Relationship between Business Strategy and Business Model Studied in a Sample of Service Companies

A business model and a business strategy are the basic conditions of a company existence. A business model describes and explains how a company works and makes money. A business strategy describes and explains how, where and for what purpose and goal a business model will be used. The research seeks to ascertain whether there is any measurable relationship between a strategy and a model. An identification of this relationship will deepen knowledge of strategic management of the company and it is a reason for further research on the nature of relationship between a model and a strategy.


INTRODUCTION
A business model and a business strategy are two essential preconditions and fundamentals of a company existence.If this existence is successful, both conditions must comply with certain quality requirements and be in reasonable conformity.If they are not compliant, their individual quality does not get space for the implementation and potential of assumptions is not converted into reality.An ambitious strategy and a common model or an innovative model and a mundane strategy are opposites that can cause more harm than good.If a model and a strategy are consistent, they should be mutually supportive and reinforcing.The aim of the research is to ascertain whether any relationship between a model and a strategy exists at all and what intensity of this relationship is.This elementary detection can open up further research on the quality and intensity of the relationships between a model and a strategy and their consequences.

THEORETICAL BACKGROUND
A business model portrays and displays the picture of company resources, which are grouped and arranged in a process to produce a value (benefit) for the customer and earnings for the entrepreneur.The business model thus solves an elementary sense of company existence in general, which is satisfied, paying a customer and an effective entrepreneur with revenues exceeding costs, and therefore he/she earns a profit.Every company that makes money has a functioning business model.It does not matter whether it is explicitly recognized and cultivated, or its existence is perceived implicitly and a model is developed intuitively.A theme of the business model came to the fore mainly due to a rise in information technology and the Internet, which have transformed the company resources and processes considerably; they have elicited new ▪ needs and brought new ways of satisfying them.New sources of earnings and profits emerged; they flow from business models that are different from those in the industrial era of business.Business models in the digital economy and in the services make money differently than in the traditional industrial economy.
A business strategy keeps a company in an industry at some position; its more demanding task is to strengthen and improve this position.The business strategy leads a company through business environment for more or less ambitious targets, which are extraordinary performance or survival at least.Moreover, it provides a guidance to confront or avoid competitors.The importance of the strategy is being increased in complex and dynamic business conditions that are unclear and unstable, but the company must exist in such environment and move forward.The strategy provides orientation in these circumstances; it identifies the starting position at present and target position in the future, and formulates usually several variations and possibilities of how to overcome the path between the present and the future.Every company that does something in reality has some business strategy.This strategy can be purposeful and planned, prepared before a company begins to act, and afterwards, the company is trying to behave according to it to achieve its goals.The opposite strategy is unplanned, spontaneous or opportunistic.Planned, but in the course of time, an adapted strategy can be identified on the basis of observing an apparent and visible acting, although such a notion of strategy is recorded ex post.
At the beginning of the study of relationship between a model and a strategy, it is necessary to assess a meaningfulness of the question "What is the first thing, what is the basis and what is the second thing or derived, what is the superstructure or what is general and what is specific?".The meaningfulness of such question stands out when an academic puts himself/herself in the position of an entrepreneur.A businessperson looks for an unmet need or creates a completely new need; he/she designs a method of how to satisfy it and tries to monetize satisfaction of a need.While the process of making money with a profit is not solved, possibly a repeated process, which is basically the same phenomenon as a business model, there is no sense to formulate a strategy.This is best seen in start-ups which solve functioning of their business models in the early stages of their existence and they begin to reflect on a strategy in the final stages of their development when they enter the market and meet the competition.A formulation of strategy considering a company that does not make money as a consequence of a dysfunctional model does not make sense.In the core of a business model, there is an answer to the question "How to make money?"The answer to the question "Where to place a model, how and when to use it?" is again in the focus of a business strategy.The model in this respect is the basis on which strategy grows.A model is a phenomenon that has fundamental, existential, and thus strategic importance for a company.When using a strategic point of view, thus what is the most important thing for the existence and prosperity of a company, so apart from a strategy also a business model belongs to strategic considerations and strategic management.Such reasoning, however, does not qualify strategy into superior or determining position towards the model or vice versa.J. Magretta (2011, p. 69) writes: "A business model and a strategy are two different things.One explains who your customers are and how you plan to make money when by providing them with value, the other, how you will beat the competitors by being different."She adds on (2011, p. 79): "Business models describe, as a system, how the pieces of a business fit together.However, they do not factor in one critical dimension of performance: competition.Sooner or later -and it is usually sooner -every enterprise runs into competitors.Dealing with that reality is strategy´s job."Francine Newth (2012, Abstract) formulates these ideas in a similar way: "The business model is about how a company works and strategy on how a company competes."She further explains (2012, p. 2 ): "The business model is an internal system that is composed of elements, links and dynamics, while the strategy is an external competitive approach using competences that have developed in the business model."From quoted opinions of Magretta and Newth, it is evident that the strategy and model are relatively independent entities but interrelated and complementary.R. Massanel Cassadesus and J. E. Ricart write (May/June 2010): "The business model is a reflection of the implemented strategy.Strategy is a contingent plan how to use a business model." The business model is, based on their perception, a part of a wider-designed strategy, strategy determines the model as a system of activities, selects the appropriate model and establishes the rules for its use.Another link between a strategy and a model they see that ( January/February 2011) "while every company has got a business model, not every company has got a strategy, thus a plan against any unforeseen events that may arise."May reasonably be assumed, that a company which has not got planned, formal strategy, acts too and this action indicates a certain logic, respectively some template that can be considered as a strategy, and thus a use of a model.J. Muehlhausen (2013, p. 19) is of the opinion that "business model is part of business strategy" and he justifies this fact that the business model is what you do and the strategy and tactics are how you will do it.The argument about what is a part of what is inconclusive, but separation of model from strategy is obvious.C. M. DaSilva and P. Trkman (December 2014) consider "business model as a reflection of business strategy and they give reason that the strategy shapes development of capabilities that may change the current business models in the future."Practice shows but that models usually emerges in non-strategic, unplanned way as a result of many trials and errors.
Quoted opinions of Massanel Cassadesus, Ricart, Muehlhausen, DaSilva and Trkman show that strategy and model are linked entities, that strategy determines model that there is a priority of strategy over model.Contrary to them, Lewis and Seddon to the question (2003): "What comes the first one: the strategy or business model?",reply that it seems to them that the business model comes first.They refer to the models in architecture and software engineering, which are known as the building blocks for successful conceptualization and formation of strategy.Their arguments are not based on field research, they figure out their conclusions on the base of analysis of the assertions in the literature.Many uncertainties in relationship between business strategy and business model come from the proximity of these two related but separated phenomena.N. Stieglitz and N. J. Foss (2015, p. 106) therefore merely state: "Sometimes business models are seen as subordinate and at sometimes as superordinate to business strategy." A study of the literature shows that there are not unambiguous opinions considering the priority of the relationship between model and strategy.In favour of priority or foundation of model there can be stated this argument.The model addresses the basic and existential question of the company, which says: How to make money?This question is fateful and strategic as well, but the answer to it does not explain the content of the strategy.The correct answer, however, is the reason and basis for strategy formulation.To formulate a strategy for a model that does not earn is obvious nonsense.Opposite views appear too, however, that the strategy creates some preconditions in the long term that may affect business model.Argumentation, however, does not go into depth and empirical evidences lack.Across the literature, more consistent opinions appear that a dependence is between strategy and model, although some empirical evidences lack again.

