P3 BA Study Text Sample Chapter

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For Examinations to June 2017
STUDY TEXT
ACCA
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Paper P3 | BUSINESS ANALYSIS
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ACCA
BUSINESS ANALYSIS P3
STUDY TEXT
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September 2016June 2017 Edition
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Paper
P3
Contents
Page
Introduction ...............................................................................................v
About This Study System ............................................................................v
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Syllabus.....................................................................................................vi
Approach to Examining the Syllabus .......................................................... ix
ACCA Study Guide .......................................................................................x

Examination Technique .......................................................................... xvii
Sessions
Foundations of Strategic Analysis ......................................... 1-1
Environmental Analysis ........................................................ 2-1
Competition and Customers .................................................. 3-1
Strategic Capability .............................................................. 4-1
Organisational Inuences ..................................................... 5-1
Competitive Advantage Strategies ........................................ 6-1
Corporate-Level Strategy ...................................................... 7-1
Strategy Development .......................................................... 8-1
Organising and Enabling Success .......................................... 9-1
10
Managing Strategic Change .................................................10-1
11
Business and Process Change ..............................................11-1
12
Information Technology and E-Business ..............................12-1
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DeVry/Becker Educational Development Corp. All rights reserved.
iii
Contents
Sessions
Page
E-Business Applications .......................................................13-1
14
An Introduction to Project Management ..............................14-1
15
Project Control and Leadership ............................................15-1
16
Pricing Strategy ...................................................................16-1
17
Finance and Strategy ...........................................................17-1
18
Ratio Analysis ......................................................................18-1
19
Strategy Implications of Management Accounting ...............19-1
20
Strategy and People ............................................................20-1
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13
Index ..................................................................................21-1
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21
iv
Introduction
ABOUT THIS STUDY SYSTEM

This Study System has been specifically written for the Association of Chartered Certified
Accountants Paper P3 Business Analysis.
It provides comprehensive coverage of the core syllabus areas and is designed to be used
both as a reference text and as an integral part of your studies to provide you with the
knowledge, skill and confidence to succeed in your ACCA studies.
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About the author: Nick Ryan is Becker's lead tutor in performance management and has
15 years' experience in delivering ACCA exam-based training.
How to Use This Study System
You should start by reading through the syllabus, study guide and approach to examining
the syllabus provided in this introduction to familiarise yourself with the content of
this paper.
The sessions which follow include the following features:
These are the learning outcomes relevant to the session,

as published in the ACCA Study Guide.
Session Guidance
Tutor advice and strategies for approaching each session.
Visual Overview
A diagram of the concepts and the relationships addressed

in each session.
Definitions
Terms are defined as they are introduced and larger groupings of terms will
be set forth in a Terminology section.
Illustrations
These are to be read as part of the text. Any solutions to numerical

Illustrations are provided.
Exhibits
These extracts of external content are presented to reinforce concepts and

should be read as part of the text.
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Focus
Examples
These should be attempted using the pro forma solution provided (where
applicable).
Key Points
Attention is drawn to fundamental rules, underlying concepts and

principles.
Exam Advice
These tutor comments relate the content to relevance in the examination.
Commentaries
These provide additional information to reinforce content.
Session Summary
A summary of the main points of each session.
Session Quiz
These quick questions are designed to test your knowledge of the technical
content. A reference to the answer is provided.
Study Question
Bank
A link to recommended practice questions contained in the Study Question

Bank. At a minimum, you should work through the priority questions
after studying each session. For additional practice, you can attempt the
remaining questions (where provided).
Example Solutions
Answers to the Examples are presented at the end of each session.
Session 1
FOCUS
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Foundations of Strategic
Analysis
This session covers the following content from the A
CCA Study Guide.
A. Strategic Position
1. The need for, and purpose of, strategic and business analysis
a) Recognise the fundamental nature and vocabulary of strategy and strategic decisions.
b) Discuss how strategy may be formulated at different levels (corporate, business level,
operational) of an organisation.
c) Explore the Johnson, Scholes and Whittington model for defining elements of strategic
managementthe strategic position, strategic choices and strategy into action.
d) Analyse how strategic management is affected by different organisational contexts.
e) Compare three different strategy lenses (Johnson, Scholes and Whittington) for viewing
and understanding strategy and strategic management.
f) Explore the scope of business analysis and its relationship to strategy and strategic
management in the context of the relational diagram of this syllabus.
3. Competitive forces affecting an organisation
e) Determine the opportunities and threats posed by the environment of an organisation.

5. The internal resources, capabilities and competences of an organisation.
f) Determine the strengths and weaknesses of an organisation and formulate an
appropriate SWOT analysis.
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C. Strategic Action
3. Understanding strategy development

a) Discriminate between the concepts of intended and emergent strategies.
b) Explain how organisations attempt to put an intended strategy into place.
c) Highlight how emergent strategies appear from within an organisation.
d) Discuss how process redesign and e-business can contribute to emergent strategies.
e) Assess the implications of strategic drift and the demand for multiple processes of
strategy development.
Session 1 Guidance
Understand the basic concepts and vocabulary of strategy, focusing on the hierarchy of objectives,
how the layers interact and the strategic importance of a mission (ss.1,2).
Review the relational diagram of main capabilities (Johnson, Scholes and Whittington) as a model that
takes an organisation-wide view in defining the elements of strategic management.
(continued on next page)

P3 Business Analysis
Becker Professional Education| ACCA Study System
VISUAL OVERVIEW
Objective: To understand the characteristics of strategic decisions and the basic vocabulary
of strategy; to be able to explain the Strategic Management Model and apply the concepts
of strategic lenses to strategy and strategic management.
CONCEPTS
What Is Strategy?
Characteristics of Strategic Decisions
Levels of Strategic Planning
Economy, Efficiency and Effectiveness
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VOCABULARY OF STRATEGY
Mission (or Vision)

Mission Statement
Goals and Objectives
Strategic Capability
Business Model
Control
STRATEGIC MANAGEMENT
Relational Diagram of Main Capabilities

Strategic Position SWOT Analysis
Strategic Choices
Strategy Into Action
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STRATEGY LENSES
Overview
Strategy as Design
Strategy as Experience
Strategy as Ideas
Strategic Drift
Session 1 Guidance
Apply a SWOT analysis, an assessment of an organisation's strengths, weaknesses, opportunities

and threats, to explore strategic position (s.3.2). The SWOT framework may also be substituted
for "Position Analysis".
Explore the possibility for organisations to view and manage strategy differently and how the
"three lenses" might affect the final choice an organisation makes (s.4).
Read "Emergent strategies" (Mintzberg) and the problem of strategic drift (s.4.5).
1-1
Session 1 Foundations of Strategic Analysis
1 Concepts
1.1 What Is Strategy?
Strategy is difficult to define. There are many different "definitions"
of strategy, each of which is based on different assumptions and is
more or less appropriate in different circumstances.
1.2 Characteristics of Strategic Decisions

Corporate strategies have general characteristics in that they:
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Determine the long-term direction of the company.

Are concerned with the scope of an organisation's activities
"Strategy is the
direction and scope
of an organisation
over the long term:
which achieves
advantage for the
organisation through
its configuration of
its resources within a
changing environment,
to meet the needs
of markets and
fulfil stakeholders'
expectations".
Johnson, Scholes and

Whittington (JS&W)
(i.e. types of products, services and markets).

