data would become obsolete

 Hence a score card that is balanced, showing all angles

 The Balanced Scorecard model suggests that the organization be viewed from 4
perspectives.

 Then developing metrics, collecting data and analyzing it, relative to each of these
perspectives

 Financial:

 What should be done to create sustainable economic value?

  What is the:

 Return on capital employed

 EVA

 Cash Flow

 Sales Growth

 Reserve

 Internal Business Processes:

 What must be the levels of productivity, efficiency and quality?

 Operations – measures of quality, cycle time and cost

 Post sales – warranty, repair, defects and returns

 Innovation – R & D, forecasting future needs

 Learning and Growth:

 How is high performance supported through performance management systems?

 Measures for:

 Retention

 Skills

 Morale

 Excellence and holistic learning

 Customers:

 What do our customers require from us and what are we doing to support that?

 Product quality

 Customer satisfaction

 Customer acquisition

 Market share

 Customer retention

 Profitability

Business Models:
 Business model is a company’s plan for making profits
  It also describes how an organization creates, delivers, and captures value, in economic,
social, cultural or other contexts

Business Model Canvas Definition

 
A business model canvas is a visual representation of a business model, highlighting all key
strategic factors. In other words, it is a general, holistic and complete overview of the
company’s workings, customers, revenue streams and more.
 
The actual business model canvas definition was first proposed by Alexander Osterwalder, a
Swiss entrepreneur, and consultant, but has gone to be used around the world. 
 
What’s the Purpose of a Business Model Canvas?

 
Other than providing a general overview of the business model, these canvases enable
companies to visualize and analyze their strategy. This includes updating the model as the
company evolves, such as changes in the market, new streams or expansions.
 
The business model canvas provides the central, common source of knowledge through
which each department can add their unique input from their respective domains.
 
It is a template that defines the business - specifically, how each section interacts with the
others. For example, understanding the value proposition, the target customer and the
channels through which they are engaged all need to be analyzed together, not just in
individual vacuums.
 
Alternatively, the business model canvas can be used by organizations to plan, assess or
execute new models altogether. In this way, the canvas highlights the key essentials and
ensures that no vital factors are forgotten. If the canvas is incomplete, then the respective
strategy is also incomplete.
 
Elements of a Business Model Canvas

 
So, what does a business model canvas include?
 
Customer Segments
 
Whether its B2B or B2C, all businesses have customers. These are the people or
organizations that buy your products, use your service or are otherwise essential for creating
a profit. 
 
Customers can be defined through various means but it’s important to focus on the core
customers first, then assess less critical or potential future clients. The canvas should
assess, among other factors:
 
 Current and future needs: what are customers looking for, and what might they be looking
for in the immediate future?
 General demographic: age range, location, interests, etc
  Likes, dislikes and pain points: what do your customers enjoy and what puts them off?
Knowing this will help understand how best to approach them.
 Relations with other segments: this is important if your business relies on multiple groups
interacting. Airbnb, for example, has both property owners and guests - the business strategy
only works if both are satisfied.
 
Additionally, you can list additional segments that may utilize the product or service in the
future. This will highlight future directions the strategy can go in, once success has been
gained with the core, primary audience(s).
 
Value Proposition
 
A company’s value proposition is the sum of its various products and services, specifically in
regards to how it uniquely stands out amongst the competition. In layman's terms: what is
the unique factor that makes this business better than another?
 
The creator of the business model canvas, Osterwalder has also stated that organizations
need to offer something unique and, what’s more, this needs to be immediately discernible
from the competition.
 
The value proposition can be as simple as being cheaper, faster, more efficient or more
readily available than the competition. However, we can roughly place all values in two
broad categories:
 
 Quantitative. This refers to benefits that can be easily counted; from a customer’s point of
view, this means they can be easily compared to the competition. Examples of this can
include pricing or speed. Users may very well choose your service because it's cheaper or
quicker.
 Qualitative. This refers to abstract concepts such as value or experience - those that can’t be
readily measured by hard numbers, but nonetheless, give a strong emotional response to your
audience. Examples of this can include various characteristics, such as using local products,
being eco-friendly or having a personal, customer-centric approach that competitors lack.
 