AIMS, METHODS AND RESEARCH SAMPLE
The goal of the research is to explore the relationship between a business strategy and a business model.To ascertain how tight is the connection between business strategy and business model.The tightness of relationship has got practical implications.Close relationship may reduce variability of model and variability of strategy, respectively a change of model will be reflected in a change of strategy and vice versa.Looser relationship gives more scope for adaptability/variability of model and strategy too without weakening of the functionality of their relationship.Secondary goal of the research is to identify internal dependences in business model and business strategy and speculate on the meaning of homogeneity of model and strategy.An attractive target for research would be to clarify priority in relation of model and strategy, which is impossible to know on basis of statistical analysis.However, it is a matter of logic of specific development of this relationship, which would be causally examined on base of case studies.
The original research sample included 231 enterprises, of this 80 enterprises (34.6 %) came from industry of services.Services and sub-industries of services belong among dynamically developing businesses and their economic importance is growing at the expense of traditional primary and secondary industries.Of the originally complementary business, services became an important part of national economy.They are an important source of employment and job creation, because "in most countries exceeded the share of services in GDP from 50 % to 60 %, while the highest share of services have particularly the most advanced countries.Despite this fact, however, services contribute only 20 % to the total international trade".(www.economy.gov.sk/s,August 2014) For the narrowed research sample there were selected 30 service enterprises.This number has proved to be sufficient due to the achieved level of significance of examined parameters.There are also smaller samples, often with 20 elements, but they are divided into test and control group 10/10.Service enterprises came from sub-industries: human resources agencies (8), marketing agencies (7), consulting agencies (8), law firms (3), financial agencies (4).The selected companies are essential representatives of companies from the respective sub-industries that are placed in the survey sample.The selection criterion was the formal and content quality of information on the surveyed companies and attributes of business models and strategies that differentiated them from models of other companies.Companies in the narrowed research sample were examined besides in detail and evaluated personally by authors of the article without other intermediaries.Due to the methods used, verified relationships should be also valid in larger files too.In a narrow sample, some relationship could not be identified, and therefore they will be a theme of further examination.

