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ACCA Paper P3: BUSINESS ANALYSIS Mnemonics and Charts


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No snowflake in an avalanche ever feels responsible. Voltaire

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Copyright statement For the ladies only Why study from a computer screen? Memorising: Tips and techniques Writing or saying things over and over again Vocalising Initial letters and making phrases The use of mnemonics The use of jingles Word association Visualising Link/story technique Do I need to memorise all your mnemonics? Disguise your use of mnemonics in the exam Charts Colour codes Electronic links within the database

ACCA Paper P3 Business Analysis +AddVance Mnemonics and Charts

Syllabus
The structure of the syllabus Intellectual levels Learning hours Guide to exam structure Guide to examination assessment Aim Main capabilities Rationale Detailed syllabus Approach to examining the syllabus

Study Guide
A B C D E F G H Strategic position Strategic choices Strategic action Business process change Information technology Project management Financial analysis People

Contents

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Where shall I begin, please your majesty? he asked. Begin at the beginning, the king said gravely, and go on till you come to the end: then stop. Lewis Carroll Through the Looking-Glass

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Overview of Mnemonics and Charts

Main Contents
Title Position audit: Where are we now? Choices and evaluation: Where do we want to be? Implementation and action: How do we get where we want to be? Business process change Information technology Project management Financial analysis People Revision modules
Contents

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ACCA Paper P3 Business Analysis


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Position Audit

Anjin-san, forget the village. A thousand things can happen before those six months occur. .... Leave the problems of God to God and karma to karma. Today youre here and nothing you can do will change that. Today youre alive and here and honoured, and blessed with good fortune. Look at the sunset, its beautiful neh? This sunset exists. Tomorrow does not exist. There is only now. Please look. It is so beautiful and it will never happen again, never, not this sunset, never in all infinity. Lose yourself in it, make yourself with nature and do not worry about karma .... James Clavell, Shgun, Coronet Books/Hodder and Stoughton
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Strategic Review (Position audit) - Overview of what might be involved: 1 of 2


Trigger point for strategy Often there is some happening or event that triggers the need for strategic change. The need is then uncovered by a strategic review, which itself can take several forms. Common trigger-points are shown below: Continuous appraisal On-going reviews and special investigations Performance appraisal systems Audits: - system audit - operating audit - organisation structure audit Cybernetic control systems - feedback - feedforward Competitive analysis Examples: change in legislation merger of competitors Examples: technological break-through move by competitor outbreak of conflict between countries From: research and development market(ing) research associated companies

Expected event

Sudden unexpected event

Ideas from within the firm Type of review

To evaluate a strategic proposal made independent of strategic review Ad hoc review reasons for . One off Reactive management Trouble-shooting Unexpected event Overlooked eventuality

Proactive management Continuous review Structured analysis on a continuous basis: Conditioned and directed research Cybernetic feedback systems
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2 of 2
External sources (environmental review) Secondary data Data that has been made available for another purpose and is therefore used in a second-hand way

Data gathering

Internal sources (resource audit)

Primary data Data that is created especially for this purpose and is therefore unique PESTEL analysis Gap analysis Various writers Ansoff McKinsey Various writers Vertical, horizontal and ratio analysis Kotler, et al BCG and Shell models Various models Porter Porter Porter Mendelow, et al Ansoff, Mintzberg, et al

Data analysis

Use made of analytical models There are other models

7-S analysis 10-M analysis Financial analysis Life-cycle analysis Product portfolio analysis Competitive analysis 5-Forces analysis Diamond analysis Value-chain analysis Stakeholder analysis SWOT analysis

Reporting system

Strategic review work often involves accountants and other consultants, and findings (usually with recommendations) are reported to managers with responsibility for strategic decisions. The system reports in three ways: full and detailed report, including statistics briefing paper (brief and to the point) oral presentation (use of Microsoft PowerPoint, etc.) A formal strategic review will uncover useful information for strategic management, and in the main will report on the following aspects: SWOTs core competencies and uses currently made the momentum line of existing strategy (expected results of the current strategy) present product-market sphere significant problems - now - looming recommended strategic change/direction

Aspects reported

Conclusion

It is not possible to provide a definite list of the aspects that should be analysed in a strategic review. This must depend upon the particular situation, trigger signs, circumstances and forces at work in the operational environment of a given organisation at a particular time. However the strategic review is usually a vital need in the early stages of strategy formulation. www.tonysurridge.co.uk

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Macro- and micro- environments

Macro-environment Those components of the environment that affect many businesses in the economy as a whole and may potentially affect a particular organisation but whose relevance is not specific at a particular time. They are broad forces (PESTEL) which we cover later. The effect of macro factors is usually less immediate than direct ones. MACROENVIRONMENT

Domain What an organisation stakes out for itself with respect to the range of products or services offered and markets served. An organisations domain determines those parts of the business environment that are micro or macro.

