ACCA P3 PROFESSIONAL LEVEL

Business Analysis

SMART Notes

Prepared by Darren Sparkes

Email: darrensparkesnotes@sky.com

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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 Objectives12
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 People30

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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 problemwith 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)

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ACCA P3 Business Analysis These notes are not intended to cover the whole of the ACCA P3 syllabus Darren Sparkes, 2010
Extracts from the Examiners comments
In general:
Candidates were stronger in strategic concepts (strategic position, Porters 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 bCandidates failed to spot glaring errors in the process.
Part cIn many cases, candidates provided good answers to a very different question.

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ACCA P3 Business Analysis These notes are not intended to cover the whole of the ACCA P3 syllabus Darren Sparkes, 2010
 Section B
Question 2 part aCandidates answered thisrelatively well, using appropriate calculations
Question 2 part bcandidates 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 basked candidates to analyse these competencies. Some of these were clearly signposted
in the scenario. Many candidates failed to identify any relevant competenciesfalling back on generalisations
such as good communication skills and hence did not score well on this part of the question.
Question 4 part aIn general, this part of the question was answered well by most candidates
Question 4 part bThis 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.

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ACCA P3 Business Analysis These notes are not intended to cover the whole of the ACCA P3 syllabus Darren Sparkes, 2010
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 its the interpretation that
gets the marks)
Time management the marks are your guide

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ACCA P3 Business Analysis These notes are not intended to cover the whole of the ACCA P3 syllabus Darren Sparkes, 2010
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

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ACCA P3 Business Analysis These notes are not intended to cover the whole of the ACCA P3 syllabus Darren Sparkes, 2010
 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

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ACCA P3 Business Analysis These notes are not intended to cover the whole of the ACCA P3 syllabus Darren Sparkes, 2010
 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 organisations strategy taking account of customer and other
Exercise professional major stakeholder requirements
judgement Integrate appropriate information technology solutions to support the
Select relevant organisations strategy
data
Apply appropriate quality initiatives to implement and support the
organisations strategy
Advise on the principles of project management to enable the implementation
of aspects of the organisations strategy with the twin objectives of managing
Determine appropriate risk and ensuring benefits realisation
techniques Analyse and evaluate the effectiveness of a companys 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

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ACCA P3 Business Analysis These notes are not intended to cover the whole of the ACCA P3 syllabus Darren Sparkes, 2010
 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
CSFS
SWOT
Porters Generic
Strategies BCG, PSPM, DPM, APD,
Portfolio analysis Mkt attract/SBU strength

The Strategy Clock Strategic Withdraw Ansoffs 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
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ACCA P3 Business Analysis These notes are not intended to cover the whole of the ACCA P3 syllabus Darren Sparkes, 2010
 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. Hondas entry into the USA, 3M
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ACCA P3 Business Analysis These notes are not intended to cover the whole of the ACCA P3 syllabus Darren Sparkes, 2010
 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 detre.

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
Mendelows 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

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ACCA P3 Business Analysis These notes are not intended to cover the whole of the ACCA P3 syllabus Darren Sparkes, 2010
 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
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ACCA P3 Business Analysis These notes are not intended to cover the whole of the ACCA P3 syllabus Darren Sparkes, 2010
 Strategic
Manpower Assets
Management S
Money Valuable
Same as Different to Rare Architecture
Make-up
competitor / easy competitor / Manufacturing Cant be copied A
to copy difficult to copy Material Not substitutable
Markets Give access to wide R Reputation
Resources range of markets
Basic Unique
Ms
I
Competences Threshold Core Innovative
Core Competences Ability
the activities or
Strategic Capability processes that critically
Resource audit underpin competitive
advantage.

