ACCA P3 Smart Notes Dec 2010

ACCA P3 – PROFESSIONAL LEVEL
Business Analysis
SMART Notes
Prepared by Darren Sparkes
Email: darrensparkesnotes@sky.com
1
ACCA P3 - Business analysis These notes are not intended to cover the whole of the ACCA P3 syllabus ©Darren Sparkes, 2010
Contents Page no.
Paper 3 Examiners Approach…………….….... 3
Extracts from the Examiners report ……….…...4
Examination Technique……………….…..……..7
Background and examination format..…............9
Syllabus Overview………………………...........10
Strategic Planning………………………...….....11
Mission and Objectives…………………………12
Business & Professional Ethics..………….…...13
Internal Analysis……………….……………..…14
External Analysis……………..………………....15
Strategic Options……………………….……….17
Method of Growth………………………............18
Portfolio Analysis…………………………….….19
Strategic Choice & Change Management…....20
Marketing………………………………………...21
Organisational Structure…………………….….22
International Market Place.…………….……....23
Business Process Change…….…..…………..24
Information Technology……..…….……..........25
Quality………………………………….……......26
Project Management………………………...…27
Role of Finance………………………………...28
Review and Control………………………..…..29
Strategy and People……………………………30
2
ACCA P3 – Business Analysis These notes are not intended to cover the whole of the ACCA P3 syllabus © Darren Sparkes, 2010
Approach Required
‘Differentiation is important to individuals seeking to pass a management and
strategy examination.
It is the ability to link strategic and financial analysis;
it is the confidence to use creative thinking in the way you answer a

particular problem…with alternative ways of viewing and solving a problem’
Ralph Bedrock (Paper 3 Assessor)
There is no absolutely correct answer – candidates who provided

coherent justification… awarded appropriate marks
Steve Skidmore (P3 Examiner)
3
Extracts from the Examiners comments
In general:
• ‘Candidates were stronger in strategic concepts (strategic position, Porter’s Diamond) and less comfortable
with business process modelling and customer relationship management.’
• ‘Part questions on specific factual areas (competency frameworks and CMMI) were either answered well
(because the candidate was familiar with them) or poorly (because the area was not studied or revised).’
• ‘There was some evidence of poor time management, apparently caused by over-answering question 1.’
Section A - Question 1
• In general the first part of the question was answered well, using a wide range of appropriate models and
frameworks.
• However, candidates must be careful in the future to stick to external issues if a PESTEL analysis is
specified in the question.
• …some candidates did not restrict themselves to assessing the strategic position. They began to suggest
strategic solutions and options which were not required by the question and so no credit was given. This
reinforces the need for the candidate to carefully read the question and to answer within its scope.
• …many answers well written and well-structured, so gaining most of the professional marks on offer.
• Part b…Candidates failed to spot glaring errors in the process.
• Part c…In many cases, candidates provided good answers to a very different question.
4
Section B
• Question 2 – part a…Candidates answered this…relatively well, using appropriate calculations
• Question 2 – part b…candidates answered this part question very well, not only showing knowledge of the
model but were also confident in applying it to a case study scenario
• Question 3 – part b…asked candidates to analyse these competencies. Some of these were clearly signposted
in the scenario. Many candidates failed to identify any relevant competencies…falling back on generalisations
such as ‘good communication skills’ and hence did not score well on this part of the question.
• Question 4 – part a…In general, this part of the question was answered well by most candidates
• Question 4 – part b…This was not particularly well answered by most candidates. Most candidates seemed to
be unfamiliar with the concept of competency frameworks or their potential application. This was despite an
article in Student Accountant magazine.
5
Therefore, to pass P3 learn from the examiners
comments:
• Analyse the requirements – verbs and keywords

• Planning – think before you write the answer
• Application, application, application
• Theoretical answers score few marks
• You can only apply what you know – learn it!
• Use and interpret the numbers (they are usually
easy calculations so it’s the interpretation that
gets the marks)
• Time management – the marks are your guide
6
Examination Technique to give the Examiner what he wants
PADI – Plan, Analyse, Design, Implement
PLAN
1. USE 15 MINUTES READING TIME WISELY
• Examine section B questions and choose the two on which you can MAXIMISE MARKS (not necessarily
those on your ‘favourite’ topics)
• If you have some time left then analyse Question 1 requirements and skim read the Q1 scenario to get a feel
for the relevant issues and identify where the information is for each part of the requirements.
2. WORK OUT TIMINGS

• Q1 = 90 minutes. Planning = 20-25 minutes, Writing answer = 65-70 minutes
• Section B Questions = 45 minutes each. Planning up to 10 minutes, Writing answer 35 minutes.
• Break down the time required for each part of the requirements using the marks as a guide. 1.8 minutes per
mark in total, 1.4 minutes per mark after planning.
• I suggest you start with Question 1 as you know you have 90 minutes to complete it.
START PLANNING IN YOUR ANSWER BOOK
3. ANALYSE THE REQUIREMENTS