Aim to match activities to resource capabilities.
Aim to match activities with the firms' environment:
Competitive environment (e.g. meeting needs of the market)
Financial environment (e.g. satisfying shareholders'
expectations)
Social environment (e.g. eco-friendly activities).
Have a significant effect on lower-level decisions.
Are affected by the values, expectations and power of
members of the firm and by outsiders.
Involve uncertainty about the future, the integration of
operations and major change.
1.3 Levels of Strategic Planning
Planning can take place at different levels in an organisation.

Three levels of strategy are typically distinguished: corporate,
business and functional.
1.3.1 Corporate Level (Strategic Level)
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The corporate-level strategy is concerned with the overall purpose

and scope of an organisation and how value will be added to the
different parts (business units) of the organisation.
Planning at this level looks into the formulation, evaluation
and selection of strategies for the purpose of preparing a longterm plan of action to attain objectives.
Key questions to consider at this level of planning include:
What business is the firm in?
What business should the firm be in?
How integrated should these businesses be?
Example: For News Corporation, the global media
conglomerate, diversifying from print journalism into television
and social networking are corporate-level strategies.
1-2
The need to
successfully integrate
the corporate,
business and
functional levels of
strategic planning
underlines the
importance of aligning
the strategies at
each of these levels.
This is a complex
process requiring
careful and sensitive
management.
1.3.2 Business Level (Tactical Level)

The second level is described in terms of business-level strategy,
which is about how to compete successfully in particular markets
or how to provide best value services in the public services.
Planning at this level is about the utilisation of resources
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toachieve specific objectives in the most effective and

efficient way.
Planning at this level often relates to a strategic business
unit(SBU).
Which products should be developed?
What approach to gain competitive advantage?
Which markets to enter?
Example: News Corporation contains stand-alone segments of
the company which clearly fit with corporate-level strategy. For
instance, the Fox Movie Channel and the National Geographic
Channel are part of Cable Network Programming, and the Wall
Street Journal and HarperCollins are part of Publishing.
1.3.3 Functional Level (Operational Level)
The third level of strategy is at the operating end of an organisation.
Operational strategies are concerned with how the component parts

of an organisation deliver effectively the corporate- and businesslevel strategies in terms of resources, processes and people.
Planning at this level is concerned with short-term utilisation
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and employment of resources, both human and non-human.

How do the different functions of the business support
corporate strategies?
How do the different functions of the business support
business unit strategies?
Example: MySpace engineers had to keep developing
enough processing capacity to cope with the strategy of
rapid growth. Operational decisions are closely linked to
business-level strategy.
1.4 Economy, Efficiency and Effectiveness

Economy: Reducing the cost of resources used. An input measure.
Effectiveness: Achieving the volume, service level and quality
desired. Effectiveness is about what needs to be done, achieved.
An output measure.
Efficiency: Improving the utilisation of resources. Efficiency is
about how something is done. A ratio comparing outputs to inputs.
1-3
Vocabulary of Strategy
2.1 Mission (or Vision)
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*Some writers use the term "mission" as expressed here and others,
mostly American and Japanese, use the term "vision". Vision often
incorporates the strategic thinkers' ideas of what the organisation
could look like in the future.
An organisation's mission* has been described as:
"The most generalised type of objective an expression of the
raison d'tre of the organisation".

"Overriding purpose in line with the values or expectations of
stakeholders". It answers the question: "What business are
we in?"
"The organisation's basic function in society" (Mintzberg).
Itincludes typically:
Purpose;
Basic strategy;
Policies and standards of behaviour;
Values and culture.
2.2 Mission Statement
Organisations develop mission statements; these are printed and

published descriptions that attempt to convey the mission of the
organisation to stakeholders.*
In general terms, a mission statement should have the following
characteristics:
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Brief;
General;
Statement of purpose;
Powerful force for change;
Clarifies the business area in which the company intends
*Often an
organisation's mission
statement reads as
if it were prepared
for public relations
rather than to express
strategic objectives.
tooperate;
Communicates with staff;

Communicates with external groups.
The modern view of a mission statement is that it provides insight

into the culture and values of an organisation more than simply
strategy and objectives.
2.3 Goals and Objectives
Most writers agree that objectives can be ranked in a

hierarchy, but they may disagree about what goes where.
Important in this context is that the "things that need to be
achieved" are goal congruent; in other words: The various
goals and objectives will be consistent with one another and
will support the overall mission.
1-4
Goala general
statement or
purpose.
Objectivethe
quantificationor more
precise statement of
the goal.
Here is a common view:
MISSION
GOALS
OBJECTIVES
Peter Drucker was the first to suggest that objectives should be
SMART:
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Specific Measurable Achievable Relevant Time-related
Exam questions may

present a scenario
that gives you a
picture of a confused
organisation. Ask
yourself what the
organisation really
needs to look at;
what it must focus on
to be successful can
help your analysis.
2.4 Strategic Capability
Strategic capability refers to resources, activities and processes.

Some will be unique and provide "competitive advantage". These
terms will be used throughout this Study System.
2.5 Business Model
A business model describes how product, service and information

"flow" between participating parties.
2.6 Control
Strategic control has two parts:
assessing the effectiveness of strategies and actions; and

taking corrective actions when required.
Strategic Management
3.1 Relational Diagram of Main Capabilities
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Strategic management takes an organisation-wide view rather

than dissecting operation-specific implications. The systems
approach to understanding the way organisations work looks
at the internal and external linkages between the various
components of an organisation and its environment.
1-5
These relationships are depicted in the relational diagram as three

interconnected layers.*
The top layer concerns the overall strategic perspective and
depicts the three main elements of strategic management:

analysis of an organisation's external and internal
environment to understand its strategic position;
generating options and making strategic choices for the
future; and
turning strategy into action.
The middle layer focuses on implementation issues that have
to do with business process management and the financial
feasibility of all of these elements.
The bottom layer emphasises the importance of human
resource and its influence on all the other aspects.
*The three
interconnected layers
in a relational diagram
provide an overview
for the P3 syllabus.
The middle and bottom
layers will be discussed
in later sessions.
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the
3.2 Strategic Position
The strategic position is concerned with:
the external environment's effect on strategy;

an organisation's strategic capability (i.e. resources and
competences);
the expectations and influence of stakeholders.
An analysis of external and internal factors will enable planners to
understand the business environment in which the organisation
operates and to predict changes that might affect the organisation
in the future.
3.2.1 SWOT Analysis
SWOT analysis, sometimes called "corporate appraisal", is the

analysis of the organisation's:
Strengthsthings they do well, or things they have that

others do not.
Weaknessesthings they do badly, or things they lack.