Another way of expressing the core value is by asking what you want customers to
remember. When it comes to recommending your business to others, what’s the essential
benefit that people should mention? This is the value that your organization needs to drive -
so it needs to be on the canvas.
 
Of course, your value also needs to be maintained. For instance, if your value lies in being
the only service in a respective region, what will happen when a larger competitor eventually
decides to move in? The business model canvas should highlight these weaknesses, in
order to better plan ahead.
 
Channels
 
How will you and your customer interact? Once you define your customer, as well as flesh
out your unique value, this will impact what channels you use. 
 
For example, if your audience is busy and on the go, a mobile-facing service will be
essential. Likewise, if you’re targeting specific locations, perhaps a physical presence is also
needed? What’s important here is that you consider the many touchpoints that your
customers may want and highlight the beneficial ones.  
 
However, it should be noted that channels can adapt over time and this is one area where
the business model canvas is likely to be updated. 
For example, when Domino’s first started, there were only a handful of options, namely
dialing the store or visiting in-person. The invention of the internet and mobile apps quickly
changed this and now there are over 10 different ways, including smart TVs, slack
integration and voice commands. 
 
Yet the decision to expand with new digital products didn’t just happen on a whim; the
business model canvas considered the customer needs (efficiency and a desire for less
effort) with their value proposition (making food ordering and delivery as easy as possible) to
define new channels. 
 
Customer Relationships
 
This section covers your relationship with each customer. This includes how customers first
came to use your business, how you kept these initial customers and, ultimately, how the
business will grow its audience.
There are a number of factors to consider here, especially in regards to the type of
relationship you want:
 
 Personal Assistance. In these forms, customer service is essential. Clients want a personal
approach from your company and, in turn, you offer a direct approach tailored to their
specific needs. This often involves having employees attached to specific customers (such as
a sales or business development position) both before and after the sale process itself. This is
something a bank might have for its business clients, for example. How dedicated this exact
relationship depends on the nature of your service, as well as your customers.
 Automation and Self-Service. On the other hand, you might not want to have a direct,
personal relationship at all. This can often be found in e-commerce stores, for example;
customers just want to browse and shop at will, without speaking to anyone. Automation can
enhance this through personalization, without the customer being aware, such as Netflix’s
recommended viewing.
 Communities. Alternatively, if your target audience is a particular niche, segment or region,
you might want to establish a community. In this approach, your business model brings
people of shared interests together, to facilitate more actions.
 
Revenue Streams
 
Ultimately, a company has to turn a profit. On the business model canvas, this is
represented by revenue streams: the various channels with which income can be generated.
 
Here are the most common revenue streams to consider:
 
 Asset or goods sales: this is one of the oldest streams. By selling goods, the business
generates revenue at each transaction.
 Subscription: If your providing an ongoing service or rented out products, then these fall
under subscription models; your customers pay on a regular schedule (such as per month or
year) as long as they are using your business.
  Leasing or lending: This is similar to the subscription, but differs in that it’s for a predefined
period. Car rentals, for instance, often do this, as customers define the rental period before
purchasing. Newer models, however, try to challenge this status quo by offering a more
subscription-based service.
 Licensing: This is where the business sells licenses to other companies or individuals to use
the property. It’s similar to sale, but differs in that you still own the intellectual property; the
user can’t resell it.
 White labeling: Similar to licensing, white labeling is where you provide a product or service
that businesses can relabel as their own. This is typically done as a subscription or one-off
license purchase, so it can be considered an additional variant of the above.
 Advertising: Perhaps your model is designed to attract users, but currently drive revenue
from advertising opportunities? Social media networks are the most famous example of this;
they don’t make money through purchases or subscriptions, but through charging advertisers
to benefit from this network.
 
It’s important to note that these revenue streams are not set in stone - they will adapt and
evolve as the market changes. As a business, you should regularly return to the canvas to
make sure each stream is as effective as it can be. This includes different pricing plans and
options (especially if you have multiple streams) or adding new streams, such as with
Domino’s, for example.
 