• Identify the verb, or verbs, and make it stand out. The verb tells you what the examiner wants you to do, e.g.
evaluate, recommend, analyse, calculate. Be sure to identify all the verbs in the requirement just in case
there is more than one thing to do, e.g. analyse and discuss, evaluate and recommend.
• Identify key words. These tell you what to do it on or about, e.g. evaluate what?, recommend what?
4. ALLOCATE MARKS TO EACH VERB IN THE REQUIREMENT

• This can now determine how much to write for each verb in the requirement
5. IDENTIFY RELEVANT MODELS, TOOLS, THEORIES FROM YOUR KNOWLEDGE BANK
7
6. DEVELOP HEADINGS AND NUMBERS LAYOUT
• Put key elements of model in plan as headings, e.g. Porters 5 Forces analysis = 5 headings. Headings will
give your answer a framework and structure.
• Use requirements to develop headings to show marker that you are answering the question asked
7. DISTRIBUTE MARKS ACROSS HEADINGS

• This can now determine how much you write under each heading
ANALYSE
8. ANALYSE THE SCENARIO
• Make brief notes in your plan under relevant headings from models/tools/theories and requirement
• Find relevant numbers for calculations
DESIGN
9. THINK BEFORE YOU WRITE
• Decide which points you are going to put in your answer (trying to put in everything usually leads to going
over time) and start with your strongest points
• Decide how you are going to layout your answer to make life easy for the marker and maximise marks
IMPLEMENT
10. WRITE UP YOUR ANSWER TO MAXIMISE MARKS
• Layout calculations in a logical and easy to mark format - Add value to calculations by asking ‘SO WHAT?’
• Use as many headings as possible to give the answer structure
• Work on 2 sentences for 1 mark – 1) Make your point, 2) Give evidence from the scenario
• PEE for 2 marks – Point, Evidence, Explain (So what?)
• Leave a blank line between paragraphs to make your answer ‘easy on the eye’
• Be strict with timings. When time is up on a question, or part of a question, move on.
• Stick to answering the requirement – use your plan to keep you on track
• REMEMBER THE THREE GOLDEN RULES – 1) APPLICATION 2) APPLICATION and 3)APPLICATION
8
• Assess the strategic position of the organisation
• Evaluate strategic choices available to an organisation
• Discuss how an organisation might go about its strategic implementation
• Model and redesign business processes and structures to implement and
support the organisation’s strategy taking account of customer and other
Exercise professional major stakeholder requirements
judgement • Integrate appropriate information technology solutions to support the
Select relevant organisation’s strategy
data
• Apply appropriate quality initiatives to implement and support the
organisation’s strategy
• Advise on the principles of project management to enable the implementation
of aspects of the organisation’s strategy with the twin objectives of managing
Determine appropriate risk and ensuring benefits realisation
techniques • Analyse and evaluate the effectiveness of a company’s strategy and the
Candidate Requirements financial consequences of implementing strategic decisions
• The role of leadership and people management in formulating and
implementing business strategy
Apply knowledge
and skills
Paper Background
Objectives of the
paper
Format of paper
Section A 50%
• Compulsory
• Major case study
• Usually four parts
• Case will include numbers
Section B 50%
• Choice of two from three
• Each question likely to include
two parts
• Will include short scenario
• May include numbers
9
Governance and Corporate Social Responsibility
Cultural Web
Syllabus Overview SMART
Mission and objectives

Purpose, Strategy, Policies, Values
Mendelow's power-interest matrix
Product Life Cycle

PEST Stakeholder Analysis
Resource audit
Porters 5 Forces External Analysis Internal Analysis

Core competences
Porters Diamond Corporate

Appraisal Porters Value Chain
Benchmarking
CSF’S
SWOT
Porter’s Generic
Strategies BCG, PSPM, DPM, APD,
Portfolio analysis Mkt attract/SBU strength
The Strategy Clock Strategic Withdraw Ansoff’s product-

Options market matrix
TOWS Matrix
Risk
Acquisition vs organic vs joint development
Strategic Choice Cost/Benefit
Suitability, Acceptability, Feasibility
Change Management
International
Trading HRM IT Project Management
Structure Implementation
Sources of Finance Quality

Marketing Software Quality
Review and Control
Business Process Change
Not for Profit Organisations
Software Solutions Investment Appraisal

Non-financial Measures
Financial Measures
BSC
10
Position
Integrates activities
Competitive advantage Analysis
Corporate =
Strategic level
Relationship with environment
Whole
organisation Business = Tactical
level
Inter-
All stakeholders Functional = Operational level dependant
Long-term
Strategy Choice Action

‘… a course of action, including
the specification of resources, to
Freewheeling Opportunism achieve a specific objective
Johnson,
• Market Driven – reactive Scholes & Strategic Design Experience
• Hands on management
• Exploit complacent players Whittington Lenses
• Relies on leaders vision
• No formula for success Ideas
Alternative
√
×
Take advantage of market
opportunities
Stock market problems
Strategic
Planning Purpose
Incrementalism (Lindblom)
• Building block approach
• Build strategy through incremental steps not radical
• Respond and fit to environment
shifts Rational ‘Top Down’ Approach • Utilise scarce resources
√ Accepts uncertainty of future • Provide direction
√ Builds commitment Mission & Objectives • Ensure consistent objectives
× May be too slow • Monitor progress
× Ideas often compromised
Corporate appraisal
Strategic options Advantages Disadvantages