Opportunitiesevents or changes that can be exploited to the
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organisation's advantage.
Threatsevents or changes that should be defended against.
SWOT analysis illustrates key external factors from the
business environment (opportunities and threats) alongside the
internal strategic capabilities (strengths) or lack of capabilities
(weaknesses) of an organisation that are most likely to affect
strategy development.
A good strategy will attempt to seize opportunities in the
business environment and overcome threats by building on the
organisation's strengths and addressing its weaknesses.
1-6
3.2.2 Opportunities and Threats Analysis (External Perspective)

The most common tools in an external analysis are:
PESTEL (or SLEPT) analysis, which looks at environmental
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factors under the headings Political, Economic, Social,

Technological, Environmental and Legal;
the competitive forces model ("five forces") and the
"diamond", developed by Michael Porter of the Harvard
Business School;
the product life cycle ("PLC") model;
market segmentation used to identify strategic groups; and
critical success factors (CSFs), determining what customers
value (see Session 4).
3.2.3 Strengths and Weaknesses Analysis (Internal Perspective)

An analysis of an organisation's strategic capabilities looks at:
unique resources and core competences;

cost efficiency;
benchmarking;
cultural aspects;
organisational knowledge; and
managing people.
The discovery of stakeholder expectations and the influence

of ethics and corporate governance, and the use of Michael
Porter's Value Chain model to achieve competitive advantage are
additional elements in an internal analysis.
3.2.4 SWOT Grid
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The SWOT Grid is a graphical depiction that combines the results

of the environmental analysis and the internal position audit
(analysis) into one framework to assess a company's current and
future strategic fit, or lack of it.
STRENGTHS
WEAKNESSES
Established
Poor labour
reputation
relations
Internal to the company
OPPORTUNITIES
THREATS
Rise in consumer
demand
International
competition
External to the company
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Example 1 SWOT Analysis

Prepare a SWOT analysis for a major international airline (e.g. British Airways, Lufthansa).
Solution
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3.3 Strategic Choices
Strategic choices involve understanding the underlying bases

for future strategy at the business and corporate levels and the
options for developing the strategy in terms of the directions and
methods of development.
In other words, strategic choices look at the influence of corporate
strategy on an organisation, approaches to achieve competitive
advantage and directions and methods of development. The most
common tools used at this stage are:
Sa
Related and unrelated diversification;

International diversification;
The BCG model;
Generic strategies;
The strategy clock;
Value chain analysis;
Product-market mix (Ansoff); and
Methods of growth.
Having decided on an overall strategic direction, the planners

must then choose a "vehicle" (e.g. organic development, strategic
alliance or acquisition).
Each strategic option must be assessed until a "best" strategy is
found according to:
suitability to a firm's strategic situation;

feasibility in terms of resources and competences; and
acceptability to key stakeholders.
1-8
3.4 Strategy Into Action

Strategy into action concerns implementation. Strategies must
be made to work in practice. Once an organisation has decided
on the most appropriate strategic option to pursue, it must be
translated into a series of implementation "projects", each of
which must be planned and implemented.*
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Strategy implementation is often about changing the culture of

the organisation as much as its structure. Cultural change is
particularly difficult, as it means changing the values, beliefs and
behaviour of individuals. No matter how "big" the strategy is,
its success may depend on the ability and willingness of a few
individuals to change the way they behave.
*Success or failure
of the strategic plan
depends on how
well (if at all) it is
implemented. Many
organisations spend
a great deal of time
and effort on planning,
but this is wasted
if they never get to
implement it.
JS&W focus on three main issues:
1. Structuring an organisation to support successful

performance including organisational structures, processes and
relationships;
2. Enabling success through the way in which the separate
areas (technology, information, finance and people) of an
organisation support strategies; and
3. Managing strategy very often involves change.
Strategy Lenses
4.1 Overview
JS&W argue that the development and management of strategy

can be viewed differently through three "lenses":*
1. Design lens. Strategy is formulated by top management
through careful and objective analysis and planning and
implemented downward through the organisation, which can
help in thinking through strategic issues.
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2. Experience lens. Strategic decisions are made and strategies

develop as the outcome of people's experience and the cultural
processes in and around organisations. In other words, this
view is based on what has worked in the past.
3. Ideas lens. This approach helps explain why some
organisations are more innovative than others and how some
organisations seem to cope with a fast-changing environment
better than others.
*JS&W suggest that viewing strategy and strategic management

through only one of these lenses may result in failure to see issues
raised by the other lenses. Managers who do not may miss out on
new opportunities and ideas.
1-9
4.2 Strategy as Design

This view emphasises that strategy development can be a logical
process in which the forces and constraints on the organisation
are weighed carefully through analytic and evaluative techniques
to come up with a clear strategic direction. It focuses on a topdown, rational approach by senior management.
The assumptions behind it are:
It is the responsibility of management to lead the development
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of strategy;
Managers know what they are doing; and
Managers have clear objectives.
4.2.1 The Rational Model
The concept of "strategy as design", also called the "Rational

Model" of strategic planning, is a series of steps that should be
carried out in a certain sequence.
Intended strategies are developed in a systematic way and are

associated with strategic planning systems. Such a system involves:
Mission/Vision;
Stakeholders analysis;
Environment analysis;
Position analysis;
Strategic choice;
Strategic implementation; and
Control and review.
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The rational model represents the traditional way of how strategy

is made or should be made. It has its value because it draws
together a number of related issues and focuses people on many
variables that make up a strategy.
However, the use of formal strategic planning systems has
given way to more informal planning. Complex and dynamic
environment planning is more concentrated on discussion of key
strategic issues and the overall scope and direction of strategy.
The use of project teams and workshops to develop strategy has
grown; strategy consultants have become popular to help bring
about change and the influence of powerful stakeholders on the
development of a strategy is undeniable.
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1. STRATEGIC ANALYSIS
Mission
Vision
Where the organisation wants
to be
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Purpose, policies, products,

values, competences and culture
Interpretation of the mission to the stakeholders

Quantification of mission statement (objectives)
Environmental Analysis
Position
Value chain, portfolio analysis,

resource analysis
PESTEL, Porter's five forces,

Porter's Diamond
Corporate Appraisal
SWOT analysis
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2. STRATEGIC CHOICE
General Options
Value chain, generic strategies, BCG model, acquisition/growth
Evaluation of Options
Acceptability, suitability, feasibility
3. STRATEGIC IMPLEMENTATION
Review and
control,
feedback to
analysis stage
Resource planning, operations plans, functional

strategies, structure, culture, change
1-11
4.2.2 Advantages and Disadvantages of the Rational Model

Disadvantages
Advantages
Identifies risks
Sets formal targets for

control
Forces decision making
Helps building
organisational co-ordination
and coherence
Ignores internal politics

May become too formal
and reduces initiative and
flexibility
Managers do not know
everything
Separates planning from
doing
Other methods of
strategy formulation
may provide useful
alternatives to
suggest in the exam if
the rational approach
does not fit or work or
is too rigid.
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4.3 Strategy as Experience
Strategy as experience is the view that future strategies of

organisations are based on the adaptation of past strategies
influenced by the experience of managers and others in the
organisation.*
*As Charles Handy puts it, "this is the way we do things around
here". If different views and expectations exist within the
organisation, they will be resolved not just through analytical rational
processes but also through bargaining and negotiation. In such
organisations there is a tendency to build on and be a continuation of
what has been done before.
Incrementalism usually involves small-scale extensions of past

practices combined with constant environmental scanning.
It uses a generalised view of a desired future state and wide
Sa
objectives.
A combination of acquiring a strong core business on
experience and experimenting with possible strategic options.
It avoids major errors through cautious actions, constant
adjustment and testing of strategy.
Incrementalism is not suitable where radical change is needed
and might only apply in a stable environment.
Incrementalism
the deliberate
development
of strategy by
experimenting and
learning from the
past using a stepby-step approach.
4.4 Strategy as Ideas
Strategy as ideas is seen as emergent from within and around

the organisation as people cope with an uncertain and changing
environment in their day-to-day activities. Senior managers are
the creators of the context and the conditions in which this can
happen and need to be able to recognise patterns in the emergence
of such ideas that form the future strategy of the organisation.
Many new ideas will emerge but they are likely to battle for survival
against the forces for conformity to past strategies.
The ideas lens provides insights into how innovation might
take place.
1-12
4.4.1 Emergent Strategies

