Overview of Business Model

and Strategic Making Process

Reporters:
Agne, Angela G.
Granado, Jerald G.
Molina, Joyce G.
 1. Define business logic, and business model and strategy as
01 representation of business logic.

2. Know the role of business model in achieving superior

02 profitability and profit growth.

DESIRED LEARNING
OUTCOMES (DLO)

The students are 03 3. Identify and discuss the primary steps in a

expected strategic planning process.
to be able to:
 BUSINESS LOGIC

Business logic is the custom rules or algorithms that

handle the exchange of information between a database and
user interface.

Business logic is essentially the part of a computer

program that contains the information (in the form of
business rules) that defines or constrains how a business
operates.

Business logic can be seen in the workflows that they

support, such as in sequences or steps that specify in detail
the proper flow of information or data, and therefore
decision making. Business logic is also known as "domain
logic."
 BUSINESS LOGIC VS BUSINESS RULES

Business rules are useless without business logic to

determine how data is calculated, changed, and
transmitted to users and software. But without business
rules to create a framework, business logic cannot
exist. Business logic is any part of a business
enterprise that makes up a system of processes any
procedures, whereas anything else is an example of a
business rule.
 Business Logic Examples

A credit card issuer's business logic may specify that out-of-

state credit card transactions above a certain limit, say Php20,000,
be flagged as suspicious and the issue contacted as soon as
possible to confirm the authenticity of the transaction. The policy of
flagging such a transaction is an example of a business rule; the
actual process of flagging the transaction is an example of
business logic. Given that millions of credit card transactions are
conducted every single day, business logic enables such
transactions to be checked and processed in an efficient and timely
manner.

Another example the application of VAT on invoices is a

business rule but the calculations involved in applying it are
implemented as business logic.
Superior Performance
B
Maximizing shareholder value is the ultimate goal of profit- C
making companies, for two reasons:
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a. First, shareholders provide a company with the risk
capital
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b. Second, shareholders are the legal owners of a corporation,
and their shares, therefore, represent a claim on the profits
generated by a company. Thus, managers have an obligation to
invest those profits in ways that maximize shareholder value.
STRATEGIC MANAGERS
B
Managers must lead the strategy making process. In most C
companies, there are two primary types of managers:
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a. General managers - who bear responsibility for the overall
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b. Functional managers - are responsible for supervising a particular
function, that is, a task, activity, or operation, such as
accounting, marketing, research and development (R&D),
information technology, or logistics.
 LEVELS OF STRATEGIC MANAGEMENT
1.Corporate-Level Managers - the corporate level of management occupies
B
the apex of decision making within the organization. It consists of: a. the
chief executive officer (CEO), b. other senior executives, c. corporate staff.
C
The CEO is the principal general manager. In consultation with other senior
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development of strategies for the whole organization.
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2.Business-Level text.
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- is a self-contained division (with its own
functions—e.g., finance, purchasing, production, and marketing
departments) that provides a product or service for a particular market. The
strategic role of these managers is to:
a. translate the general statements of direction and intent that come from the
corporate level into concrete strategies for individual businesses.
b. business-level general managers are concerned with strategies that are
specific to a particular business.

3.Functional-Level Managers - are responsible for the specific business

functions or operations (human resources, purchasing, product
development, customer service, etc.) that constitute a company or one of its
divisions.
THE STRATEGY-MAKING
Process A Model of the Strategic Planning Process
B C
The formal strategic planning process has five main steps:
1. Select the corporate mission and major corporate goals.
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2. Analyze the organization’s external competitive environment to
identify opportunities and threats.
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3. Analyze the organization’s
enter the text. internal operating environment to
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identify the organization’s strengths and weaknesses.
4. Select strategies that build on the organization’s strengths and
correct its weaknesses in order to take advantage of external
opportunities and counter external threats. These strategies should
be consistent with the mission and major goals of the organization.
They should be congruent and constitute a viable business model.
5. Implement the strategies.
 Main Components of the Strategic Planning Process

1. Mission, Vision, Values and Goals Mission Statement - the first component of the strategic management process is crafting the organization’s
mission statement, which provides the framework—or context—within which strategies are formulated.

Vision
Mission
A vision statement describes what a company
A company’s mission describes what the company
desires to achieve in the long-run, generally in a
does. Essentially, the definition answers these
time frame of five to ten years, or sometimes even
questions:
longer. It depicts a vision of what the company
will look like in the future and sets a defined
a. What is our business?
direction for the planning and execution of
b. What will it be?
corporate-level strategies.
c. What should it be?