Key Resources
 
Every organization runs on resources: the essential assets in running the business and
providing the value (defined earlier) to customers. Like the other elements, this can come in
many forms.
 
 Human resources: if you’re providing personalized value or have a model that requires a lot
of staff, the cost and training of employees need to be considered.
 Financial: how much investment is required to run and maintain a business before it makes a
profit? The more money is needed upfront, the bigger the burden to generate ROI.
 Physical: expanding your presence, opening offices or buying physical space is also an asset
that needs to be considered. This is mostly true for organizations that need prominent
positions, such as high street retailers or hotels. For a lot of businesses, the push into a digital
landscape is quickly reducing the strain of this particular resource.
 Intellectual property: this can include everything needed to develop your IP (such as an
app), as well as develop and maintain it. For example, subscriptions and licenses survive by
ensuring customers can not use the service without your business, as you still hold the
intellectual property rights.
 
Through these factors, you should identify what is currently available and what is needed to
succeed. Much of this will be defined in your previous channels; this is where you focus on
what those channels need to succeed - with an end goal of creating a sustainable business
model.
 
Key Activities
 
Similar to the last section, what do you need to do to produce your value proposition and
ensure it succeeds? This section includes the key activities needed to make your model
effective and successfully connect with customers.
This can include initial investment, such as finding a development company, or even
marketing and advertising to generate that initial awareness. This section should take
everything into account, including the impact each has on the overall business, to
understand the absolute essentials and recommended extras.
 
Key Partnerships
 
Very few companies survive on their own. Identifying and preparing key partnerships is
essential for long term survivability. Here are the primary partnerships that you’ll typically
need to consider.
 
 Distributors: how will your business sell to customers? Whether its using online stores, sales
agents or other companies, you need some form of distribution.
 “Coopetition”: sometimes two businesses, that would otherwise be competitors, can join
forces to take on larger markets. This works where this is enough potential gains that a joint
venture makes more fiscal sense: there isn’t a clear risk of one siding gaining at the expense
of the others. For example, smaller organizations can often team up to provide a larger,
holistic offer to users, or to even attend events that are outside of either side’s budget.
 Suppliers: Similar to distribution, you also need suppliers for everything from raw materials
to software development. If there’s something you need and can’t produce in-house, then you
need to identify trusted suppliers.
 Existing customers: Perhaps if you have existing clients, you can offer some
recommendation rewards, or a commission-based system, to spread awareness? 
 
Like everything else, much of this will be subject to change. As the business grows, you
might find you no longer need certain partnerships, and likewise need to move to others. All
of this should be noted in the business model canvas.
 
Cost Structure
 
Finally, as far as business model canvas elements go, you need to define all potential costs.
After all, you need to know how much you’ve spent to know when you’re generating profit.
The cost structure takes both existing and future costs into account:
 
 Fixed costs are the easiest to determine as they have a singular price or a repetitive price that
doesn’t change. Rent is a good example.
 Variable costs, on the other hand, can vary and their high peaks need to be accounted for.
Factors such as temperature can often impact businesses that need to maintain a certain heat
or humidity - they may spend more (or less) in the warmer months.
 Economies of scale and scope, similarly, refer to decreasing costs as the business expands.
This is because larger production can introduce better efficiencies (scale) while creating new
partnerships and improving internal processes, as a result, can improve the wider organization
(scope). For example, you might rely on third-party providers for immediate support, such as
packaging, but move this in-house when it becomes cost-efficient to do so.
 
It’s important to understand these variables so that the business model canvas provides a
realistic view of costs right now, as well as where the company aims to be short.
 
Benefits of a Business Model Canvas

 
Visuals at a glance
 
Thanks for having everything in one place, people in the company can gain an immediate
understanding of the business model as a whole. It’s easily interpretable and offers a single
source of truth for the wider strategy.
 
Quick Improvements & Iterations
 
By having everything connected, organizations can see how every part of the business
works with the wider structure. This is where people can highlight flaws or identify solutions.
By comparing all the factors, such as customers, revenue streams and costs, the company
can begin to make strategic improvements it might not have otherwise identified before.
 