MICROENVIRONMENT

Example: The UK Sun newspaper has a different business domain than the (London) Times newspaper.

Micro-environment That part of the business environment that is directly relevant to an industry or market and is therefore relevant for the organisation is achieving its goals. It usually contains: customers competitors stakeholders but depending on the organisations domain can include other factors.

Divisions of the business environment

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PESTEL analysis
1.

The macro-environment of an organisation using PESTEL

(a) PESTEL Analysis PESTEL Analysis is a framework that strategy consultants use to scan the external macroenvironment in which an organisation operates. PESTEL is an acronym for the factors shown in the below.

P E S T E L

Political factors Economic factors Social factors Technological factors Ecological (natural, green) factors Legal factors

PESTEL factors
In the table on the next screen are examples of each of the PESTEL factors. Remember, macro-environmental factors can differ per continent, country or even region, so normally a PESTEL Analysis should be performed on a geographical basis. (b) Conducting a PESTEL Analysis Completing a PESTEL Analysis is relatively simple, and can be done by: - workshops - using brain-storming techniques - conditioned and directed research. (c) Using a PESTEL Analysis The usage of PESTEL analysis can vary depending on the industry, business, strategic development approach or market planning method. In general terms, PESTEL Analysis aids the following important stages of strategic development: 'current position' auditing future position projection formulation of strategic proposals evaluation of strategic proposals

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Examples of PESTEL factors


In this table are examples of each of the PESTEL factors. Remember, macro-environmental factors can differ per continent, country or even region, so normally a PESTEL Analysis should be performed on a geographical basis.

Political International trade regulations and restrictions Tax policies

Economic Interest rates & monetary policies Stages of the business cycle Economic growth

Social Labour/social mobility

Technological New inventions and development Government research spending Industry focus on technological effort Life cycle and speed of technological obsolescence

Ecological Environmental regulations and protection Energy use

Legal Contract enforcement law Customer protection law Employment law

Lifestyle changes Income distribution

Government organisation/ attitude

Political stability

Government spending

Demographics, population growth rates, age distribution

Destabilising factors (war, etc.)

Taxation

Education

Rate of technology transfer

Social attitude (including influence of pressure groups) Legislation/ regulation enforcing pollution (effluent) controls Legislation/ regulation controlling traffic movement and its cost

Trading block directives (such as European directives)

Competition regulation Safety regulation

Inflation rates Exchange rates

Fashion, hypes Work/career and leisure attitudes Entrepreneurial spirit Living conditions Health consciousness & welfare, feelings on safety

Energy costs (Changes in) information technology

Unemployment policy Consumer confidence

(Changes in) mobile technology (Changes in) Internet

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Using a PESTEL analysis

Completing a PESTEL Analysis is relatively simple, and can be done by: workshops using brain-storming techniques conditioned and directed research.

The usage of PESTEL analysis can vary depending on the industry, business, strategic development approach or market planning method. In general terms, PESTEL Analysis aids the following important stages of strategic development:

S C R I P T

Scenario building provides a framework of possible positive or negative future events. Current position of the organisation is analysed by use of the PESTEL framework. Research focus requires appropriate data to be uncovered, using both conditioned and unconditioned research. (Conditioned research is subject to or dependent on a condition or conditions, whereas unconditional research means unrestricted.) Idea generation PESTEL aids in the formulation of strategic proposals. Proposal evaluation PESTEL analysis can aid in the evaluation of ideas. Takes into account the main macro-environmental factors and ensures a near complete coverage.

Memory jog: PESTEL analysis provides a useful


original document)

SCRIPT (an

of the macro-environment of an organisation.

Its red hot, mate. I hate to think of this sort of book getting into the wrong hands. As soon as Ive finished this, I shall recommend they ban it. Ray Galton and Alan Simpson - The Missing Page Words spoken by Tony Handcock, 1960 BBC television programme

Tony Handcock, 1924-1968 English actor and comedian

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Gap analysis and strategic drift


Gap Analysis
Profit $m Ft: Forecast target Fo: Forecast with no strategic change Also click here

Ft

Strategic Gap Fo

2007

2008

2009

2010

2011
Current

2012

2013

2014

2015

Historical period

Planning period

Target Year

Profit $m

Strategic Drift

Also click here

Planned strategic outcome

The organisation has drifted from its strategic objectives

Actual results

2009
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2011
Current

2012

2013

2014

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Factors influencing social and culture


Culture relates to the sharing of behaviour patterns by groups of people. There are different cultures, or sub-groupings, and people can relate to move than one of them. The factors which influence culture are:

B E H A V I O U R S

Background and social class. Ethnic background. Ethnic membership affect cultural attitude and behaviour. Habits and traditions. Age (contrast the differences in behaviour between teenagers and old-age pensioners). Values and beliefs, which are often influenced by the other factors. Interests and education levels. Occupations and work. Different organisations use different structures and working practices. Usual ways of doing things norms. Religion, which will influence behaviour. Sex (gender), i.e. the different behaviours of males and females.

