Professional Documents
Culture Documents
Mr Jay FCCA 1
About the exam
Formerly known as Paper 3.5 Strategic
Business Planning
The exam format has been changed with the
exam having
3 hours and 15 minute reading time
1 Compulsory question 50 marks
3 Optional questions 25 marks each
All case study based
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About the paper (by
examiner)
It builds from Paper F1 / T5
It is also linked with paper P1 – ethical
implications of decisions
It is linked with paper F7 / 2.5 – analysis and
interpretation of financial statements
The paper supports paper P5, where the
similar ideas are brought into question
from a performance aspect
Examiner: Steve Skidmore previous 3.4 and
2.1 examiner
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About the paper (by
examiner)
Analysing the business
Where it is currently?
Where it needs to be in the future?
How to get there?
Is not exclusive to business, can include
public sector and not-for-profit
‘Strategy without implementation is the
slowest route to victory.
Implementation without strategy is the noise
before defeat.’
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5 themes 9 sections
Theme 1 is strategy.
Theme 2 is business process
Theme 3 is information technology,
knowledge management & project
management
Theme 4 is quality
Theme 5 is resources – HR and Financials
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5 themes 9 sections
A, B and C = Strategic planning
D = Business process change
E = IT and e-business
F = Quality
G = Project management
H = Financial analysis
I = Human resource management
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Why students failed in DEC
07
Lack of preparation – not knowing the
matter being questioned
Poor time management – spending too much
time on Question 1 – 50 marks, preparing
over comprehensive answers
Poor use of given data in the question
Scatter gun approach in using models
studied
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Why did the giant loose out to
Microsoft?
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How did the leader loose out
to the newbie?
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Reasons
QC
Technology
Partners
Government
Underestimate Competitors
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How did the small airline
manage to challenge the large
one?
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Reasons
Cost management
Segmenting the market effectively
Good forecasting
Independence
Better understanding of market
Clear strategy
Branding
Resourceful
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Chapter 1 – Nature of strategic
business analysis
Strategic planning
Approaches to strategic planning
Levels of strategic planning
Johnson, Scholes and Whittington Model
Contextual application
Understanding P3 syllabus
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Strategic planning
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Strategic planning
Matching organisation, resources and
competence to environment
Sustainable competitive advantage
Considers stakeholders
Integrates activities
Gives direction
Considers the whole organisation
Long term planning
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Strategic planning -
advantages
Influences future
Provides direction
Forces to look ahead
Maximisation of resource utilisation
Improves fit with the environment
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Strategic planning -
disadvantages
Less relevant in times of crisis
May ignore opportunities that arises later
Bureaucracy develops
Paralysis by analysis
Cost
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Strategic planning -
important
Many stakeholders impacted
High capital expenditure
Turn-around required
Long lead time
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Approaches to strategy
Rational “top-down” approach
Emergent strategies
Incrementalism
Freewheeling opportunism
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Level of strategic planning
Corporate strategy
What business to be in/out?
Business strategy
SBU and mission, competitive advantage,
product/market decision
Functional strategy
How each function supports the corporate
and business strategy
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Johnson, Scholes &
Whittington
Strategic position/analysis
Strategic choice
Strategic implementation
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Strategic position
Environment
Capabilities – Resources and competence
Culture, belief and assumptions
Stakeholder expectations
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Strategic choice
Generation of options
Evaluation of options
◦ Suitability to existing condition (SWOT)
◦ Feasibility - resources
◦ Acceptability - stakeholders
Selection of option
◦ Judgement involved – not purely logical
Options need to be considered for
◦ Corporate – scope and direction
◦ Business – how to compete
◦ Function – outsource / maintain
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Options that are available
Direction of growth (Ansoff matrix)
How to compete (Porter)
Method of growth (Acquisition / Organic)
Evaluation of options
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Strategy in action
Organising and structuring
Resources planning
Managing change
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Contextual issue
Small business
Multinational
Public sector
Not-for-profit sector
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Small business
Single market and limited product range
Expectation of founder important
Major problems to be faced
Pressure from larger players
Limitations in resource especially finance
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Multinational
Diverse market and products
Problems and issues
Relationship with HQ and SBU
Resource allocation and co-ordination of
activities between various SBU
Control of business
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Public sector
Significant government influence
Planning horizon driven by politics rather
than market conditions
Problems and issues
Ideology
Competition for resources – VFM
Options limited by funding
Strategic alliance key factor
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Voluntary & not-for-profit
Key objectives non financial
Funding not linked to recipient of service
Problems & Issues
Values and ideology critical
Competition for funds
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Strategy lenses
Johnson & Scholes – ways of viewing
“strategy”
Strategy as design
Strategy as experience
Strategy as ideas
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Strategy as design
Rational
Logical process
All information considered
Deliberate approach
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Strategy as experience
Incremental
Based on past
Emergent approach
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Strategy as ideas
Innovation and new ideas
Radically different and new development
Sees strategy as opportunistic
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P3 Syllabus
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Chapter 2 – External
Analysis
PESTEL Model – National Museum / EMS
Porter’s National Diamond Model - ?
Convergence - ?
Porter’s Five Forces Model – BACTI /
AutoFone
Life Cycle Model - Autofone
Strategic Group Analysis - ?
Market Segmentation - ?