Values
The values of a company state how managers and
employees should conduct themselves, how they
should do business, and what kind of organization
they should build to help a company achieve its
mission.
Insofar as they help drive and shape behavior within
a company, values are commonly seen as the
bedrock of a company’s organizational culture:
- the set of values,
. norms,
- the standards that control how employees work to
achieve an organization’s mission and goal
Major Goals
Having stated the mission, vision, and key values,
strategic managers can take the next step in the
formulation of a mission statement: establishing major
goals. A goal is a precise and measurable desired future
state that a company attempts to realize. Well-constructed
goals have four main characteristics:
• They are precise and measurable. Measurable goals
give managers a yardstick or standard against which they
can judge their performance.
• They address crucial issues. To maintain focus,
managers should select a limited number of major and
important goals to assess the performance of the
company.
• They are challenging but realistic. They give all
employees an incentive to look for ways of improving the
operations of an organization. Unrealistic and too easy
goals may fail to motivate managers and other employees.
• They specify a time period in which the goals should be
achieved, when that is appropriate. Time constraints tell
employees that success requires a goal to be attained by
a given date, not after that date.
2.External Analysis - the second component of the strategic
management process is an analysis of the organization’s external
operating environment.
Purpose of the external analysis: B C
a. To identify
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organization’s operating environment that will affect how it pursues
its mission.
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b. Analyze the industry
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competitive structure of the company’s industry, including the
competitive position of the company and its major rivals.
c. It also requires analysis of the nature, stage, dynamics, and history of
the industry
d. Assessment of the impact of globalization on competition within an
industry
e. Analyze and examine the macroeconomic, social, government, legal,
international, and technological factors that may affect the company
and its industry.
3. Internal Analysis - the third component of the strategic planning
process focuses on reviewing the resources, capabilities, and
competencies of a company. The goal is to identify the strengths and
weaknesses of the company. B C
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weaknesses, opportunities, and threats is normally referred to as a
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a. to identify the strategies to exploit external opportunities,
b. counter threats,
c. build on and protect company strengths, and
d. eradicate weaknesses
4. Strategy Implementation - involves taking actions at the
functional, business, and corporate levels to execute a strategic
plan.
B C
Implementation can include, for example:
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b. changing the way a product is designed,
c. positioning
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e. offering different versions of the product to different consumer
groups,
f. implementing price increases or decreases,
g. expanding through mergers and acquisitions, or downsizing the
company by closing down or selling off parts of the company.

5. The Feedback Loop - indicates that strategic planning is ongoing:

it never ends. This information and knowledge is returned to the
corporate level through feedback loops, and becomes the input for
the next round of strategy formulation and implementation.
 Key characteristics of good strategic leaders
Vision, eloquence, and consistency

Emotional intelligence Articulation of a business

model

Astute use of power Commitment

Willingness to delegate and empower Being well informed;

1. Vision, Eloquence, and Consistency

a. One of the key tasks of leadership is to give an organization a sense

of direction. B C
b. They must have a clear and compelling vision of where the
organization should go.
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c. Leaders must be eloquent enough to communicate this vision to
others within the organization, and consistently articulate their
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vision until it becomes
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enter the text. culture.

2. Articulation of the Business Model - the ability to identify and

articulate the business model the company will use to attain its vision.
A business model is managers conception of how the various
strategies that the company pursues fit together into a congruent
whole.

3.Commitment - strong leaders demonstrate their commitment to their

vision and business model by actions and words, and they often lead
by examples. It is an agreement or pledge to do something in the
future.
4.Being Well Informed - effective strategic leaders develop a network
of formal and informal sources who keep them well informed about
what is going on within their company.
B C
5.Willingness to Delegate and Empower - high-performance leaders
are skilled at delegation.
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- Effective delegation to distribute work load and responsibilities.
- Delegation is way of empowering subordinates to make decisions is
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a good motivational tool and often results
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text. being made
by those who must implement them.

6. The Astute Use of Power - effective leaders tend to be very astute in

their use of power. Strategic leaders must often play the power game
with skill and attempt to build consensus for their ideas rather than
use their authority to force ideas through; they must act as members
of a coalition or its democratic leaders rather than as dictators. Power
comes from control over resources that are important to the
organization: budgets, capital, positions, information, and knowledge.
7. Emotional Intelligence - (otherwise known as emotional quotient or
EQ) is the ability to understand, use, and manage your own emotions
in positive ways to relieve stress, communicate effectively, empathize
B
with others, overcome challenges and defuse conflict. Emotional C
intelligence helps you build stronger relationships, succeed at school
and work, and achieve your career and personal goals.
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Emotional intelligence is a term to describe a bundle of psychological
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attributes that many
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* Self-awareness - the ability to understand one’s own moods,