Memory jog: Remember culture affects BEHAVIOURS.

Ive been in Whos Who, and I know whats what, but itll be the first time I ever made the dictionary. Mae West, 1892 -1980 American actress, playwright, screenwriter and sex symbol. Known for her bawdy double entendres Letter to the RAF, early 1940s on having an inflatable life jacket named after her

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Legal factors
Laws are the result of common law, parliamentary statutes, government regulations and directives of supranational bodies (such as the European Union) and can be grouped as follows:

T H E R E B C C C C

Tax law. Health and Safety law. Employment law. Regulation and protection of data law. Environment protection law. Business law. Consumer protection law. Company law. Competition law. Criminal law.

Memory jog: Remember

THERE B 4 Cs.

Economic factors
Economic dynamics are important influences for decisions made by business organisations and relate to the following indicators:

I S G N P F I T

Inflation rates. Spending by government, both national and local. Growth or reduction of the Gross Domestic Product (GNP), and causes of. National economic trends factor prices such as materials, labour and rents. Productivity levels in the national economy. Foreign exchange rates. Interest rates. Tax rates.

Memory jog: When trying to recollect economic factors remember

IS GNP FIT?.
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Political forecasting and analysis

Political change can affect a business organisation in a number of ways and involves forecasting and analysis of:

Possibility of a muted regulation or change of Government policy. Indications of the reasons for the change. Nature and scope of the change. Outcome and consequences forecast for the organisation by the change. Nature of the strategic response required. Prevention (of the change) possibilities. Mitigation strategy (in the case when prevention is not possible).

I
N O N P M

Memory jog: Remember when discussing political aspects to

PIN it ON the PM (prime minister).

Education At Mr Wackford Squeers Academy, Dotheboys Hall, at the delightful village of Dotheboys, near Greta Bridge in Yorkshire, Youth are boarded, clothed, booked, furnished with pocketmoney, provided with all necessaries, instructed in all languages living and dead, mathematics, orthography, geometry, astronomy, trigonometry, the use of the globes, algebra, single stick (if required), writing, arithmetic, fortification, and every other branch of classical literature. Terms, twenty guineas per annum. No extras, no vacations, and diet unparalleled. Charles Dickens, 1812 - 70 Nicholas Nickleby (1839) Charles Dickens's gripping story about a boy's struggle to survive and find happiness in a hostile and unfeeling world. Wordsworth (1995.09.06) paperback - 731 pages

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Technological change

Technological change can affect a business organisation in a number of ways:

T W O

Types of products or services that are made and marketed. Ways in which the product is made (new materials, automation, etc.) Organisational implications for example organisation delayering and re-structuring due to IT change.

P I P E S

Processing systems machine routing and loading, etc. Information systems and the information available for market research, etc. Processing costs which are often reduced by technological change. Extent of geographical decentralising such as taking information processing operations (such as call-centres) overseas to low cost countries. Scope to improve services and communication with customers by using e-mail and e-business systems, etc.

Memory jog: when discussing how technological change can affect an organisation to mention the

TWO PIPES.

Take some more tea, the March Hare said to Alice, very earnestly. Ive had nothing yet, Alice replied in an offended tone, so I cant take more. You mean you cant take less. said the Hatter: its very easy to take more than nothing. Lewis Carroll, 1832 - 98 Alices Adventures in Wonderland (1865)

By Lewis Carroll, Tove Jansson Tate Publishing, Limited (2011) Hardback - ISBN 1854379577
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Risk and threat


A company faces risk because of its lack of knowledge of the future. When planners evaluate a strategy they will at best be able to forecast that 'if event A happens we shall have such and such a return, but if event B happens we shall lose $m.' The extent of the risk a firm faces can be revealed by the use of performance-risk gap analysis, where forecasts of the outcome in n years' time take into account not only the likely returns but also the risk - i.e., the probability of achieving various returns less than the likely level. Using this concept of risk - event A being favourable to the company and event B unfavourable, there would seem to be four basic ways in which a company can reduce its risk:

Contingency plans. If event B seemed a fairly remote possibility, but its happening would have serious consequences for the company, contingency plans should be prepared. For instance, there might be plans to cope with such events as the sudden deaths of key personnel; the merger of two competitors into one large unit; a breakthrough in technology by the company's competitors. Because of the speed of events these days and the magnitude of the effect which events such as technological breakthrough can have, no corporate strategy is complete without contingency plans. Nevertheless, they are only one part of the risk-reducing strategy. Adopting a flexible strategic profile. Whatever the company does to prepare for particular unfavourable events it must be recognised that the whole future is uncertain and the company needs to put itself in a position where it can take advantage of new (unforeseen) opportunities and avoid unforeseen threats. Contingency plans can only be prepared against events which have been predicted, even though they may be thought unlikely to happen. To avoid being taken totally by surprise, a company must have a constant 'ear to the ground' to catch hints of potentially threatening or promising developments at an early stage. (It is equally bad to miss an opportunity as to fail to forecast a threat - an opportunity rapidly becomes a threat if a company fails to take advantage of it and its competitors are quicker off the mark!) This is probably best achieved by both formal and informal information collection methods. Thus the company will keep abreast (as far as it can) of what its competitors are doing and possible planning to do, and experts within the company will have an eye on general economic trends, the opinions of political commentators and the progress of scientific research at the pure as well as the applied stage, in addition to any more specific research work the company may itself be engaged in. Mitigation of possible damage arising because of the event. If it seemed fairly likely that event B was going to happen, the company could attempt to mitigate the effect of the occurrence. The firm could aim for internal flexibility - the building up of funds to help it through the difficulty or external flexibility - the 'not putting all one's eggs in one basket' approach. External flexibility could be achieved by operating in different markets (with negatively correlated demand forces) and/or by using different technologies. If event B was 'a decline in demand at home' a possible strategy to mitigate the effect of that threat would be to expand export efforts. If event B was 'a general downturn in the world economy' a possible strategy would be to stockpile cash to see the company through the crisis until the next upswing. Event prevention. Management can attempt to influence events so that event A happens and event B does not. For instance if the company thought that a Conservative government was likely to be more favourable to it than a Labour government it could give money to the Conservative party to back their campaign. If it anticipated legislation that would seriously affect some aspect of its operations it could lobby Members of Parliament to try and avert the threat. Additionally, it could try and influence public opinion on the matter through the use of the press, trade unions, non-executive directors' influence, influential institutional shareholders and pressure groups.

Memory jog: Techniques risk (or threat)


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Influences of the main micro-environmental factors

Indirect environment

PESTEL analysis

Competitive analysis

Competitive Position

Competitive strategy

- 5-Forces analysis - Value-chain analysis - Competitors SWOT analysis

Entry barriers Cost leadership Differentiation Focus

Indirect environment

PESTEL analysis

Market analysis

Market Position

Marketing strategy

- Market research techniques

Product strategy Price strategy Place (distribution) strategy Promotion (communication) strategy People Process Physical evidence

For some organisations part of PESTEL can be micro-environment, such as a company that develops a technological-based strategy

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Classes of marketing strategy

Ward identifies four classes of market strategy:

E I R E

Entry. The strategy to enter a particular market. Increase of market share. The strategy to increase share of a segment in which the firm already operates. Remain in and sustain market share. The strategy to remain operating within a current segment. Exit. The strategy to leave the segment.

These are long term investment decisions. When appraising such future capital investment, strategic management attempt to forecast the impact of competitive forces and likely actions and reactions of competitors.

Memory jog: EIRE is another name for Ireland. It can be used as a mnemonic to describe the four main market strategies.

He who can, does. He who cannot, teaches. George Bernard Shaw, 1856-1950 Man and Superman (1903) Maxims: Education

Dan H. Laurence - Penguin (2000) - Paperback - 264 pages - ISBN 0140437886


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Porters 5 Forces framework


The key text dealing with competitive analysis is Professor Michael Porter's work 'Competitive Strategy: Techniques for Analysing Industries and Competitors' Porter states that 'competition in an industry is rooted in its underlying economics and competitive forces exist that go well beyond the established combatants in a particular industry'. The problem for the strategist is to determine which of these forces are relevant, and to what extent. Porter's approach to industry analysis is based on the concept of an industry shaped by five forces. They are illustrated in the diagram on the next screen. Porter referred to these forces as the microenvironment, to contrast it with the more general term macroenvironment. They consist of those forces close to a company that affect its ability to serve its customers and make a profit. A change in any of the forces normally requires a company to re-assess the market place. Strategy consultants use Porter's framework often to evaluate a company's strategic position.