Emergent Strategy - ‘Bottom up’ (Mintzberg) √ Identification of × Expensive (time
strategic issues and money)
Intended Deliberate Realised Strategic choice √ Consistency of goals × Bureaucracy
Strategy Strategy Strategy √ Improve × Stifles creativity
performance/survival × Less relevant in
Implementation √ Pro-active a crisis
Unrealised √ Recognises
Strategy Emergent environment
strategy Review √ Optimum use of
resources
E.G. Honda’s entry into the USA, 3M
11
Purpose
Advantages
• Resolve stakeholder conflict Criticisms
Strategy • Set direction • Meaningless terms used S Specific
• Help formulate strategy
• Communicates values to
• Written retrospectively? M Measurable
• Not communicated to
employees employees A Attainable
Policies and • Marketing to customers • Ignored by managers R Relevant
standards
T Timebound
Mission
Values ‘… the most generalised type
of objective which can be Objectives
thought of as its raison d’etre.’
Mission Statement
Published version of the
Culture
‘The way we do things around here’
Mission
Mission and
Stakeholders Objectives Cultural Web
– cultural paradigm
• Routines & Rituals
• Stories & Myths
• Symbols
• Power structure
Mendelow’s Power – Interest Matrix Critical Success • Organisation structure
• Control systems
Interest Factors
Low High
"The limited number of areas
in which results, if they are
Not for Profit Organisations
A B satisfactory, will ensure
Low Minimal Effort Keep Informed successful competitive
Features of objective setting
performance for the
Give Direction Education / • Multiple and contradictory objectives
organization.
Communication • Participation in objective setting
• Providers of funding different to beneficiaries of service
They are the few key areas
Power • Priorities may change frequently
where things must go right for
• Value for money a requirement not an objective
the business to flourish.
• Increased role of personal objectives
C D
Keep Satisfied Key Players If results in these areas are
High not adequate, the
organization's efforts for the Efficiency Economy
Intervention Participation – Keep
Close period will be less than
desired."
Effectiveness
12
Equal opportunities
C Competence
Consumer health and safety
O Objectivity
Bribes
P Professional due care
Safety in the workplace
Corporate Governance P
Strategic impact: SCRAPI
Politeness Issues
• Short-termism I Integrity
Sustainability
Fair Trade
• Control the business T Technical Standards
• Risk assessment Honesty in Advertising
Environment
• Acquisitions & Mergers
• Power of governance bodies
• Increasing shareholder power
Professional Ethics Corporate Social

‘Self control, not self interest’ Responsibility
Johnson, Scholes & Whittington – Ethical Stances
Short-term Long-term Multiple Shaper of Views on Business Ethics

shareholder shareholder stakeholder society
interest interest obligation
Business and
Professional ‘The business of
business is business’
Save time and

Ethics (Shareholder View -
Friedman)
money on
investigations Management to concentrate on
Avoid paying damages and fines Long-term Self-Interest / maximising profits and
shareholder wealth.
Attract Stakeholder view
customers and Firms should acknowledge their social
employees Businesses have no duty to
responsibilities.
Benefits to Business society.
SALSA Societal benefits will arise as a
Lower Risk result of commercial success.
No universal acceptance of
morals & ethics
Strategic Alliances
Potential problems
Conflict of CSR with shareholder wealth
• Reduced revenues
Competitive disadvantage Disclosure of business information • Increased costs
• Diverts funds from shareholders
• Distracts management
Deciding what is ethical Bad publicity from monitoring and enforcement
13
Strategic
• Manpower Assets
• Management S
• Money • Valuable
Same as Different to Rare Architecture
• Make-up •
competitor / easy competitor / • Manufacturing • Can’t be copied A
to copy difficult to copy • Material • Not substitutable
• Markets • Give access to wide R Reputation
Resources range of markets
Basic Unique
M’s
I
Competences Threshold Core Innovative
Core Competences Ability
‘…the activities or
Strategic Capability processes that critically
– Resource audit underpin competitive
advantage.’
Porter’s Value Chain