Revenue streams: p9
The business model is expressed, respectively quantified as the sum of 11 evaluated parameters, the resulting value is equal to p1 + p2 + p3 + p4 + ((p5.1+p5.2)/2)+ ((p6.1+p6.2) /2) + p7 + p8 + p9.The blocks 5 and 6, which are assessed by two parameters, are aggregated each of them into a single parameter by means of the arithmetic mean.The minimum number of points is 9 and the maximum is 45.It can be said that the companies which have reached 9 points are entirely consistent with the industry average, 18 represent a small difference, 27 represent more difference, 36 are big difference and 45 are total difference.The business strategy is described through parameters respectively seventeen variables.Each parameter is evaluated according to the same scale as the business model.The parameters/variables (pn, n = 1 -7) are divided into seven groups: External environment of enterprise: 1a, 1b Anticipating the future development of the external business environment: 2 Quality of the internal environment of enterprise: 3 Content of strategy, strategy as a set of concrete factual parameters: 4a, 4e (parameters 4b, 4c, 4dz, 4ds, 4fpri, 4fpo are omitted because they are identical to the parameters of the business model) Strategy as an instrument of competing -difference: 5a -market position: 5b Strategy as a way of company acting: 6a, 6b, 6c, 6d, 6e, 6f Strategy as a company attitude: 7a, 7b, 7c The business strategy is expressed for the need of further investigation through the blocks that are composed of selected parameters: 1.

7.
* external environment.Resultant parameter has established as the sum of assessment of the dynamics and complexity of the business environment, intensity of competition and the degree of cognition of the future.Each component can take value from the low complexity (1) to very complex, intensive and heavily foreseeable environment (5).Parameter of the external environment thus can reach values from 3 to 15.The sum of the values of the external environment parameters equals 1a + 1b + 2a.* internal environment.The object of evaluation was the quality of the internal environment perceived through competitive advantage and its sustainability.Parameter can take a value (1) which expresses conformity with the average companies to complete divergence (5) in comparison of an industry average.The parameter used in the calculation is 3a.
* environment together.Parameter was established as the sum of the assessment of external and internal environment and can take values from 4 to 20.The sum of the values of environmental parameters is 1a + 1b + 2a + 3a.* competitive strategy.It is expressed by differences from competitors and market position.Divergence can acquire value (1), which is a congruence with industry average to the value (5) which is a complete difference.The parameter used in the calculation is 5a.* Competitive position is a measure of successful acting of company on the market.Position can acquire value (1) on the edge up to the value (5) on the top.The parameter used in the calculation is 5b.* Strategy as a way of company acting.Strategy perceived like this is recorded through six parameters which are dynamics and speed, originality, clear focus, foresight, sensibility and perception and ambition.Sum of parameters is 6a + 6b + 6c + 6d + 6e + 6f, can reach values of 6 for 30.
* strategy as a company attitude.This block records the starting position or readiness of the company to respond to competitive situations that arise in the market.It is expressed by parameters passivity/activity, defence/attack and caution/courage.Sum of parameters is 7a + 7b + 7c.The result may take the values 3 to 15, wherein is the sum of the three independent variables.* strategy together.Block is the sum of the strategy as a way of action and strategy as a company attitude 6a + 6b + 6c + 6d + 6e + 6f + 7a + 7b + 7c.The result may ranges from 9 to 45.The higher the resulting value, the more the company differentiates its strategy from the competition.
The relationship between a strategy and a model will be illustrated by examining the following links: The impact of the strategy as a way of action and attitude to the company position as an elementary substantiation of functionality of strategy.
The impact of external and internal business environment and strategy on a business model.
The impact of the strategy as a way of action and company attitude on a business model.

The impact of strategic parameters on a business model
For the purpose of statistical analysis of relationships and testing of assumptions validity, there were used methods of analysis of variance (ANOVA) and of linear regression analysis.These methods are currently considered to be the standard of data analysis, because they enable to examine the causal links, to formulate assumptions about the validity of the results of the larger sample, and to provide a tool for refusing statistically insignificant results.There was constructed a regression analysis model, which was tested and gradually adjusted due to statistically insignificant variables.The results were considered to be statistically significant if a statistical significance level of 0.05 or less was achieved.