Power of buyers. The power used by the buyers in an industry make it more competitive in three ways: (i) by their power to force down prices; (ii) whilst at the same time bargaining for higher quality or improved services; and (iii) be able to play supplier competitors against each other. All three of these power ploys will be at the expense of the supplying industry's profitability. Rivalry within the market. Conflict among existing competitors involves market maneuvering. Tactics include: product innovations and improvements, price competitions, advertising battles and improved customer services. Entrants. New competitors to an industry may increase the competitiveness of a market in three ways: (i) The market capacity expands without necessarily achieving a commensurate increase in market demand. (ii) New entrants need market penetration to achieve critical mass and to then build market share. They often achieve this by product and marketing initiatives which demand response from present market incumbents. (iii) Supply and demand dynamics may lead to increase costs in the industrial sector as new competitors bid for factors of production. Substitutes. In economics, one kind of good (or service) is said to be a substitute good for another kind insofar as the two kinds of goods can be consumed or used in place of one another in at least some of their possible uses. Classic examples of substitute goods include margarine and butter, or petroleum and natural gas (used for heating or electricity). The fact that one good is substitutable for another has immediate economic consequences: insofar as one good can be substituted for another, the demand for the two kinds of good will be bound together by the fact that customers can trade off one good for the other if it becomes advantageous to do so. Thus, an increase in price for one kind of good (ceteris paribus) will result in an increase in demand for its substitute goods, and a decrease in price (ceteris paribus, again) will result in a decrease in demand for its substitutes. Thus, economists can predict that a hike (increase) in the cost of wood will likely mean increased business for bricklayers, or that falling cellular phone rates will mean a fall-off in business for public pay phones.

R E

Suppliers power. Suppliers can exert bargaining power over companies within an industry in two main ways: (i) By threatening to raise their prices, or actually raising their prices. (ii) By threatening to reduce the quality of their goods and services, or actually reducing quality. The effect of this power influence or power play will be to squeeze profitability out of an industry which is unable to recover cost increases by raising its own prices.

Memory jog: A company faces competitive PRESSURES. These pressures can be analysed by using Porters 5-Forces Framework.
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Porter's 'Five Forces' framework


The key text dealing with competitive analysis is Professor Michael Porter's work 'Competitive Strategy: Techniques for Analysing Industries and Competitors' Porter states that 'competition in an industry is rooted in its underlying economics and competitive forces exist that go well beyond the established combatants in a particular industry'. The problem for the strategist is to determine which of these forces are relevant, and to what extent. Porter's approach to industry analysis is based on the concept of an industry shaped by five forces. They are illustrated in the diagram below (below). Porter referred to these forces as the microenvironment, to contrast it with the more general term macroenvironment. They consist of those forces close to a company that affect its ability to serve its customers and make a profit. A change in any of the forces normally requires a company to re-assess the market place. Strategy consultants use Porter's framework often to evaluate a company's strategic position.

Graphical representation of Porters Five Forces Framework

Threat of New Entrants

Threat of Bargaining Power of Buyers (customers)

Threat of Rivalry within an industry

Threat of Bargaining Power of Suppliers

Threat of Substitute Products

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Fact Sheet: Threat of new entrants

Overall, there is a danger that new entrants will reduce the profitability of companies already occupying the industry.

7 6

In some cases the increased demand for resources in the industry puts an upward pressure on resource costs (supply and demand dynamics).

The marketing strategies of new entrants require innovative responses from companies already occupying the market. This often increases costs and reduces profitability within the market

5 4 3 2 1

Offensive marketing strategies involve the 4 Ps, i.e. product innovation strategy, pricing strategy (often price reduction), promotion strategy and distribution strategy.

Thus, there is a need for new entrants to pursue offensive (build) marketing strategies.

For new entrants to achieve critical mass they need to penetrate the market and build share.

New entrants require to achieve critical mass. This is a volume level which allows a companys fixed costs to be spread over a sufficient output for the companys total cost per unit (and thus its selling price) to be competitive.

New entrants cause the market capacity to expand usually without an increase in market demand

Click to the next screen

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Extent of threat from new entrants

The extent of threat from new entrants is influenced by the following.

B I G S C A

Barriers to entry. Image and brand equity. Government regulation.

Switching costs for the buyer/customer. Capital requirements for entry. Access to distribution channels (for the new entrant). Learning/experience curve disadvantages for new entrants. Expected retaliation from market incumbents.

L E

Memory jog: Companies often face BIG SCALE penetration of their markets by new entrants and must build or use barriers to entry to help protect and defend their market positions.

Expenditure rises to meet income. C. Northcote Parkinson, 1909-93 The Law and the Profits (1960) C. Northcote Parkinson's Parkinson's Law Leo Gough www.tonysurridge.co.uk

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Threats posed by substitutes


Substitutes pose the following threats.

P A I D

Price-quality trade off. Because of their price-quality trade-off, substitute products may limit the price that a company can charge for it's products. Attracted to a transient market growth which eventually levels off and thus becomes very crowded and competitive. Increase the choice for customers. The main threat posed by substitutes is that they increase the competitiveness of a market. Danger that a threat of a substitute may not be realised until it is too late to arrest their entry.

Memory jog: Often, not enough attention is PAID to the threat that substitute products/services can bring to a market until it is too late.

Extent of threat of substitute products

The extent of threat of substitute products depends on;

P R I M E

Propensity of buyers to substitutes. Relative price-quality performance of substitute offerings. Imposition of switching costs by companies within the sector. Marketing mix tactics employed by the competitors supplying the substitutes. Extent, and perceived level of differentiation of the substitute.