Knowledge Management Internal Analysis …identify activities within the firm which
Tacit
(Strengths & Weaknesses) add value to customers and those that
do not
Primary Activities
Product Life-cycle • Inbound Logistics
• Operations
• Uncover Knowledge • Introduction: high risk, little • Outbound logistics
Discover Knowledge competition, low volume, high
•
Benchmarking • Marketing and sales
Capture Knowledge advertising = losses + negative
• • Service
• Share Knowledge cash
• Distribute Knowledge • Growth: increased Support/secondary activities
Lever Knowledge 1. Select processes to be
• competition, growing volumes, Procurement
Maintain Knowledge benchmark •
• EOS, high advertising = losses to
2. Assign responsibilities • HRM
profits + negative to positive cash
3. Choose type of benchmarking • Technology development
4. Choose partner • Maturity: steady repeat sales, • Firm infrastructure
5. Interaction high volumes, EOS, low level
Explicit advertising = profits + positive
6. Collect data Uses
7. Implement changes cash
• Streamline linkages
• Decline: falling volumes, falling • Eliminate non-value added activities
Knowledge Workers prices = profits to losses + • Business Process Re-engineering
• Roving role positive to negative cash, divest • Benchmark key processes
• Temporary roles Competitive Internal
• Selection based on skill & competences
Balance the portfolio
• Input into own development
• Separate & relevant incentive schemes
Functional/Activity Problems: Value Networks
• Remote locations • No common shape
• Flexible working BEST IN PRACTICE • Unpredictable
• Self-fulfilling prophecy
• Product orientated 14
Technological
• Internet Ecological
Social & Demographic • Government • Globalisation
• Income distribution spending on RnD Pollution
Economic •
• Education levels • Communications Energy usage
• Globalisation •
• Population size • Speed/rate of Disposal of waste
• Economic cycle •
• Age profile change Sustainability of
• Interest rates •
• Lifestyle changes • Processes and resources
• Inflation
• Fashions and tastes methods of
• Employment levels
• Consumerism production
• Exchange rates
Political PESTEL analysis Legal

• Taxation (External, Environmental analysis) • Health And Safety
• Government policy • Employment
• Foreign trade • Consumer protection
regulations • Monopoly legislation
•
•
Protectionism
Globalisation External Analysis • Industry watch dogs
(Opportunities and Threats)
Porter’s 5 Forces
(Competitive,
Threat from New Market Entrants Threat from Substitute
Industry analysis)
Barriers to Entry: Technologies
• Economies of Scale • Can same features be produced
• Other cost advantages cheaper?
• Capital requirements • Can new features be provided for same
• Access to distribution channels cost?
• Patents, Government policy
• Reaction of existing firms
Competitive Rivalry • Level of danger may be influenced by
Greatest where: barriers to entry and/or power of buyers
• Competitors of similar size
• Slow market growth rate
• High fixed cost industry
Power of Buyers • Lack of differentiation Power of Suppliers
Power greatest where: Power greatest where:
• Few buyers • Few suppliers
• High number of suppliers available • Few substitutes
• Cost is high proportion of buyers total cost • High switching costs
• Low switching costs External Analysis • Threat from forward integration
• Buyers have low profits • Customer not significant to supplier
• Buyers have full information
(Opportunities and Threats) • Supplier has differentiated product
• Little product differentiation
15
Firm structure, strategy, rivalry
Porter’s
Diamond
External Analysis Factor
conditions ‘National
Competitive
Demand
conditions
(Opportunities and Threats) Advantage’
Related and supporting industries
Corporate Appraisal
Internal + External Analysis
= Corporate Appraisal = Position
Appraisal= SWOT Analysis
Strengths Weaknesses
INTERNAL Internal Analysis
Factors specific to the organisation
External Analysis EXTERNAL
Factors open to all in the industry Opportunities Threats
TOWS
16
To beat the five
High Hybrid Differentiation Focused Porters Five forces
Differentiation Forces
PESTEL
Porter’s Generic Strategies
Strategically develop
Benefit Low Price Strategic Fail organisation in line • Overall Cost Leadership
Clock
with environment (better margin, potential price cuts, entry
barrier, reduce supplier power)
challenges
• Differentiation
Low No Frills Fail Fail Market Facing (Premium price, better margin, barrier,
reduce buyer power)
• Focus (Niche)
Low Price High Positioning view (Cost or Differentiation, focus on market
needs, develop core competencies)
Method (see next page) Resource Based View Advantage

Beware of ‘Stuck in the Middle’
Limitations
•
•
Definition of market
Ignores factors such as competitors Strategic Options Uses
• Suggests strategies in isolation • Analyse rivals
• Suggest own strategy
SBU level strategy
Direction •
Horizontal diversification – competitive products, Limitations