According to Henry Mintzberg, emergent strategies do not arise
out of careful, conscious strategic planning, but from a number
of ad hoc choices and ideas. Emergent strategies develop out
of patterns of behaviour (routines, activities). Process change,
quality initiatives and technology are important sources for
emerging strategies.
Illustration 1 Emergent Strategy

of Taxi Fleets
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The strategic behaviour of taxi fleetsfor instance, clustering at hotels

and airports in the morning and eveningresults not from a master
plan scheduling particular drivers to be at specific places at appointed
times. It emerges from the individual behaviours of fairly autonomous
individual drivers. Some writers assert that this co-ordination can
be produced by having all taxi drivers follow two simple rules: Do
not get into any line that has more than five cabs in it, and bid on
every call the dispatcher broadcasts (with the closest cab getting the
fare). Personally, I have not met a cab driver who admits abiding by
these rules or even being aware of them. Nevertheless, distribution
of taxi cabs over the course of a day does tend to be predictable and
strategic, in that cabs usually show up where they are most needed
without being told where to go by planning staff. The cumulative
result of thousands of decisions made by empowered individual cab
drivers, most of them in competition with each other, is a purposeful
system, even though no one in the system has consciously designed
ormanaged the interactions between taxis.
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The diagram below illustrates intended and emergent strategies:
Intended (planned) strategy is a strategy whose objectives
have been defined in advance, and whose main elements have

been determined prior to commencement.
Unrealised strategy is one that never happened.
Realised strategy means that the strategy is actually being
followed by an organisation in practice.
Emergent strategy comes through everyday routines,
activities and processes in organisations that are consistent
over time but not stated in any formal plan.
In many cases though, managers cannot just let emerging
strategies take over. Mintzberg says that each emerging strategy
must be crafted and the use of emergent strategy must not be
allowed to dominate, for the following reasons:
inappropriate for long-term direction;

implications for future use of resources required elsewhere;
may become uncontrollable and prove dysfunctional.
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4.4.2 How to Craft Emergent Strategies
Know the business and understand its operations and processes.

Manage stability and detect discontinuity.
Detect and manage emergent patterns.
Reconcile change and continuity.
Additional insights to the crafting of emergent strategies can
be gained from process redesign (Session 11) and e-business
(Session 12).
Process redesign relates to the way in which products are
produced and distributed, especially in regard to cost or reliability.
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E-business relates to the transformation of processes through

the use of the Internet, and has enabled new business models to
emerge by bringing customers, producers and suppliers together
in new ways.
Some firms have combined both process redesign and e-business

innovations to reduce cost and gain competitive advantage. For
example in computers, Dell has innovated its sales processes
through enabling customers to tailor the specification of their
computers online (within certain parameters) and production
processes through its electronically linked supply chain.
4.5 Strategic Drift
Sa
Strategic drifta situation in which the organisation's strategy

gradually moves away from the forces at work in its environment.
Charles Handy first defined the term, in 1989, as "a gradual change
in strategy, a drift from vision that occurs so subtly that it is not
noticed until it is too late". It occurs where strategies progressively
fail to address the strategic position of an organisation and
performance deteriorates.
4.5.1 Process of Strategic Drift
Many organisations' strategies develop incrementally. Significant

changes in the environment in which an organisation operates
often lead to situations in which the strategy pursued is no
longer aligned with the environment. If strategic drift continues
unchanged, it can lead ultimately to corporate failure.
1-14
JS&W discuss strategic drift taking place over five phases as

shown by the following diagram, and this is discussed in more
detail below:
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Environmental
Change
Strategic Change
Phase 1
Incremental
Change
Phase 2
Strategic
drift
Phase 3
Flux
Phase 4
Transformational
change or death
< Phase 1: Incremental changeWhile the environment is
Sa
stable incremental change does not present a problem; it is

sufficient to keep the strategy aligned with the environment.
< Phase 2: Strategic driftThe change in the environment
starts to accelerate (e.g. technological developments or
changes in market demand reduce the competitive edge on
existing products or services). The incremental approach to
strategy development means that the strategy diverges from
the environment. Towards the end of this phase, symptoms
of strategic drift become evident (e.g. a decline in financial
performance or a loss of market share).
< Phase 3: FluxDue to the downturn in performance at the
end of phase 2, strategies may change, but with no clear
direction. Management changes may take place and internal
rivalries or boardroom clashes arise over the organisation's
future direction; some managers wish to stick to strategies
based on what has worked in the past, while others call for
a new direction. As the organisation's reputation suffers it
becomes more difficult to recruit able managers, confounding
the problem.
< Phase 4: Transformational change or deathIf strategic drift
reaches phase 4, one of three outcomes will result:
1. The organisation dies (i.e. goes into receivership or
liquidation).
2. The organisation is taken over by another one.
3. Management finally makes a transformational change to
the organisation. Such a fundamental change may also
require a complete change to its culture and structure to
align the organisation's strategy with the environment.*
*Transformational
change is detailed in
Session 10.
1-15
4.5.2 Importance of Strategic Drift

If strategic drift can be identified early (e.g. in phase 2), action
can be taken to realign the strategy with the environment and so
avert phases 3 and 4.
< It is therefore vital that strategic managers analyse the
*Environmental
analysis is covered in
Sessions 2 and 3.
*Strategic options
and their evaluation
are detailed in
Sessions69.
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environment in which their organisation operates.*

< If appropriate strategic options are identified that match the
changes in the environment, this should avoid the risk of
strategic drift.*
< If phase 4 is reached, even if a successful transformation is
implemented, significant staff redundancies may be required
and much of the shareholders' wealth is likely to have been
destroyed.
< In practice, many organisations do not realise that strategic
drift is occurring until financial performance declines
dramatically.
Illustration 1 Strategic Drift
Sa
Motorola was founded in 1928. The company's strategy was based

on technological innovation. Initially, the company manufactured
walkie-talkie devices that were used extensively during World
WarII. The company later introduced the first television for under
$200, was a leading producer of microchips in the 1970s and was
the leading producer of cell phones by the mid-1980s, with 60%
share of the US market by the mid-1990s.
The company experienced strategic drift during the mid-1990s
when, in spite of the development of digital technology, Motorola
continued to manufacture analogue phones, even though it had the
technology to develop digital phones. As a result, the company lost
market share to Nokia and Ericsson, and by 1998, its market share
had dropped to 35%. The company was forced to lay off 20,000
employees.
During the following decade, the company developed digital cell
phones but struggled to compete with Nokia and Ericsson. In 2005,
Motorola launched its Razr V3 cell phone, which had advanced
technology and design but retailed for $500. The company failed
to realise that the market had again changed; mobile phones had
become a fashion item and consumers were not prepared to pay so
much for a device they would only keep for two years.
With the advent of the smart phone, Motorola was one of the first
manufacturers to use the Google Android operating system on its
phones, but in spite of this, sales were slow.
In 2011, Motorola split into two partsMotorola Mobility, which
made the handsets, and Motorola Solutions. Motorola Mobility was
acquired by Google in August 2011 and sold to Lenovo in January
2014. Motorola Solutions still exists as an independent company.
Source: This illustration is based on a case study in "Exploring Strategy" by Johnson,
Scholes and Whittington.
1-16
Session 1
Summary
Strategy is the direction and scope of an organisation over the long term.
Strategic planning takes place at three levels of an organisation: corporate level, business
leveland functional level.
An organisation's mission states its basic function in society (Mintzberg) and typically
includes: purpose; basic strategy; policies and standards of behaviour; and values and
culture.
Objectives should be SMART (Drucker): Specific, Measurable, Achievable, Relevant and