Memory jog: Often, the threat of substitutes becomes a concern of the strategic analyst.

PRIME

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Seven situations where buyers are particularly powerful

The power used by the buyers in an industry make it more competitive in three ways: (i) (ii) (iii) by their power to force down prices; whilst at the same time bargaining for higher quality or improved services; and be able to play supplier competitors against each other.

All three of these power ploys will be at the expense of the supplying industry's profitability. Michael Porter purports that the power of the industry's buyer depends on the characteristics of its market situation and of the relative importance of a buyer's purchases from the industry compared with its (the buyer's) overall business. He suggests that buyers are particularly powerful in seven situations.

B I L L S U

Buyers product is not strongly affected by the quality of the suppliers' product. Information. The buyer has full information. Large purchases by the buyer relative to its supplier. Low profits earned by buyers. Significant proportion of the buyers costs are purchases.

Undifferentiated purchases. Purchases are undifferentiated. Potential for backward integration. Buyers have the potential for backward integration.

Memory jog: Actually the BILLS (invoices) are often not going

UP for a buyer.

Buyers often have the power to force prices down!


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I evidently knew more about economics than my examiners. John Maynard Keynes, 1883 - 1946 explaining why he performed badly in the Civil Service examinations.

The life of John Maynard Keynes [Book] by Sir Roy Forbes Harrod - Norton (1982) - paperback - 674 pages
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Extent of threat from the bargaining power of a buyer

The extent of the threat from the bargaining power of buyers is influenced by:

V I P P A

Volume of purchases from the buyer the higher they are, the bigger the threat. Information the buyer has available about the offerings of its suppliers competitors. Price sensitivity of the buyer.

Price of the total purchase including add-ons, such as delivery. Amount of bargaining leverage both parties have. Switching costs imposed on the buyer by its supplier. Substitute products/offerings available to the buyer.

S S

Memory jog: The buyer is a

VIP (very important person) who can

PASS its purchasing policy in a way that can damage its supplier.
Pass, in this case, means to make ones way (Chambers 20th Century Dictionary).

If at first you dont succeed, try, try again. Then quit. No use being a damn fool about it. W. C. Fields, 1880-1946 attributed

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Ways to reduce Buyer Power


There are ways open by which firms can attempt to reduce the power of the buyers in its market.

S M I L E D

Switching costs. Companies can lock in customer loyalty by the use of switching costs. An example is a supermarket loyalty card. A customer would be unable to take advantage of the loyalty card if he/she switched to another supermarket. Marketing tactics. The tactics to be employed depend upon the sensitivity of the market. If the market is promotional-sensitive then the company can obtain customer loyalty through its promotion strategy. Innovation in the market price. Companies selling unique products will possess technological monopoly and customers will be forced to use their products/services. Low price. If the market is price sensitive then customers can be locked in by the use of low selling prices, discounts and favourable credit terms. Exact need focus. Companies that produce to exact needs (customisation, bespoke offerings, etc.) usually create switching costs which lock in customers. Product differentiation. Customer loyalty is often the result of the habitual buying of customers who are happy with the quality of the product they purchase. This is particularly so in the case of fast moving consumer group (FMCG) products or repeat products.

Memory jog: use word association. Fortune has SMILED on organisations that increased or sustained their competitive advantages by reducing the power of their buyers to switch to other suppliers.

A see nothing wrong with giving Robert some legal experience as Attorney General before he goes out to practice law. John F. Kennedy, 1917 - 63 Americas 35th president of the appointment of his brother Robert.

Bill Adler - More Kennedy Wit 1st Ed 1965 h/b d/j / JFK
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Threat of bargaining power of suppliers


Suppliers can exert bargaining power over companies within an industry in two main ways: (i) (ii) By threatening to raise their prices, or actually raising their prices. By threatening to reduce the quality of their goods and services, or actually reducing quality. The effect of this power influence or power play will be to squeeze profitability out of an industry which is unable to recover cost increases by raising its own prices. Porter suggests that suppliers are particularly powerful in six situations.

A L L S A I

Availability of substitute products. There are few substitutes for their products. Low number of suppliers. There are few suppliers. Low importance of the buyer to the supplier. The company supplied is not an important customer. Supplier is able or has intention to integrate forward (downstream). Importance of the supply to the buyer. The supplier's product is an important component to the buyer's business. Differentiated goods/products are supplied. The supplier's product is differentiated.

Memory jog: ALL SAID and done, the suppler can present very serious threats to its customer (buyer).

Extent of threat of the bargaining power of suppliers


The extent of the threat of the bargaining power of suppliers depends on:

S I D E

Switching costs. The suppliers switching costs relative to the firm's switching costs Input supply costs of the buying firm relative to its other costs and sales. In other words, costs of inputs relative to selling price of the product. Degree of differentiation of supplied goods or products. Existence of substitute inputs.