AN ANALYSIS OF RELATIONSHIP BETWEEN A BUSINESS STRATEGY AND A BUSINESS MODEL
Basic statistics data on the analysed sample are reported in Table 1.Business models of surveyed service companies are slightly over-average original, thus they are mutually very different and innovative.Companies are placed in a slightly above-average complex and dynamic environment and the quality of their internal environment roughly corresponds to the surroundings.Strategies of companies are different, however, the positions that are achieved by these strategies are even more different.Companies enhance an efficiency of their strategies by their attitudes and actions that are significantly above-average.The strategy is from this reason obviously a significant factor that can increase the functionality of the average model too.
Strategies (66.3% of the maximum 45 points) are more original than models (Average is 40.2% of the maximum 45 points).The originality of the strategy is the highest, if it is expressed by position of enterprises (74.4% of the maximum 5 points), less original is strategy expressed by attitudes and actions (66.3% of the maximum 45 points) and the least original is strategy expressed by difference (54.4% of the maximum 5 points).
Tab An impact of strategy as a way of action and attitude on the position of a company.The purpose of the strategy is to achieve a positional advantage, it means a larger market share, more powerful, stronger, better position.If the strategy does not fulfil the purpose, so it does not fulfil its essential role, it loses a meaning and even threatens a company.In such case, a powerful business model vanishes into smoke.A prerequisite of a functioning model is a functioning strategy.The strategy is a set of assumptions and instructions on how a company will act, but a decisive point ultimately is how a company will really act.Distinguishing between perception of a strategy expressed by attitude and expressed by action is therefore important and essential.
It is evident from the regression analysis in Table 2 that a company market position is significantly influenced by strategy as a way of action.A company position is considerably affected by its strategic action which is the cause of 13 % of variability of a market position.A strategy as a company attitude has got no significant effect on the position of the company.The consequences of a real action are more important than consequences of preparation for this action.It can be argued that a different way of formulation of strategy, thus attitude versus action, differently determines a position of a company.
Tab.An impact of the environment (external and internal) and strategy (together) on a business model.The strategy is a way about how to use a business model and this use is carried out in some external and internal environment.Rate of the impact can explain autonomy or dependence of a business model on the area of its deployment and method of its use.
An impact of environment and strategy on a business model expressed by way of a regression is recorded in Table 3.The strategy together is the cause of 16 % of variability of a business model.
Companies that have a more different strategy also have a more different business model.An influence of environment on a business model has not been demonstrated, it cannot be asserted therefore that more complex (more extraordinary) environment requires even more extraordinary business model.Business model is influenced by the choice of strategy, an environment together plays in this respect an unconfirmed impact.An impact of strategy as a way of action and attitude on a business model.Given that the examination of the relationship between a strategy and a model is in the centre of the research, so impact of the strategy is distinguished between the strategy as an attitude and strategy as an action.It is assumed a different sensitivity to the expression of strategy.
The consequences of the impact of different strategy expression on a business model are examined by a regression analysis and recorded in Tab. 4. It is questionable whether a business model is more influenced by strategy as a way of attitude or by way of action.The result of the analysis is that business model is affected by the strategy as a way of action.A more different way of action (dynamics, originality, clear focus, foresight, sensitivity and ambition) is reflected in a more extraordinary business model.The action of company explains 22 % of variability of business model.The relationship between the strategy as a company attitude (activity, aggression, selfreflection) and the business model has not been confirmed.The research has been dealing with the impact rate of individual strategic parameters on a business model.The results are shown in Table 5.A business model is affected by difference and strategy as a way of action.The difference and action of a company explain 30 % of variability of a business model.A strategy had the greatest influence as a way of action (beta = .40),and then difference (Beta = .37).A company that is dynamically acting and is considerably different has a more exceptional business model as well.Strategic parameters like environment, market position and strategy as a company position did not prove a significant impact on exceptionality of a business model.A relationship has not been identified between market position and exceptionality of a business model.Therefore, it has not been confirmed that companies with a better position have more extraordinary business models.
Summary/Main results of the analysis: The strategy has got several traits/expressions (difference, attitude, action) and the result (position), however, their originality is not equal, but they lead as a whole to a result that is more original than its assumptions, and therefore it is not excluded that the accompanying factor increasing the efficiency of the strategy is a business model.
The position of a company is a consequence of the strategy as a real action; the strategy as an attitude does not have a relevant impact.
The strategy affects a business model, which can also be explained, that a part of a strategy formulation is a model formulation to some extent, or to be more precise, a model deter-1.