Shareable
 
Nobody wants to go through a 2-hour presentation everything they want to go through the
business strategy. The business model canvas definition is a better way to show this plan. It
can be easily shown to new people to help bring them up to speed, while simple changes
don’t require extensive explanations; people can see how they fit onto the updated canvas.

 
TL;DR - What Is a Business Model Canvas?
 
A business model canvas is an effective way to bring all the elements of your strategy
together, from initial costs to customer & revenue streams. Doing so helps bring in all
departments in your company and allows for a broad, but deep, an overview of the intended
business model. Whether its propose updates to an existing strategy or developing an
entirely new company, the canvas is one of the best ways to get an initial overview and
assess directions as early as possible.

SM & Sustainability
 The role of strategic management is to set goals and put in place procedures that make the
business more competitive and deliver value for all stakeholders.

 It is vital that sustainability is a priority in this in order to remain an attractive proposition for
consumers, employees and investors alike

 Sustainability refers to the ability to maintain or support a process continuously over time

 It means fulfilling the needs of current generations without compromising the needs of
future generations, while ensuring a balance between economic growth, environmental care
and social well-being

 Environmental sustainability is the conservation of biodiversity without foregoing economic

and social progress

 Conservation – water, soil

 Reduce, reuse, recycle

 Save more, waste less

 Less pollution

 Economic sustainability refers to the organisation's ability to manage its resources and

responsibly generate profits in the long term

 Encouraging responsible consumption

 Promoting techniques of more saving and less wasting in employees also

 Social sustainability has the goal of strengthening the cohesion and stability of social groups.

 Two pronged – don’t do anything to harm, and do everything to help

 Promoting diversity

 CSR

 Social, Environmental and Economic is also known as the Triple Bottom Line

 People

 Planet and

 Profit

 In order to be considered sustainable, a business must be able to conserve natural

resources, support a healthy community and workforce, and earn enough revenue to remain
financially viable for the long-term.

ESG:
ESG stands for Environmental, Social and Corporate Governance. These three
broad areas can provide a range of targets for a business to meet in order to
improve its sustainability and lower its risk level across various factors. They
include aspects like inclusion and diversity, climate change, human rights and
more. 
This is attractive to the increasing number of socially responsible investors who,
in the words of the Corporate Finance Institute, “consider it important to
incorporate their values and concerns (such as environmental concerns) into
their selection of investments instead of simply considering the potential
profitability and/or risk presented by an investment opportunity.”

CSR:
 Corporate Social responsibility (CSR), also known as

 Social Responsibility,

 Corporate Citizenship, 

 Responsible Business, 

 Sustainable Responsible Business (SRB) or

 Corporate Social Performance,

 is a form of self regulation integrated into business models

 The continuing commitment of business to behave ethically and contribute to economic

development while improving the quality of life of their workforce, their families, the local
community and society at large

 Apart from merely charity, CSR is ensuring a secure existence for the public sphere that a
business operates in, and ultimately for itself

 CSR-focused businesses should proactively promote the public interest by encouraging

community growth and development, and voluntarily eliminating practices that harm the
public sphere, regardless of legality.

 Corporate Social Responsibility

 Accountability and obligation to society

  Corporate Social Responsiveness

 Action and activity

 Corporate Social Performance

 Outcome and results

 Thomson-Reuters columnist Chrystia Freeland has called CSR “a fetish encouraged by the
philanthropies that feed off it, and funded by the corporate executives who find that it
serves their bottom line.” 

Corporate Responsibility
 Responsibility towards shareholders:

 Safety of investment

 Maximizing dividends

 Participation in management

 Information to shareholders

 Retaining public image

 Responsibility towards consumers:

 Production as per requirement

 Prompt and adequate service

 Co-operation

 Adequate research and development

 Testing of products

 Innovation

 Improvement

 Responsibility towards workers / employees:

 Fair wages

 Security

 Opportunities for development

  Proper working conditions

 Trade union rights

 Responsibility towards community and Government:

 Abide by laws and regulations, especially environmental

 Pay taxes

 Cooperation