Memory jog: Looking at this SIDE of a suppliers power base shows that it can exert considerable threat to its buyer.
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Ways to reduce Supplier Power


There are ways open by which firms can attempt to reduce the power of the suppliers in its market.

Economies of scale: large, experienced firms can generally produce at higher volumes than small, inexperienced firms. The rationale is that it is often better to expand within an existing market and build volume, than diversify into different product-markets and sectors. High volume purchases favour suppliers Switching costs. These are one-off costs facing a supplier which switches from one buyer. Switching costs may include contractual obligations, costs of certification, product redesign, costs and time in assessing a new source (if the supply is a non-traded good), or even the cultural problems of severing a relationship. Switching costs help to lock in suppliers thus removing -part of their power base. Capital investment: especially in industries with economies of scale and/or natural monopolies. Capital investment will increase quality, reduce costs and act as an entry barrier all of which will help to reduce the power of suppliers. It makes companies attractive to other suppliers thus reducing the power position of any one supplier. Advertising. Firms can seek to make themselves attractive by building trade loyalty. This would also make it it difficult for new competitors who may not be able, or willing, to spend heavily on trade advertising and promotion. Product differentiation. Products can be differentiated in terms of: price, quality, brand image, features, distribution, exclusivity, packaging, value. Patents help to give strength to a differentiated position. Patents and copyright offer inventors some protection against new entrants. This helps to provide the volume of purchases which lock in the supplier. Economies and cost advantages independent of size/scale. Established companies may have cost advantages not available to potential entrants, no matter what their size and cost levels. Critical factors include; proprietary product technology, favourable locations, learning or experience curve, favourable access to sources of raw materials and government subsidies. All of these make buyers preferable to suppliers.

A P

Memory jog: use word association. The use of tactics may enable the firm to ESCAPE from the power lock of suppliers.

Please, sir, I want some more, Charles Dickens, 1812 - 70 Oliver Twist (1838)

Oxford University Press (2010) - Hardback - 517 pages - ISBN 0192729667


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Threat of rivalry within an industry

Conflict among existing competitors involves market maneuvering. Tactics include: product innovations and improvements, price competitions, advertising battles and improved customer services. Rivalry occurs because one or more companies feels threatened or sees a market opportunity. Competitive moves usually results in counter-defensive strategies from other companies. This interactive pattern of offensive and defensive strategies is costly and may leave all the competing companies worse off then before. Porter suggests that there are seven main determinants relating to the strength of internal competition and rivalry within an industry.

L C H I M E

Lack of differentiation in the sector.

Competition is diverse. High fixed costs in the industry. Increase of capacity is only possible in large incremental amounts. Many equally balanced competitors. Exit barriers are high/robust. Slow rate of industrial growth.

Memory jog: Remember the different threats of rivalry within an industry as

L CHIMES.
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A man may be a fool and not know it, but not if he is married. H. L. Mencken, 1880-1956

Laurence J. Peter - Quotations of Our Time (1977)


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Intensity of competitive rivalry


The intensity of competitive rivalry in an industry is influenced by five main factors:

A L I C E

Asymmetry (irregularity) of information. now Level of marketing effort within the sector. Intermittent industry capacity. Complexity of information required. Equality within brands, i.e. lack of differentiation.

Memory jog: The film ALICE with other films!

in Wonderland competes

Porters 5-Forces Framework challenged


Porter's framework has repeatedly been challenged by other academics and strategists on the arguments that four dubious assumptions underlie the five forces:

C U R E

Collusion and interaction is non-existent. That buyers, competitors, and suppliers in a sector are unrelated and do not interact and collude. Uncertainty of competitive behaviour. That uncertainty is low, allowing participants in a market to plan for and respond to competitive behaviour. Resources a firm brings. That the attractiveness of an industry can be evaluated independent of the resources a firm brings to that industry Entry barriers create value. That creating barriers to entry, create value.

Furthermore, an important extension to Porter was found in the work of Brandenburger and Nalebuff in the mid-1990s. Using game theory, they added the concept of complementors (also called "the 6th force"), helping to explain the reasoning behind strategic alliances. The idea that complementors is the sixth force has often been credited to Andrew Grove, former CEO of Intel Corporation, although according to most references, the sixth force is government or the public. (Complementors is a term used to describe businesses that sell a product (or products) or service (or services) that complement the product or service of another company by adding value to them; for example, Intel and Microsoft (Pentium) (processors and Windows), or Microsoft & McAfee (Microsoft Windows & McAfee anti-virus).

Memory jog: Perhaps Michael Porters framework is not a winall CURE for identifying the nature of competition within a market sector.