complementary products, by-products Do nothing • Unclear definition of industry
/ Withdraw • Defines advantage in terms of position not
resources
Vertical Integration Ansoff’s Matrix • Lack of empirical evidence
Advantages Products, existing and new (PEN) • Ignores middle ground
Economies of combined Disadvantages
•
• Increased operational Markets, existing and new (MEN) • Restricts firm to position in present
ops industry
• Economies of control and gearing
• Reduced flexibility to • Requires perfect information
coordination • Market Penetration (cost reductions,
• Avoiding the market change partners
• Capital investment needs price reductions, advertising, minor product
• Tap into technology modifications)
Conglomerates • Product Development (exploit Risks
Advantages
• Flexibility
Disadvantages existing customers, RnD, buy-in and badge, • Product
• No additional benefit to JV’s, Licensing)
• Quick growth shareholders through
• Market
• Access to capital • Market Development (new markets • Operations and
synergies such as foreign markets, new segments such
• Portfolio effect
• Avoidance of anti-
• No operating advantages as adult to child or industrial to consumer) management
monopoly legislation • Diversification (related = vertical • Financial
integration or unrelated = conglomerate
17
Advantages Disadvantages Advantages Disadvantages
• Quick • Purchase premium • No premium for assets • Slow
• Lower risk • Integration issues • People development • Increases number of
• Overcomes barriers to entry o Systems • Staged investment competitors
• Same number of competitors o People • Established culture • Overcoming barriers to
• Can block a competitor o Culture • Introduction of new entry
• Possible synergies • Synergies do not technology and systems • No opportunity for
• Possible under-valuation of materialise easier synergies
target • Reputation of target • Possibility of grants • Higher risk
Acquisition Organic
Acquisition versus
Growth
Organic growth
Divestment
Possible synergies √ Quick
• Market √ Higher price due to
• Economies of scale strategic value
• Shared activities
• Surplus assets
•
•
Vertical integration
Skills transfer Method of Withdrawal √
Demerger
Gives shareholders
Growth?
• Dilution of risk an exit route
• Reduced power of √ Management can
buyers/suppliers focus on core areas
• Tax advantages √ Two companies can
develop separate
identities
Joint Venture
Separate business entity
with equity form two or
more businesses
Joint Development
Methods Management Buyout
(MBO)
Strategic Alliance √ Quick growth Consider
√ Access to competences • On-going involvement of
Long-term agreement to Licensing √ Less financial risk/outlay holding company
share knowledge, Giving the right to
competences, technology √ Overcome product, market, • Why is holding company
exploit brand, recipe, operational risk selling?
for mutual benefit process etc for a × May lose competences • Loss of Holding company
share of the profits × Train future competitors help, e.g. technical support,
Franchising × Brand infection finance services
Giving the right to exploit a business × Operational and contractual • Quality of management team
method/model in return for a capital sum disputes • Price
plus a share of the profits. Franchisor × Ownership of assets • Personal risk, e.g. home at
usually provides support e.g. marketing, × Sharing of profits risk?
training, technical
18
Problems:
• Definition of axes
• Definition of market
• No account of complimentary goods Directional Policy Matrix Business Sector
• Assumes high market share = advantage Prospects
Unattractive Average Attractive
BCG Matrix
Phased
Relative market Withdrawal withdrawal Double or quit
High share Low Weak
Proceed with
STAR PROBLEM CHILD care
High Build then Hold Build or Divest Proceed with
Losses to profits, negative Losses, negative cash Company’s Phased care Try harder
Market to positive cash Competitiv Avge withdrawal
growth e Growth
CASH COW DOG capabilities
Hold then Harvest Harvest then Divest Growth
Low Profits and positive cash Profits to losses, positive Cash Leader
to negative cash Strong
Generation
Leader
Public Sector Portfolio Matrix

High
Value for money
Low Portfolio
High Analysis
Public Public sector Star Political hot box
need &
Funding Market Attractiveness/SBU Strength matrix
effective Business strength/Competitive position
ness Golden Fleece Back drawer issues –
discontinue
Low Strong Average Weak
Enhance Lead Hold leadership Maintain