Time-related.
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SWOT analysis summarises the key issues from the business environment (opportunities
and threats) and the internal (strengths and weaknesses) strategic capabilities of an
organisation that are most likely to affect strategy development.
Strategic management can be viewed through three lenses (JS&W): a design lens, an
experience lens and an ideas lens.
Session 1 Quiz
Estimated time: 15 minutes
1. Distinguish between corporate and business strategy. (1.3.1, 1.3.2)
2. Describe the purpose of a mission. (2.1)

3. Define "strategic management". (3.1)
4. Describe the components of a SWOT analysis. (3.2.1)

5. List the THREE strategic lenses. (4.1)
6. List THREE advantages and THREE disadvantages of the Rational Model. (4.2.2)
7. Define "incrementalism". (4.3)
Sa
8. Explain how strategy emerges. (4.4.1)
Study Question Bank

Estimated time: 30 minutes
Priority
Q1
Estimated Time
Strategic Planning
Completed
30 minutes
1-17
EXAMPLE SOLUTION
Solution 1SWOT Analysis
W
Number of destinations offered
Supplier pressureAirbus or Boeing
Customer loyalty cards
Outdated IT structure
Modern fleet, safety record
Little presence in the value sector
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Increased business travel
Video-conferencing
Ticketless travel
Increased fuel costs
Alliances with other airlines for new
Increase competition for (and price

of) prime slots at major airports
Sa
destinations
1-18
Sa
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NOTES
1-19
Index
A
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ABC, See Activity-based costing

Absorption costing .......................... 19-11
Accountability ....................................5-9
Accounting rate of return (ARR)........ 19-29
Accounts payable days .................... 18-10
Accounts receivable days ................... 18-9
Acid-test ratio ................................ 18-13
Acquisitions .......................................8-7
Action-centered leadership model ....... 20-6
Activity-based costing (ABC) ............ 19-17
Adaption ......................................... 10-3
Adhocracy ....................................... 9-11
Affiliate model .................................. 12-6
Agglomeration ................................. 2-11
Alien businesses .................................7-6
Alignment
process ...................................... 11-12
strategic ....................................... 14-5
Analogous estimates ....................... 14-15
Ansoff matrix .....................................8-4
Application controls ........................ 12-23
Application security controls ............. 12-29
Apportionment ............................... 19-16
Appraisal(s)
performance ................................. 9-15
project ....................................... 14-26
ARR, See Accounting rate of return
Ashridge Management College
model........................................ 20-6
Ashridge Portfolio Display model ...........7-6
Asset turnover ................................. 18-7
Autocratic leadership style ................. 20-5
Average payment period .................. 18-10
Blockages ........................................ 10-4

Boscard........................................... 14-7
Boston Consulting Group .....................7-4
Bottom-up estimates ...................... 14-15
Boundaryless organisations ................ 9-20
BPR, See Business process re-engineering
Branding ................................3-12, 13-16
Breakeven analysis ........................... 16-7
Brokerage model .............................. 12-6
Budgeted cost .................................. 15-6
Budgeting........................................ 19-2
Bureaucracy ......................................9-8
Burns and Scapens ........................... 17-5
Business automation ....................... 11-13
Business change life cycle .................. 11-4
Business ethics ..................................5-3
Business information systems ............ 12-7
Business model ..................................1-5
Business processes ........................... 11-2
Business process re-engineering
(BPR) ............................. 11-13, 20-11
Business profile analysis .................... 8-18
Business rationalisation ................... 11-13
Business risk.................................... 17-3
Buying process ...................................3-6
Cash budgets ................................. 17-17

Cash conversion cycle ..................... 18-11
Cash cow .................................. 7-4, 17-3
Cash management .......................... 17-16
Centralisation................................... 9-16
CEO, See Chief executive officer
Change management ........................ 10-6
Change patterns ............................. 11-16
Chief executive officer .........................9-9
Closure decisions ............................ 19-15
Closure phase ................................ 14-18
Cloud computing ............................ 12-14
Cluster analysis ................................ 9-26
Clustering........................................ 2-11
COBIT 5 ........................................ 12-21
Codes of ethics...................................5-5
Codes of practice ............................ 12-19
Coercion.......................................... 10-6
Collaboration ............................. 6-8, 10-6
Collection period .............................. 18-9
Commoditisation ............................ 11-12
Commodity processes ....................... 11-8
Communication
global.............................................2-8
project manager .......................... 15-11
Community model ............................ 12-7
Competences .....................................4-2
Competition
cycle ..............................................3-2
global.............................................2-8
market types................................. 16-3
Sa
Back drawer services ..........................7-8

Backup ......................................... 12-31
Balanced scorecard ........................... 9-13
Ballast businesses ..............................7-6
Balogun and Hope Hailey ................... 10-2
Bargaining power ............................. 2-27
Barriers to entry ............................... 2-26
BCG matrix ................................ 7-4, 15-5
Behavioural theories ......................... 20-3
Benchmarking .................................. 4-15
Benefit classification ....................... 14-21
Benefit maps ................................. 14-24
Benefits
budgeting ..................................... 19-2
e-marketing ................................ 13-11
project ....................................... 14-21
Bespoke software ........................... 11-19
Best fit approach .............................. 20-8
Best-in-class benchmarking ............... 4-16
Big data .......................................... 9-25
Blanket rate ................................... 19-17
Becker Professional Education | ACCA Study System
Session 21 Index
Culture ..................................... 1-9, 5-19

Cumulative preference shares ............ 17-7
Current ratio .................................. 18-12
Customer life cycle ......................... 13-19
Customer relationship management
(CRM) ..................................... 13-16
Customer(s)
behaviour .......................................3-5
Five forces model.............................6-4
Customer segmentation .................. 13-26
Cycle of competition ...........................3-2
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Competitive advantage
national ........................................ 2-11
strategies .......................................6-2
types .............................................4-2
Competitive benchmarking ................ 4-15
Competitive forces model ...... 1-7, 2-24, 6-4
Comply or explain...............................5-8
Computer hardware .......................... 12-8
Concentrated marketing .................... 3-10
Connectivity standards .................... 12-18
Consolidation strategies ......................8-4
Consortia ........................................ 8-12
Consumer segmentation ......................3-8
Consumers ...................................... 16-4
Content security ............................. 12-30
Contingency planning ...................... 12-31
Contingency theories ........................ 20-6
Continuation decisions .................... 19-15
Continuous planning ......................... 13-3
Contract manufacture ....................... 7-17
Contracts of employment ................... 9-14
Contribution analysis ........................ 16-9
Control environment ....................... 12-26
Control(s)
processes ..................................... 9-12
risk .............................................. 15-4
strategic .........................................1-5
Conversion premium ....................... 17-11
Convertible debentures ................... 17-11
Convertible loan stock ....................... 17-8
Core competency................................4-4
Corporate governance .........................5-7
Corporate parent ................................7-2
Corporate portfolio .............................7-4
Corporate social responsibility (CSR) .....5-4
Correlation ...................................... 2-17
Cost-based pricing ............................ 16-6
Cost drivers ................................... 19-19
Costing
standard ....................................... 19-3
techniques .................................... 19-8
Cost(s)
data ........................................... 19-12
direct and indirect ........................ 19-16
efficiency ................................ 4-7, 13-6
globalisation ...................................2-8
leadership.......................................6-2
project management .................... 14-14
variance ....................................... 15-6
CPA, See Critical path analysis
Credit card fraud ............................ 12-18
Critical path analysis (CPA) .............. 14-12
Critical success factors (CSFs) ....... 1-7, 4-5
CRM, See Customer relationship
management
CSR, See Corporate social responsibility
Cultural
factors ...........................................2-5
processes ..................................... 9-13
web ..................................... 5-20, 10-5
Sa
Data exploration ............................... 9-26