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mines the strategy to some extent, while relevance of environment towards the model was not identified.
The strategy as an action shows the influence on a model; the strategy as an attitude does not have relevant links to a model.
The strategy as an action along with difference shows the influence on a model in the context of a larger set of strategic parameters too.

DISCUSSION
There are no known empirical results about the relationship between a business strategy and a business model that would have been reported in literature.It is assumed, however, a workable strategy just does not make sense on its own, but it can support, improve, or enhance the functionality of a business model, of which results are a major expression of company viability.
The strategy as an action explains 13 % of variance (excellence) of a market position, or a market position depends on the extent of 13 % on the real action of a company.The strategy as an attitude has not got a relevant influence.The strategy as an attitude has not got a relevant impact.
It can be concluded that all resolutions after a confrontation with reality remain without a clear impact or are not fulfilled.The fundamental question is which other factors, apparently external and independent of the will of a company, affect the market position, or if there is an impact of a strong internal factor, which is a model.The mode of formulation/identification (attitude versus action) of a strategy thus matters, because it will be reflected by having a better position of a company.
The strategy itself explained 16 % of variability (excellence) of a business model.The environment does not have a relevant impact.What factors, besides a strategy, explain the variability of a model?The strategy is a strong subjective and internal factor, but apart from it, there are other influential, but unidentified factors, possibly a residual impact should be comprised by some objective, external factors, for example, environment, of which impact was not confirmed, or a model being independent on external influences and its variability (excellence) is autonomous.
The action of a company explains 22 % of variability of a business model.If the strategy is considered to be an action only and it is abstracted away from attitude, so the impact of a strategy on a business model increases when compared to the previous influence.The action without previous attitude has a greater impact on the model.The attitude probably does not play such a role which should have.Instead of having a positive impact, it has an eroding effect.
The action of a company and difference explain 30 % of variation (excellence) of a business model.The strategy as a mode of action (Beta = .40)had a greater impact on the model and the difference (Beta = .37)had a smaller impact on the model.The difference enhances the impact of action on variability of a business model and encourages its uniqueness.
It was assumed that if a company is active in more complex environment, the model will adjust to circumstances better, and if its strategy is exceptional, it will be reflected in a more extraordinary business model.As shown in Table 4, this assumption was confirmed partially only.While strategy has had a significant impact on the business model excellence, the influence of environ-4.

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ment was not confirmed.It is shown in Table 5 that only the strategy as a mode of action has had an impact on the excellence of model.Thus, a specific determination of dynamics and speed, originality, clear focus, foresight, sensitivity and responsiveness and ambitiousness influence the business model excellence positively.
The strategy expressed by an action is a distinctive factor among the surveyed strategic parameters, which shows an identifiable impact on the business model, and is validated by several regression models.This influence and the relationship can be explained by what a model displays as a real running of a company in conceptual form and the strategy as an action expresses real deployment and use of this model.Just reality, concreteness and action of the two aspects of company existence, which are a model and a strategy, are probably the base connecting them.
The factors indicating action only, e.g.attitudes or creating external conditions, hence factors of rather passive nature vanish in the context of action.

CONCLUSION
The relationship between a business strategy and a business model is described in literature as beliefs and opinions without in-depth explanation and empirical evidences.There is no clear opinion on which side of this relationship is dominant, primary or determining.The existence of relationship and dependency is recognized; however, some arguments are abstract-logical and based on personal perception.Examining the relationship between a strategy and a business model is important because the existence of this relationship has serious implications for company performance.Companies do not often realize that these two fundamental components of business are connected and they do not pay equal attention to them.Enterprise as a system has to have all the elements and relations which have to be functional and working.The unknown and dysfunctional elements and relations weaken the functionality of an enterprise/system.The executed research on the given sample confirmed the existence of a link between a strategy and a model.The strategy expressed by several relative ways has relevant or nontrivial impact on the model.This knowledge extends the scope of strategic reflections about the company; it introduces strategy into new contexts and also has got practical implications, since M. Newth (2012, p. 92) concludes the analysis of the relationship between a strategy and a model: "Strategies complete the business model which helps to decide which strategy variant is the best for the company.Competitive strategy and performance increase when business models and strategies are complementary mutually".Relationships between a strategy and a model remain unexplained on softer/lower distinctive level, which consists of business model blocks and particular parameters of a business strategy.However, that is a theme for further research.
2 An impact of environment and strategy on a company position An impact of strategic parameters on a business model.Widening the range of factors, respectively strategic parameters that may affect a business model will contribute to identification of other potential determinants.Their recognition and deliberate use can increase the exceptionality of a model, which is significant result of the research lastly.