Opportunities to add value High Diversify Leverage leadership
Low High Re-invest strengths In attractive
High Use EOS segments
Ballast Heartland
Avoid ‘me too’ Segment Harvest
Edge of Long-term Differentiate between growth Price-up
Heartland Industry Med
Re-invest and harvest Cut costs
attractiveness Line pruning
Ability to
Add value Segment focus Harvest through
Low Seek sale of business Divest/Liquidate
advantage
Alien Territory Value trap
Low
19
Ashridge Portfolio Display – Corporate Parents
Acceptability
Suitability
Is the proposed strategy suitable for the
Will the proposed strategy meet Feasibility
the objectives of the organisation Has the organisation got, or can it get,
present situation and circumstances of the and, therefore, be acceptable to
organisation? the necessary resources to carry out the
the major stakeholders? strategy?
i.e. Is it suitable given the SWOT
analysis?
Strategic
Risk Choice (SAF) Cost/Benefit
`
Strategic Drift
Strategy Environment
Job Factors
Lewin’s Force
Field Analysis
Types of Change Personal
Extent of change Factors
Transformation Realignment
Driving Forces Restraining Forces
Social
Incremental Evolution Adaptation Factors
Speed Change
Strengthen Weaken
of Management Organisational
Change Factors
Revolution Reconstruction
Big Bang
Unfreeze Change Refreeze
Supporting
Time Power Mechanisms
• Participation
Change
• Education & communication
Scope Kaleidoscope Readiness • Facilitation & support
• Negotiation
Preservation Capacity • Manipulation
Diversity Capability • Coercion
20
Coordinated marketing
Implementation Issues
Customer needs
Profitability Analyse environment
Marketing and competitors – PEST
Target Markets Strategy / Porter’s five forces
Kotler’s Four
Pillars
Market Segmentation and
Marketing Target Market
A Awareness …identify, anticipate and satisfy …division of the market into
homogenous groups of potential
I Interest customer requirements customers who may be treated
D Desire similarly for marketing purposes
A Action Product Sales
Production • Geographic
• Demographic
Communications Mix: o Age
Physical Advertising Firm’s orientation o Gender
o Income
Evidence Sales promotion
o Family life-cycle
Public relations
Social class
Marketing
Personal selling •
Processes • Psychological
• Education
• Hobbies
People
Promotion • Distribution
Undifferentiated
channels Marketing Research
• Market coverage …systematic gathering,
Place • Outlet locations recording and analysing of data Differentiated
7 P’s • Warehousing about problems relating to the
marketing of goods and services
Marketing Mix – 4P’s Concentrated
…set of controllable
marketing variables used to
Price produce desired response in Product qualities
Field Research Desk research
(Primary data) (secondary data)
the target market Features, options,
range, warranty, Interviews, focus groups, External
branding, packaging questionnaires, Internal CSO reports,
• Price levels experiments, Test Accounts, Sales Business
• Discounts monitors, Trade
• Allowances
Product marketing reports, Customer
journals,
Product Life Cycle complaints
• Payment terms newspapers
• Delivery options
Product
to meet Product
needs mix
21
Divisional
√ Multiple products &
Entrepreneurial markets
√ Fast decisions Functional √ Autonomy for SBU
Matrix
√ Responsive to market √ Economies of scale managers √ Breakdown of silo’s
√ Congruence √ Specialists with some autonomy √ Training of SBU managers √ Shared knowledge
× No career structure √ Career structures √ Frees up senior managers √ Skill development
× No autonomy √ Frees up entrepreneur √ Focus on specific √ Innovation and creativity
× Single product & market × Slow decisions (bureaucratic) products/markets × Dual command
× Functional silo’s × Loss of congruence? × Dilution of functional
× Few products & markets × Duplication of effort authority
× Isolation of SBU × Time consuming meetings
managers
Centralised vs Decentralised
Virtual
S Strategy Types of Structure Network Organisation
Organisation
T Technology
O Objectives Outsourcing
P People √ Reduced cost
T Tasks
Planning and control Organisational External
√
√
√
Skill shortages
Flexibility
Focus on core business
Relationships
I
E
Ideology
Environment • Direct supervision
Structure ×
×
Loss of control
Supplier dependency
× Confidentiality
S Size • Planning processes
× Loss of in-house skills
• Performance
Mintzberg’s
management
• Internal market Structural
Decentralisation
• Culture Managing Configurations • Simple structure =
Strategic Apex entrepreneurial
• Self-control Business
Advantages: • Machine bureaucracy
Units Techno- Support = functional
• Frees senior
management structure Middle Line Staff • Professional
• Better local decisions bureaucracy =
• Better motivation decentralised
• Flexibility Operating core • Divisional form
Strategic Synergy
• Training/career path Planning co.s Manager • Adhocracy = matrix
Disadvantages: Financial Portfolio

• Loss of control Control co.s Manager
• Loss of congruence
• Duplication of effort
• Extra costs of control
Strategic Parental
Control co.s Developer
22
Country Political
specific costs Influences Acquire
resources Political
Legal
Diversify
sources of Economic
Economies Cost advantages
of scale Expand sales sales &
supply
Social/cultural
Convergence of Markets Reasons for growth in
international business Objectives of General
international risks Technological
Trend to Global growth

products
Competitive
Forces
Exporting
√
√
Low capital outlay
Low risk
The International
√
×
Can learn about market
May not meet customer needs Market Place
× Perceived lack of commitment
× High distribution costs
Methods of International Expansion

Joint Venture &
Franchising
√ Access to local resources Global Multi-Domestic Hybrid
√ Reduced national sentiment
√ Shared capital input
√ Access to competences and • Perceives foreign markets as • See overseas market as distinctive • Standardise wherever possible,
knowledge similar to domestic market • Customised products and e.g. RnD, Branding
× Shared profits • Products & marketing mix marketing mix • Market convergence may allow
× Lose competences constant • Increased overseas sales volumes standardised product
× Train competitor • Standardisation to save time and BUT • BUT
× Operational disputes money • Fewer EOS giving higher costs, so • Demand-driven
• Supply-driven policy volumes not turned into profits • Customised marketing mix
where necessary = GLOCAL
Foreign Direct Investment
√ Closer to market
√ Retain profits
√ More control STAFFING
√ Reduced operational conflicts
× High financial risk √ Overcomes lack of host skills, √ Multi-cultural view, inexpensive √ Efficient use of HR, builds strong
× Staffing decision unified culture, Transfers × Limits career mobility, isolates HQ culture and management
× Integration difficulties competencies from subsidiaries network
× Resentment by host, single × Subject to National immigration
cultural view policies, expensive
23
Transition
Strategic Development
Low Importance High Process Re-engineering
High
Complex but not core Complex & dynamic Redesign
competence High strategic value for
- Outsource advantage Process Redesign
Process - Process Improvement
Complexity Analysing
Dynamics Static / commodity Static but valuable
- Outsource/Automate - automate for efficiency Process Improvement
Low - Minimum resources Planning Gaps &
disconnects –
Failures in
Improving Processes communication
Harmon’s
Process-Strategy
Matrix Simplification – Value -added
Eliminate duplicated analysis –
Business activities Eliminate non-value