Debentures ...................................... 17-7
Debt ............................................. 17-10
Debt factoring ................................ 17-16
Decentralisation ............................... 9-16
Decision science ............................... 9-27
Decision trees .........................8-17, 19-23
Decomposition ................................. 2-19
Delivery phase ............................... 14-17
Demand
conditions ..................................... 2-10
manipulation ............................... 16-10
Demerger ........................................ 8-10
Democratic leadership style ............... 20-5
Design lens........................................1-9
Development phase ........................ 14-18
Differentiated marketing .................... 3-10
Differentiation
advantage ......................................4-2
product ..........................................6-3
Diffusion strategy ...............................6-5
Direct
costs .......................................... 19-16
manufacturer model ....................... 12-6
supervision ................................... 9-12
Disciplinary systems ......................... 9-15
Distribution...................................... 13-6
Diversification
Ansoff matrix ..................................8-4
international ................................. 7-11
product ..........................................7-8
Dividend cover ............................... 18-16
Divisionalised form ........................... 9-10
Dog .......................................... 7-4, 17-3
E
Earned value management (EVM) ....... 15-6
Earnings per share (EPS) ................. 18-15
E-branding .................................... 13-16
E-commerce .................................... 13-2
Economic
class ..............................................3-8
factors ...........................................2-5
risk .............................................. 17-3
Economic order quantity .................. 17-14
21-1
Session 21 Index
Forecasting....................................... 2-14
Four view model................................ 11-6
Franchising....................................... 7-17
Fraud............................................. 12-18
Functional level...................................1-3
Funding strategies............................. 17-2
G
Gantt charts................................... 14-11
Gearing ratio.................................. 18-14
General controls.............................. 12-21
Geocentric management style............. 7-13
Globalisation............................... 2-8, 7-15
Goals.................................................1-4
Golden fleece services..........................7-8
Governance standards..........................5-8
Gross profit percentage...................... 18-3
Growth
organic............................................8-6
product life cycle............................ 4-14
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Economies of scale..............................4-7
Economy............................................1-3
EDI, SeeElectronic data interchange
Effectiveness...................... 1-3, 5-9, 13-17
Efficiency.................................... 1-3, 4-7
Elasticity of demand........................... 16-5
Electronic data interchange (EDI)...... 11-10
E-marketing................................... 13-11
Emergent strategies........................... 1-13
E-MRO........................................... 13-10
Enterprise resource planning (ERP)...... 11-9
Web-based.................................. 13-10
Environmental
analysis...........................................2-3
factors............................................2-7
lobby..............................................5-6
scanning..........................................3-4
E-procurement.................................. 13-9
EPS, SeeEarnings per share
Equity finance................................... 17-8
Equity share capital........................... 17-8
ERP, SeeEnterprise resource planning
Ethical stance.....................................5-3
Ethnocentric management style........... 7-13
EVM, SeeEarned value management
Evolution.......................................... 10-3
Execution phase.............................. 14-17
Executive information system.............. 12-7
Exit costs......................................... 16-3
Expected value................................ 19-22
Experience
cost efficiency..................................4-7
lens................................................1-9
Explicit knowledge...............................4-8
Exporting......................................... 7-16
Extended marketing mix..................... 3-15
External relationships......................... 9-18
Extranets....................................... 12-20
Extrapolation.................................... 2-17
Sa
Handy, Charles...........1-12, 5-19, 9-23, 20-8

Harmon, Paul.................................... 11-7
Heartland businesses...........................7-6
Historical benchmarking..................... 4-15
Hollow organisations.......................... 9-22
Home-preneurs................................. 9-23
Howard-Sheth model...........................3-6
Human resource development
(HRD)...................................... 20-12
Human resource management
(HRM)..................... 4-11, 14-16, 20-12
Hybrid financing.............................. 17-11
Facilities management...................... 11-11

Factor conditions.................................2-9
Feasibility......................................... 8-19
Federations of experts........................ 9-22
Feedback
continuous planning........................ 13-3
customer..................................... 13-16
Finance leases................................ 17-11
Financial control style........................ 9-17
Financial risk.................................... 17-3
First-mover advantage.........................4-8
Five forces
comparison......................................6-4
model........................................... 2-26
Fixed asset turnover.......................... 18-8
Fixed costs....................................... 16-7
Force field analysis............................ 10-4
21-2
Ideas lens..........................................1-9
Inbound logistics............................... 4-11
Incrementalism................................. 1-12
Indirect costs.................................. 19-16
Industrial goods..................................3-6
Industrial segmentation........................3-9
Industry
benchmarking................................ 4-15
critical success factors.......................4-6
rivalry.............................................6-4
Infomediary model............................ 12-6
Information intensity matrix............... 13-8
Information sharing........................... 4-15
Infrastructure
hardware and software.................... 12-7
political factors.................................2-5
value chain.................................... 4-11
Infrastructure for e-business............. 12-15
Initiation phase................................. 14-6
Input controls..........................9-12, 12-23
Session 21 Index
Japanese model.............................. 20-11

Job design........................................ 20-9
Joint venture............................ 7-17, 8-11
Just-in-time.................................... 17-14
M
Machine bureaucracy...........................9-8
Macro-environment..............................2-4
Make or buy decision....................... 19-15
Management
customer relationship.................... 13-18
facilities....................................... 11-11
knowledge.......................................4-8
orientation..................................... 7-13
processes...................................... 11-3
scientific........................................ 20-9
strategic..........................................1-5
styles............................................ 9-17
supply chain.................................. 13-3
team........................................... 15-15
Management information system......... 12-7
Manufacturer model........................... 12-6
Margin............................................. 4-10
Marginal
analysis....................................... 19-14
costing.......................................... 19-8
Market
analysis ratios.............................. 18-15
penetration strategies.......................8-4
research..........................................3-4
segmentation...................................3-8
selection........................................ 7-15
share..............................................7-4
Marketing
function...........................................3-3
mass............................................. 3-10
mix............................................... 3-11
objectives...................................... 16-2
services......................................... 3-16
Material requirements planning......... 17-14
Maturity........................................... 4-14
Merchant model................................ 12-6
Mergers.............................................8-7
Mintzberg, Henry......................... 1-13, 9-7
Mission statement...............................1-4
Missionary organisation........................9-8
Modular organisations........................ 9-22
Monopolistic competition.................... 16-3
Moral statement..................................5-3
Multinational organisation................... 7-14
Linear regression analysis................... 2-15

Liquidity ratios................................ 18-12
Loan stock........................................ 17-7
Lock-in strategies................................6-8
Logical security controls................... 12-29
Logistics........................................... 4-11
Long-term
asset turnover................................ 18-8
debt............................................ 17-10
LPC, SeeLeast preferred co-worker
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Intangible resources............................4-3
Integrated reporting.......................... 5-17
Interest cover................................. 18-17
Internal rate of return (IRR).............. 19-34
International diversification................. 7-11
International value network................ 7-12
Interpolation..................................... 2-17
Intranets........................................ 12-19
Inventory
turnover........................................ 18-8
valuation..................................... 19-10
Inventory days................................ 17-13
Investment appraisal methods.......... 19-29
IRR, SeeInternal rate of return
ISO/IEC 27000................................ 12-21
IT
alliances........................................ 8-14
business process re-engineering..... 11-15
controls....................................... 12-21
systems........................................ 7-17
Key factor analysis.......................... 19-15