Porters 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
ACCA P3 Business Analysis These notes are not intended to cover the whole of the ACCA P3 syllabus Darren Sparkes, 2010
 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)

Porters 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

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ACCA P3 Business Analysis These notes are not intended to cover the whole of the ACCA P3 syllabus Darren Sparkes, 2010
 Firm structure, strategy, rivalry

Porters
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

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ACCA P3 Business Analysis These notes are not intended to cover the whole of the ACCA P3 syllabus Darren Sparkes, 2010
 To beat the five
High Hybrid Differentiation Focused Porters Five forces
Differentiation Forces
PESTEL
Porters 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
Vertical Integration
Advantages
Economies of combined
ops
Economies of control and
coordination
Avoiding the market
Tap into technology
Conglomerates
Advantages
Flexibility
Quick growth
Access to capital
Portfolio effect
Avoidance of anti-
monopoly legislation
ACCA P3 Business Analysis
Disadvantages
Increased operational
gearing
Reduced flexibility to
change partners
Capital investment needs
Disadvantages
No additional benefit to
shareholders through
synergies
No operating advantages
These notes are not intended to cover the whole of the ACCA P3 syllabus
Do nothing Unclear definition of industry
/ Withdraw Defines advantage in terms of position not
resources
Ansoffs Matrix Lack of empirical evidence
Products, existing and new (PEN) Ignores middle ground
Markets, existing and new (MEN) Restricts firm to position in present
industry
Requires perfect information
Market Penetration (cost reductions,
price reductions, advertising, minor product
modifications)
Product Development (exploit Risks
existing customers, RnD, buy-in and badge, Product
JVs, Licensing)
Market
Market Development (new markets Operations and
such as foreign markets, new segments such
as adult to child or industrial to consumer) management
Diversification (related = vertical Financial
integration or unrelated = conglomerate
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Darren Sparkes, 2010
 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
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ACCA P3 Business Analysis These notes are not intended to cover the whole of the ACCA P3 syllabus Darren Sparkes, 2010
 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 Companys 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
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ACCA P3 Business Analysis These notes are not intended to cover the whole of the ACCA P3 syllabus Darren Sparkes, 2010
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
Lewins 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
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ACCA P3 Business Analysis These notes are not intended to cover the whole of the ACCA P3 syllabus Darren Sparkes, 2010
 Coordinated marketing
Implementation Issues
Customer needs
Profitability Analyse environment
Marketing and competitors PEST
Target Markets Strategy / Porters five forces
Kotlers 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 Firms 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 Ps Warehousing about problems relating to the
marketing of goods and services
Marketing Mix 4Ps 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

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ACCA P3 Business Analysis These notes are not intended to cover the whole of the ACCA P3 syllabus Darren Sparkes, 2010
 Implementation Issues
Divisional
Multiple products &
Entrepreneurial markets
Fast decisions Functional Autonomy for SBU
Matrix
Responsive to market Economies of scale managers Breakdown of silos
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 silos 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
Mintzbergs
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
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ACCA P3 Business Analysis These notes are not intended to cover the whole of the ACCA P3 syllabus Darren Sparkes, 2010
 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
ACCA P3 Business Analysis These notes are not intended to cover the whole of the ACCA P3 syllabus Darren Sparkes, 2010
 Transition
Implementation Issues

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
Harmons
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 Is (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 7Ps Organisational
preferences
-Frequency 4Ps No cost savings
Customisation
-Monetary People
Extension value Processes
Physical evidence
25
ACCA P3 Business Analysis These notes are not intended to cover the whole of the ACCA P3 syllabus Darren Sparkes, 2010
 Internal Implementation Issues Quality
Certification
External Failure
Commitment Communication
Appraisal Quality
Costs Standards
(PAF) Competence
Preventative
6 Cs
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 Cs
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
ACCA P3 Business Analysis These notes are not intended to cover the whole of the ACCA P3 syllabus Darren Sparkes, 2010
 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
ACCA P3 Business Analysis These notes are not intended to cover the whole of the ACCA P3 syllabus Darren Sparkes, 2010
 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 CSFs be combined with non-financial measures.
relationship with
2. Identify competences required for CSFs
shareholder wealth
3. Develop KPIs for competences
4. Measure competence
5. Take action continuous improvement

29
ACCA P3 Business Analysis These notes are not intended to cover the whole of the ACCA P3 syllabus Darren Sparkes, 2010
 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 Business Analysis These notes are not intended to cover the whole of the ACCA P3 syllabus Darren Sparkes, 2010