added activities
Process Change Process

Measures Feedback control systems
• Interviews Software Solutions –

• Questionnaires TARA
• Observation Systems Development Life
• Documenting tools Cycle
• Workshops
• Protocol Analysis Action Review Targets
• Prototyping Establish business needs
• Staff training
• Installation
Design
Weighting and Scoring Input-Process-Output Actuals
• File conversion & Select
• Quality of Support
• Testing Software • User Friendliness
• Ability to meet needs
• Compatibility/Integration Generic Solutions
Implementation • Costs √ Speed
• Supplier factors √ Cost
√ Risk
• Software Review √ Support
• System × Unique needs
• Project × Supplier power
× Compatibility/Integration 24
ACCA P3 – Business Analysis × No
These notes are not intended to cover theadvantage
whole of the ACCA P3 syllabus © Darren Sparkes, 2010
Implementation Issues Barriers
• Technophobia
• Security
• Set-up costs
• Running costs
• Limited
opportunities
Value chain E-business
• Limited resource
• Disinterested
customers
Generic strategies Integrated

E-commerce
Porters Five Forces

E-commerce
Strategic
Context Web-
Presence
Push vs Pull
Information Push = Supplier led
Technology
Pull = Customer led
Customer
Relationship
Management
Customer Life
Cycle E-sourcing
Downstream
Supply Chain
6 I’s (Customers) Management
• Integration E-procurement
Selection E-purchasing
• Industry structure
• Independent E-marketing Upstream
locations • Switching costs (Suppliers)
• Individualisation • Disintermediation E-payment
Acquisition
• Intelligence • Re-intermediation
• Interactivity E-branding • Updates Risks
• Communication
Retention • User community
• Tracking • Technology
-Recency 7P’s Organisational
preferences •
-Frequency • 4P’s No cost savings
• Customisation •
-Monetary • People
Extension value • Processes
• Physical evidence
25
Internal Implementation Issues Quality
Certification
External Failure
Commitment Communication
Appraisal Quality
Costs Standards
(PAF) Competence
Preventative
6 C’s
Customers
Proactive Continuous
improvement
Quality Assurance
Reactive
Quality Control TQM 99.99966%

‘Fitness for ‘Get it right
Use’ first time’
Level 1
Performed process Capability
Maturity Quality
Model
Level 2
Integration Six
Managed process
(CMMI) Sigma
Quality
Level 3 Software
Defined process
Key 3.4 defects in
Requirements 1 million
Level 4
Quantitatively Mangd Problem Solving
Process
(DMAIC) Team Roles
Level 5 6 C’s
Optimising process
The ‘V’’ Model
Define 6 Sigma
Test Plans Champion Master Black belt
Measure
Requirement spec A Acceptance testing Implementation
Leader
Functional spec C System testing Analyse
S
’ Black Belt
System Design S Integration testing
sI Improve
C
Unit Design C Unit testing Green Belt
’T
’ Control
C
s
Coding
s
’ 26
ACCA P3 – Business Analysis s These notes are not intended to cover the whole of the ACCA P3 syllabus © Darren Sparkes, 2010
Implementation Issues • Purpose
• Technological • Scope
• Operational • Deliverables
• Economic • Tolerate / Accept • Costs
• Social • Treat / Reduce Critical
• Time Path
• Transfer / Insure • Objectives
• Terminate / Avoid Analysis
• Stakeholders
Resources
Project • Org structure
Risk Initiation
Document
Quality • Time
SWOT
• Quality
Project • Resources Work
Time Feasibility Appraisal Breakdown
• Evaluation
• Dissemination Structure
• Sponsor • Exit
• Manager Stakeholders • Sustainability
• Team Initiation
Tie up loose Project Planning
Compare PID
ends
Management
to Outcome Ensure
Completed
(IPECC)
Formally terminate Execution
project
Completion Put plan into action
Final report & audit Monitor

And Project Leader
Control
Evaluate performance
Smooth TARA
handover
• Motivation
Corrective • Planning
Action Frequency • Co-ordination
Project • Communication
Adjust Plan Initiation • Problem solving
Document • Change Mgt
• Complexity
• Risk • Budgeting
Fast Track
• Cost • Meetings
Crashing
Motivation
Increase
resource 27
• Strategic funding
• Self generated income • Cost
• Management • Gearing
• Developmental funding • R&D
• Cost minimisation • Control
• Support Services • Security
• Apportion overheads to projects
Competitive • Cash flow
Strategy • Availability
• Exit routes • Retained earnings
Core Costs • Ordinary shares
Core Funding
Investment Financial Considerations
Strategy Strategy
Equity
Not for Profit
Organisations Financing
Decisions Alternatives Pref shares
Strategy
Debt
Grants
ROCE
Payback
Role of Finance •
•
Debentures
Loans
Traditional • HP/Leasing
Methods Investment • Overdraft
Appraisal • Trade Creditors
Ratios
Discounted cash • ROCE

flow techniques • Asset turnover • Gross/Net Margin
• ROCE Profitability
• ROE
• Receivables
NPV • Payables
IRR • Inventory Efficiency
• Revenue/employee
• Current ratio
Liquidity • Quick ratio
Inter-firm comparison Limitations
Limitations • Only comparative Gearing
• Accounting policies • Inflation
• Bias by large/small firms • Definitions • Dividend cover
• Unrepresentative avge • Accounting policies • Interest cover
Investor ratios
• Industry classifications • Availability of info • EPS
• Financial periods • Historical • PE ratio
28
Problem:
no account taken of invested Return On Residual
capital used to generate Investment Income (RI)
profits
Examples (ROI)
• Gross margin
• Net margin PBIT
• Cost % sales PBIT X 100 = % (CE x imputed interest rate)
• Profit CE RI
Profit Related Measures
Relative Measure % Absolute Measure £’s