Key performance indicators (KPIs).........4-5
Key players....................................... 5-16
Klout............................................... 9-27
Knowledge management......................4-8
Kotler, Philip.......................................3-3
Sa
Laissez-faire leadership style............... 20-5

Leaders
visionary....................................... 7-15
Leadership..........................................5-8
competence................................. 15-11
cost................................................6-2
Lewin, Kurt.................................... 20-5
strategic........................................ 20-2
Lead time....................................... 17-12
Lean production.............................. 20-11
Learning
organisational..................................4-9
workplace.................................... 20-14
Leasing.......................................... 17-11
Least preferred co-worker (LPC).......... 20-7
Legal factors.......................................2-8
Leverage........................................ 18-14
Levers............................................. 10-4
Licensing.......................................... 7-17
21-3
Session 21 Index
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National competitive advantage........... 2-11

NEDs, SeeNon-executive directors
Net present value (NPV)................... 19-33
Net profit percentage......................... 18-4
Net promoter score.......................... 13-24
Network and communications............ 12-11
Network(s)
diagrams..................................... 14-12
IT systems..................................... 7-18
organisations................................. 9-21
value............................................ 4-13
Network security controls................. 12-30
New entrants.............................. 2-26, 6-4
Niches...............................................6-4
Non-cumulative preference shares....... 17-7
Non-executive directors (NEDs).............5-7
Non-price competition........................ 16-4
NPV, SeeNet present value
Parental developer...............................7-3
Partnerships..................................... 8-14
Payback period................................ 19-30
Penetration pricing....................3-14, 16-10
P/E ratio, SeePrice earnings ratio
Perceived value........................... 6-6, 16-5
Perfect competition............................ 16-3
Perlmutter, Howard............................ 7-13
Person cultures................................. 5-21
PESTEL analysis........................... 1-7, 2-2
Physical risk...................................... 17-3
Planning
phase............................................ 14-8
processes...................................... 9-12
strategic..........................................1-2
PLC, SeeProduct life cycle
Policies and procedures...................... 9-14
Political
factors............................................2-5
hot boxes........................................7-8
risk............................................... 17-3
Polycentric management style............. 7-13
POPIT model..................................... 11-6
Porter, Michael............................ 1-7, 13-8
Porter's diamond.................................2-9
Portfolio manager................................7-3
Position audit......................................4-2
Post-completion audit........................ 15-8
Post-implementation review.............. 14-24
Power cultures.................................. 5-21
Precautionary motive....................... 17-12
Preference shares.............................. 17-8
Price
competitive advantage......................6-7
discrimination................................ 16-4
marketing mix................................ 3-14
setting.......................................... 16-6
skimming.............................3-14, 16-10
Price earnings ratio (P/E ratio).......... 18-16
Pricing strategy................................. 16-2
Primary activities............................... 4-11
Problem child......................................7-4
Process change patterns................... 11-16
Processing controls.......................... 12-24
Process-strategy matrix...................... 11-7
Procurement..................................... 4-11
Product
design.............................................4-7
development strategies.....................8-6
diversification...................................7-8
market research...............................3-4
marketing mix................................ 3-11
positioning..................................... 3-11
Product life cycle (PLC)................. 1-7, 4-14
Professional bureaucracy.................... 9-10
Profitability ratios.............................. 18-3
Progress reports................................ 15-2
Sa
Objectives
diversification................................. 7-15
goals...............................................1-4
pricing.......................................... 16-2
OECD, SeeOrganisation for European
Cooperation and Development
Offshoring........................................ 9-19
Off-the-shelf software...................... 11-18
Oligopoly.......................................... 16-3
One-stop shops................................. 9-22
Operating leases............................. 17-11
Operational information system........... 12-8
Operational level.................................1-3
Opportunity cost............................... 16-3
Ordinary shares................................ 17-7
Organic development...........................8-6
Organisational
iceberg.......................................... 5-19
influences........................................5-2
knowledge.......................................4-9
structures........................................9-2
Organisation for European Co-operation
and Development (OECD)............. 5-14
Outbound logistics............................. 4-11
Output controls................................. 9-13
Outsourcing.............................9-18, 11-11
Overdrafts...................................... 18-12
Overhead apportionment.................. 19-16
Overseas production.......................... 7-16
Overtrading.................................... 18-15
P
Packaging......................................... 3-13
Parametric modelling....................... 14-15
21-4
Session 21 Index
Quality
improvement methods.................. 11-10
project management..................... 14-15
Question mark.................................. 17-3
Quick ratios.................................... 18-13
ROCE, SeeReturn on capital employed

ROE, SeeReturn on equity
Role cultures..................................... 5-21
S
Sales-force automation.................... 13-26
SARA approach................................. 15-5
Sarbanes-Oxley Act (SOX) (2002)....... 5-13
SBUs, SeeStrategic business units
Scarce resources............................. 19-15
Scenarios................................. 2-13, 8-18
Schedule performance index............... 15-6
Scientific management....................... 20-9
SCM, SeeSupply chain management
Scope creep...................................... 14-8
Scoring methods............................... 8-17
Screening......................................... 8-17
Search engine................................. 13-21
Seasonality....................................... 2-18
Secured debentures........................... 17-7
Security......................................... 12-18
Segmented marketing........................ 3-10
Sensitivity analysis...................8-19, 19-23
Service(s)
extended marketing mix.................. 3-15
marketing mix................................ 3-15
primary activity.............................. 4-11
SFA, SeeSales-force automation software
Shamrock organisations..................... 9-23
Shaper of society.................................5-4
Share capital.................................... 17-8
Shared services................................. 9-20
Shareholder value analysis................. 8-19
Shipment tracking............................. 13-7
Short-messaging service (SMS)......... 13-17
Short-term liquidity ratios................. 18-12
Simple moving average method........... 2-19
SLEPT analysis....................................1-7
Slippage........................................... 15-3
SMS, SeeShort-messaging service
Social analytics................................. 9-26
Social networks............................... 13-21
Social responsibility.............................5-3
Sociocultural factors............................2-5
Socio-economic groupings....................3-8
Software.......................................... 12-9
Software solutions........................... 11-17
SOSTAC planning framework............. 13-15
SOX, SeeSarbanes-Oxley Act (2002)
Speculative motive.......................... 17-12
SPI, SeeSchedule performance index
Staff development........................... 20-12
Stakeholder mapping......................... 5-16
Stakeholders............................... 5-4, 17-4
Standard costs.................................. 19-3
Star........................................... 7-4, 17-3
Steering group................................ 15-10
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Project
appraisal..................................... 14-26
charter.......................................... 14-8
control.......................................... 15-2
cost management......................... 14-14
gateways..................................... 14-18
HRM........................................... 14-16
life cycle........................................ 14-6
management.................................. 14-2
manager...................................... 15-10
quality management..................... 14-15
teams......................................... 15-15
Promotion........................................ 3-14
Pull model........................................ 13-5
Push model....................................... 13-4
Push-pull model................................ 13-5
Sa
Random walk model........................... 2-19