emotions, and drives, as well as their effect on others.
* Self-regulation - the ability to control or redirect disruptive impulses
or moods, that is, to think before acting.
* Motivation - a passion for work that goes beyond money or status
and a propensity to pursue goals with energy and persistence.
* Empathy - the ability to understand the feelings and viewpoints of
subordinates and to take those into account when making decisions.
* Social skills - friendliness with a purpose.
What Is A Business Model?
A business model is a conceptual structure that supports
the viability of the business and explains who the business
serves to, what it offers, how it offers it, and how it achieves
its goals.

All the business processes and policies that a company

adopts and follows are part of the business model.

According to management guru Peter Drucker: A business

model is supposed to answer who your customer is, what
value you can create/add for the customer and how you can
do that at reasonable costs. Thus, a business model is a
description of how a company creates, delivers, and captures
value for the customer as well as itself.
What Are The Components of A Business Model?

An ideal business model usually conveys four key

aspects of which business is presented using a specialized
tool called business model canvas. These key components
are customers, value proposition, operating model, and
revenue model.
BUSINESS MODEL CANVAS ILLUSTRATION
BUSINESS MODEL CANVAS ILLUSTRATION
Most Common Types Of Business Models

1. Franchise
A franchise can be a manufacturer, distributor or retailer. Instead of
creating a new product, the franchisee uses the parent business’s
model and brand while paying royalties to it. Examples – McDonald’s,
Pizza Hut, Jollibee

2. Freemium
This is one of the most common business models on the Internet.
Companies offer basic services to the customers for free while charging
a certain premium for an extra add-ons. So there will be multiple plans
with various benefits for different customers. Generally, the basic
service comes with certain restrictions or limitations, such as in-app
advertisements, storage restrictions etc., which the premium plans shall
not have. For example Zoom, Dropbox, MailChimp, Evernote etc.
3. Subscription
If customer acquisition costs are high, this business model might be
the most suitable option. The subscription business model lets you
keep customers over a long-term contract and get recurring revenues
from them through repeat purchases. Examples LinkedIn, Dollar
Shave Club, Netflix, Amazon Prime.

4. Affiliate Marketing
Affiliate marketing business model is a commission-based model where
the affiliate builds its business around promoting a partner’s product
and directs all its efforts to convince its followers and users to buy the
same. In return, the affiliate gets a commission for every sale referred
to. Examples are Involve Asia, Clickbank, JVzoo, CJ affiliate,
WarriorPlus, Amazon Affiliate program.
Most Common Types Of Business Models

5. Advertisement
Advertisement business models are evolving even more with the rise
of the demand for free products and services on the internet. Just like
the earlier times, these business models are popular with media
publishers like Youtube, Forbes, etc. where the information is
provided for free but are accompanied with advertisements which are
paid for by identified sponsors.

6.Data Licensing / Data

Selling
With the advent of the internet, there has been an increase in the
amount of data generated upon the users’ activities over the internet.
This has led to the advent of a new business model – the data licensing
business model. Many companies like Twitter and Onesignal sell or
license the data of its users to third parties who then use the same for
analysis, advertising, and other purposes.
What is the role of the business model in achieving superior
profitability and profit growth?
A B C D
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the enterprise. It is the result of how efficiently and effectively
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(ROIC) that a company earns is defined as its net profit over the
capital invested in the firm (profit/capital invested). A company that
uses its capital efficiently and effectively makes a positive return on
invested capital:

-By net profit, we mean net income after tax.

-By capital, we mean the sum of money invested in the company:
that is, stockholders’ equity plus debt owed to creditors.
 The profit growth of a company can be measured by the increase in
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net profit over time. A company can grow its profits if it sells products in
markets that are growing rapidly, gains market share from rivals,
increases the amount it sells to existing customers, expands overseas,
or diversifies profitably into new lines of business.

The business model plays a crucial role in achieving superior

profitability and profit growth by defining how the company creates,
delivers, and captures value for both customers and itself. A well-
designed business model aligns the company's resources and activities
to efficiently produce goods and services that satisfy customer needs,
leading to positive returns on invested capital (ROIC). By identifying the
target customer, delivering compelling value propositions, optimizing
operating processes, and choosing revenue streams wisely, a business
model enables the company to generate profits and sustain growth over
time. Additionally, the flexibility of the business model allows the
company to adapt to changing market conditions, seize new
opportunities, and mitigate risks, contributing to long-term profitability
and profit growth.