Benefits
√ Longer-term
measures
√ More difficult to
manipulate Review and Control Problems:
• Sub-optimal
Problems:
• Absolute measure
√ Measures investment poor for
determinants and decisions performance
results • Deplete capital comparisons
√ Promotes goal assets too early
congruence The Balanced Scorecard
√ Includes
stakeholders
Financial Perspective
Joint issues when used in isolation
• Backwards looking measures
Potential • Short-termist decisions
Drawbacks Customer Internal Business • Open to easy manipulation of discretionary costs and
× Measures conflict Perspective Perspective capital employed
with each other
× Requires cultural
change Learning & Growth
Perspective
× Overload – Conclusion
‘paralysis by
analysis’
Financial measures should not be used in
× Time and cost isolation to measure performance but should
× No obvious
1. Identify CSF’s be combined with non-financial measures.
relationship with
2. Identify competences required for CSF’s
shareholder wealth
3. Develop KPI’s for competences
4. Measure competence
5. Take action – continuous improvement
29
Implementation Issues • Exploitative autocratic
Current & future • Benevolent authoritative
HR needs • Participative
• Democratic
• Trait
HR Gap Labour supply • Style
• Contingency • Charismatic • Communication
• Situational • Transformational • Teamwork
• Transactional • Delegation
Current HR • Motivation
position • Trust
Classical
Likert's
Management • Performance
HR Planning Styles • Potential
Strategic and
Leadership • Training
coherent
Recruitment
approach
Purpose
Learning
organisation
Assessment
Workplace
Strategy and & Appraisal
Knowledge
Management
Learning People Barriers
• Confrontation
Competency Performance • Judgement
Job design Measurement
Frameworks Reward • Chat
• Bureaucracy
Management • Event
• Unfinished
TARA Motivation business
• Scientific Mgt
• Job enrichment • Categories
• Japanese Mgt • Levels
• BPR • Design Issues
• Analyse behaviour • Techniques • Employee ranking
• Recruitment • Teamwork • Rating scales
• Succession • Strategic alignment
• Training needs • Checklists
• Manage planning • Critical incident method
performance • Free reporting
• Benchmarking Considerations: • Performance contract
• Fair & consistent • BARS
• Motivation • Appraisal interviews
• Reward performance
• Recognise job factors
• Control salary costs
30

ACCA P3 Smart Notes Dec 2010

Uploaded by

Copyright:

Available Formats

You might also like

ACCA P3 Smart Notes Dec 2010

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

ACCA P3 Smart Notes Dec 2010

Uploaded by

Copyright:

Available Formats

ACCA P3 – PROFESSIONAL LEVEL

Prepared by Darren Sparkes

It is the ability to link strategic and financial analysis;

it is the confidence to use creative thinking in the way you answer a

There is no absolutely correct answer – candidates who provided

• Analyse the requirements – verbs and keywords

2. WORK OUT TIMINGS

START PLANNING IN YOUR ANSWER BOOK

3. ANALYSE THE REQUIREMENTS

4. ALLOCATE MARKS TO EACH VERB IN THE REQUIREMENT

5. IDENTIFY RELEVANT MODELS, TOOLS, THEORIES FROM YOUR KNOWLEDGE BANK

7. DISTRIBUTE MARKS ACROSS HEADINGS

Mission and objectives

Product Life Cycle

Porters 5 Forces External Analysis Internal Analysis

Porters Diamond Corporate

The Strategy Clock Strategic Withdraw Ansoff’s product-

Sources of Finance Quality

Software Solutions Investment Appraisal

Strategy Choice Action

Strategic options Advantages Disadvantages

Professional Ethics Corporate Social

Short-term Long-term Multiple Shaper of Views on Business Ethics

Save time and

Porter’s Value Chain

Political PESTEL analysis Legal

(Opportunities and Threats)

(Opportunities and Threats) Advantage’

Related and supporting industries

Method (see next page) Resource Based View Advantage

Horizontal diversification – competitive products, Limitations

Public Sector Portfolio Matrix

Enhance Lead Hold leadership Maintain

Disadvantages: Financial Portfolio

Trend to Global growth

Methods of International Expansion

Business activities Eliminate non-value

Process Change Process

• Interviews Software Solutions –

Generic strategies Integrated

Porters Five Forces

Information Push = Supplier led

Quality Control TQM 99.99966%

Tie up loose Project Planning

Final report & audit Monitor

Discounted cash • ROCE

Relative Measure % Absolute Measure £’s

You might also like