Opportunities and threat (SWOT) – Ona /
Greentech
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PESTEL Model
Political
Taxation policy
Government stability
Foreign trade regulation
Ideology
Economical
Interest rates
Inflation
Business cycle
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PESTEL Model
Unemployment rate
Disposable income
Energy availability and cost
Social
Population
Demographics
Social mobility
Income distribution
Lifestyle changes
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PESTEL Model
Attitude to work & Leisure
Levels of education
Consumerism
Technological
Government spending on research
New discoveries
Industry focus on technological effort
Speed of technology transfer
Rates of obsolescence
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PESTEL Model
Ecological/Environmental
Pollution
Energy usage
Legal
Taxation law
Employment law
Monopoly legislation
Environmental protection law
Data protection law
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Porter’s National Diamond
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Porter’s National Diamond
Factor condition
◦ Availability of raw material & suitable
infrastructure
Demand conditions
◦ The type of demand in home country and its
levels
Related and supporting industries
◦ Spatial proximity of upstream or downstream
industries facilitates the exchange of
information and promotes a continuous
exchange of ideas and innovations
Firms strategy, structure and rivalry
◦ The push in the local industry that creates WCM
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Why Proton Fails to deliver
value?
Factor
◦ Malaysia has the raw materials but lacked in human
capital needed for the development of cars
Demand
◦ Malaysian demand is insufficient to allow for the
establishment of economies of scale, malaysian
have a “tidak apa” attitude, which allowed poor
quality to be accepted
Related industries
◦ Malaysia did not have a ready set of suppliers for the
manufacturing of car, each was established 1st time
Firms strategy - cheapest due to import duties
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Convergence
Impact of PESTEL on the industry
Sector – public services
Industry – group of firms selling the same
product
Supply-led = where producers try to see the
connection between separate industries or
sectors
Market-led = where buyers see or want
connections between separate
industries/sectors
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Convergence
Convergence in substitute – where one
technology replaces another
Convergence in complements – where 2
technologies from separate industries work
better together
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Convergence
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Porter’s five forces
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Threat of new entrant
the existence of barriers to entry (patents,
rights, etc.)
economies of product differences
brand equity
switching costs or sunk costs
capital requirements
access to distribution
absolute cost advantages
learning curve advantages
expected retaliation by incumbents
government policies
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Bargaining power of
customer
buyer concentration to firm concentration ratio
bargaining leverage, particularly in industries
with high fixed costs
buyer volume
buyer switching cost relative to firm switching
costs
buyer information availability
ability to backward integration
availability of existing substitute products
buyer price sensitivity
differential advantage (uniqueness) of industry
products
RFM Analysis (Recency, Frequency, Monetary
value)
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Bargaining power of
suppliers
supplier switching costs relative to firm
switching costs
degree of differentiation of inputs
presence of substitute inputs
supplier concentration to firm concentration
ratio
threat of forward integration by suppliers
relative to the threat of backward
integration by firms
cost of inputs relative to selling price of the
product
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Rivalry
number of competitors
rate of industry growth
intermittent industry overcapacity
exit barriers
diversity of competitors
informational complexity and asymmetry
fixed cost allocation per value added
level of advertising expense
Economies of scale
Sustainable competitive advantage through
improvisation
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Subsitute
buyer propensity to substitute
relative price performance of substitutes
buyer switching costs
perceived level of product differentiation
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Stages of lifecycle
Sales and
Profits ($)
Sales
Profits
Time
Losses/
Investments ($)
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Strategic Group Analysis
Helps identify who the most direct
competitors are and on what basis they
compete.
Raises the question of how likely or possible
it is for another organization to move from
one strategic group to another.
Strategic Group mapping might also be used
to identify opportunities.
Can also help identify strategic problems.
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SGA Characteristics
Extent of product (or service) diversity
Extent of Geographic coverage
Number of Market segments served
Distribution Channels used
Extent of Branding
Marketing Effort
Product (or service) quality
Pricing policy
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Strategic Maps of the United States Airline Industry
The Late 1970s The Early 1990s
Pan International
International Laker
TWA Am
World
United
North American
Braniff west
Conti- Northwest
nental Delta
Eastern
Geographic Scope
TWA
United
USAir
Delta
National National
American
Continental
South-
Western
RepublicOzark west
USAir Piedmont
America
AirCal West
South- Frontier Kiwi
west
PSA Reno Others
Texas Int’l
Regional Regional Air
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Basis of segementation
Geographic – B/C
Socio-economic C
Demographic C
Psychographic C
Benefit sought C
DMU B
Type of buy B
Size of company B
Industry B
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Prepare segmentation for
ACCA market
Demographic
AGE – 19-23 / 24 AND ABOVE
GENDER – MALE/FEMALE
AUDIT FIRM/CORPORATE/FULLTIME
DEGREE ROUTE/ACCA ROUTE
Geographic
◦ KL
◦ PJ
◦ DAMANSARA
◦ KLANG
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Conclusion of analysis
Identification of threats
◦ What are the threats
◦ How will it impact the competitors and the
company
Identification of opportunities
◦ What are the opportunities
◦ Profit making potential?
◦ Can it be exploited?
◦ Comparative ability of competition
◦
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Analysis
Item from case + Model + O/T = Answer
One year period for certification indicates
that it will be hard to enter & compete
directly. This makes it harder for new
entrants.
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