Ranking methods............................... 8-17
Rappa, Michael.................................. 12-6
Rational model.................................. 1-10
Reconstruction.................................. 10-3
Regression analysis........................... 2-15
Relationship marketing..................... 13-18
Relevant costs................................. 19-14
Remuneration.....................................5-9
Re-order level................................. 17-14
Reporting structures.......................... 9-15
Resource(s)........................................4-2
5M approach....................................4-3
converting..................................... 4-10
development analysis...................... 8-19
histogram.................................... 14-10
scarce......................................... 19-15
Retained earnings.............................. 17-9
Return on capital employed (ROCE)..... 18-5
Return on equity (ROE)...................... 18-7
Revolution........................................ 10-3
Reward systems................................ 9-15
Rhine model.......................................5-7
Risk
analysis....................................... 19-22
assessment.................................... 15-4
classifications................................. 17-3
control.......................................... 15-4
management......................... 15-3, 19-23
TARA approach............................... 15-5
Rivalry............................................. 2-28
21-5
Session 21 Index
Trade policy........................................2-8
Trait theories.................................... 20-2
Transformational theories................... 20-8
Transnational organisations................. 7-14
Trends............................................. 2-18
Tuckman, Bruce.............................. 15-15
Turnaround....................................... 10-7
U
UK Combined Code on Corporate
Governance...................................5-8
Uncertainty..................................... 19-22
Undifferentiated (mass) marketing....... 3-10
Unique resources.................................4-3
Unit contribution margin..................... 16-7
Unsecured debentures........................ 17-7
User surveys................................... 13-17
Utility model..................................... 12-7
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Strategic
alignment...................................... 14-5
business units (SBUs).......................6-2
capability.................................. 1-5, 4-2
change management....................... 10-2
choices............................................1-8
control............................................1-5
control style................................... 9-18
decisions.........................................1-2
drift...................................... 1-14, 10-3
groups............................................3-2
management....................................1-5
management styles......................... 9-17
position...........................................1-6
Strategic alliances..................... 8-11, 9-21
Strategic drift................................... 1-16
Strategy
costing........................................ 19-16
culture.......................................... 5-21
development....................................8-2
implementation................................1-9
lenses.............................................1-9
pricing.......................................... 16-2
project management....................... 14-4
vision..............................................1-4
Subscription model............................ 12-7
Substitutes................................. 2-26, 6-4
Success criteria................................. 8-15
Succession planning......................... 20-14
Supervision...................................... 9-12
Suppliers............................................6-4
bargaining power............................ 2-27
selection...................................... 11-22
Supply chain management (SCM)........ 13-3
Supply costs.......................................4-7
Support activities.............................. 4-11
SWOT analysis....................................1-6
Synergy.............................................8-8
Synergy manager................................7-3
Systems failure............................... 12-27
Systems theory................................. 11-2
Sa
Value
analysis....................................... 11-10
expected..................................... 19-22
goods............................................ 16-4
managing...................................... 17-2
system.......................................... 4-13
trap................................................7-7
Value chain(s)................................... 4-10
competitive advantage......................6-8
e-commerce strategy...................... 13-6
Value network................................... 7-12
Variable costs................................... 16-7
Variances.................................. 15-6, 19-3
Vertical integration............................ 13-9
Virtual integration.............................. 13-9
Virtual organisations.......................... 9-24
Vision................................................1-4
global........................................... 7-15
project manager........................... 15-11
Visionary leaders............................... 7-15
Tacit knowledge...................................4-8
Tactical-level strategic planning.............1-3
TARA approach.................................. 15-5
Task cultures.................................... 5-21
Taylor, Frederick................................ 20-9
Team management.......................... 15-15
Technological factors............................2-7
Technology development.................... 4-11
Teleworking...................................... 9-22
Threshold resources.............................4-3
Time series analysis........................... 2-18
Top-down estimates......................... 14-15
TOWS matrix......................................8-2
Trade payables................................ 17-18
21-6
W
Warrants........................................ 17-11
WBS, SeeWork breakdown structure
Web advertising model....................... 12-6
Web-based ERP............................... 13-10
Websites........................................ 13-16
Window dressing............................. 18-13
Work breakdown structure.................. 14-9
Workflow systems.............................. 11-9
Working capital............................... 17-12
Working capital cycle....................... 18-11
Working practices............................ 12-19
Workplace learning.......................... 20-14
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This ACCA Study Text has been reviewed by ACCA's examining

team and includes:
An introductory session containing the Syllabus and Study Guide and approach to
examining thesyllabus to familiarise you with the content of this paper
Comprehensive coverage of the entire syllabus
Focus on learning outcomes
Visual overviews
Definitions of terms
Illustrations and exhibits
Examples with solutions
Key points
Exam advice
Commentaries
Session summaries
Sa
End-of-session quizzes
A bank of questions
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For Examinations to June 2017

Paper P3 | BUSINESS ANALYSIS

Becker Professional Education has more than 20 years

Becker Professional Education's ACCA Study Materials

September 2016June 2017 Edition

download the Materials onto any single device;

make copies of the Materials;

reverse engineer, decompile, disassemble, or create derivate works of the Materials.

ACCA Study Guide .......................................................................................x

Foundations of Strategic Analysis ......................................... 1-1

Environmental Analysis ........................................................ 2-1

Competition and Customers .................................................. 3-1

Strategic Capability .............................................................. 4-1

Organisational Inuences ..................................................... 5-1

Competitive Advantage Strategies ........................................ 6-1

Corporate-Level Strategy ...................................................... 7-1

Strategy Development .......................................................... 8-1

Organising and Enabling Success .......................................... 9-1

Managing Strategic Change .................................................10-1

Business and Process Change ..............................................11-1

Information Technology and E-Business ..............................12-1

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An Introduction to Project Management ..............................14-1

Project Control and Leadership ............................................15-1

Pricing Strategy ...................................................................16-1

Finance and Strategy ...........................................................17-1

Ratio Analysis ......................................................................18-1

Strategy Implications of Management Accounting ...............19-1

Strategy and People ............................................................20-1

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ABOUT THIS STUDY SYSTEM

How to Use This Study System

These are the learning outcomes relevant to the session,

Tutor advice and strategies for approaching each session.

A diagram of the concepts and the relationships addressed

These are to be read as part of the text. Any solutions to numerical

These extracts of external content are presented to reinforce concepts and

Attention is drawn to fundamental rules, underlying concepts and

These tutor comments relate the content to relevance in the examination.

These provide additional information to reinforce content.

A summary of the main points of each session.

A link to recommended practice questions contained in the Study Question

Answers to the Examples are presented at the end of each session.

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e) Determine the opportunities and threats posed by the environment of an organisation.

3. Understanding strategy development

(continued on next page)

Becker Professional Education| ACCA Study System

Mission (or Vision)

Relational Diagram of Main Capabilities

Apply a SWOT analysis, an assessment of an organisation's strengths, weaknesses, opportunities

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Session 1 Foundations of Strategic Analysis

1.2 Characteristics of Strategic Decisions

Determine the long-term direction of the company.

Johnson, Scholes and

(i.e. types of products, services and markets).

1.3 Levels of Strategic Planning

Planning can take place at different levels in an organisation.

The corporate-level strategy is concerned with the overall purpose

Planning at this level looks into the formulation, evaluation

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Session 1 Foundations of Strategic Analysis

Paper P3 | BUSINESS ANALYSIS

Apply a SWOT analysis, an assessment of an organisation's strengths, weaknesses, opportunities