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Paper P3: Business Analysis

Position Audit

Contents
Title
Chart Chart Chart Chart Mnemonic Chart Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Chart Strategic Review (Position audit) - Overview of what might be involved Macro- and micro- environments PESTEL analysis Examples of PESTEL factors Using a PESTEL analysis Gap analysis and strategic drift Factors influencing social and culture Legal factors Economic factors Political forecasting and analysis Technological change Risk and threat Influences of the main micro-environmental factors

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Mnemonic Mnemonic Chart Chart Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Chart Mnemonic Mnemonic Chart Mnemonic Mnemonic Classes of marketing strategy Porters 5 Forces framework Porter's 'Five Forces' framework Threat of new entrants Extent of threat from new entrants Threats posed by substitutes Extent of threat of substitute products Seven situations where buyers are particularly power Extent of threat from the bargaining power of a buyer Ways to reduce Buyer Power Threat of bargaining power of suppliers Extent of threat of the bargaining power of suppliers Ways to reduce Supplier Power Threat of rivalry within an industry Intensity of competitive rivalry Porters 5-Forces Framework challenged Entry barriers Main barriers to entry Problems with using entry barriers as defensive strategy Porter's Value-chain analysis Value chain analysis: Cost reduction techniques - the approach Value chain analysis: Cost reduction techniques - the use of information technology (IT)

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Mnemonic Value-chain analysis: Ways of reducing costs and improving differentiation within a group of divisions, business units or separate companies Value System: (Value chain linkage with suppliers/ customers) The use of value-chain analysis Porter's Diamond and the influence of national competitiveness on the strategic position DIAMOND model: The role of government Related and supporting industries Use of the DIAMOND model by a company The difficulties of developing and using scenarios Types of public sector organisation Issues faced by public sector organisations Issues for service providers Issues faced by manufacturing concerns Examples of service sector and manufacturing activities Product life-cycle analysis Characteristics of the Development stage of the product life cycle Characteristics of the Introduction stage of the product life cycle Characteristics of the Growth stage of the product life cycle Factors that the rate of growth and the length of the growth phase depends upon Characteristics of the Maturity (stability/ consolidation/ competitive) stage of the product life cycle

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Mnemonic Mnemonic Chart Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Chart Chart Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic

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Mnemonic Chart Chart Chart Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Chart Mnemonic Mnemonic Chart Chart Mnemonic Mnemonic Mnemonic Mnemonic Chart Chart Mnemonic Characteristics of the Decline stage of the product life cycle Product life-cycle marketing objectives Summary of product-life-cycle characteristics, objectives and strategies Stages of the competitive cycle Strategic groupings Strategic group analysis Examples of market convergence Commonly used critical success factors Examples of the critical success factors of a retailer Benchmarking Different approaches to benchmarking Strategic benchmarking 10-M Internal Resource Model Internal review Distinctive capabilities (or core competences) Distinctive capabilities: Reputation Core competences: The Prahalad and Hamel Three-test model Factors considered in a Resource Audit prior to the development of strategy 7-S Framework Kaplan and Nortons Balanced scorecard: Product-line strategies

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Mnemonic Mnemonic Mnemonic Mnemonic Chart Mnemonic Mnemonic Mnemonic Mnemonic Chart Mnemonic Chart Chart Chart Mnemonic Mnemonic Mnemonic Chart Mnemonic Mnemonic Mnemonic The need for flexible product development Purposes of knowledge work systems (KWS) The Knowledge Environment Different types of IT-based knowledge support systems Knowledge Support Systems: Groupware (Collaborative Software) Development of new knowledge or ideas Practical ways of sharing knowledge The challenges for Knowledge Management Benefits of a Knowledge Management Framework Strengths, Weaknesses, Opportunities and Threats analysis SWOT analysis SWOT as a summary framework of the other analytical models Objectives analysis: The concept of hierarchy Stakeholders of business organisations Making sure that the mission statement remains valid Characteristics of an effective mission statement Benefits of having a strong mission statement Relationship between mission - goals - objectives and critical success factors Key elements of strong corporate governance Issues involving corporate governance Concept of Principal-Agency Theory (PAT) applied to shareholders and directors

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Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Chart Chart General principles of Governance Corporate governance: Best Practice Role of the Board of Directors Role of Non-Executive Directors Problems with non-executive directors Corporate Governance reports which make up the FRCs Combined Code (UK) Committees recommended by Cadbury

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Do you know? Squaring the circle Squaring the circle relates to the geometrical impossible task of forming a circle from a series of squares. The expression "squaring the circle" is sometimes used as a metaphor for doing something logically or intuitively impossible. Squaring the circle: the areas of this square and this circle are equal. In 1882, it was proven that this figure cannot be constructed in a finite number of steps
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ACCA Paper P3 Business Analysis

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Title
Chart Mnemonic Mnemonic Mnemonic Mnemonic Chart Chart Mnemonic Mnemonic Chart Mnemonic Chart Mnemonic Porters 3 Generic competitive strategies Differentiation strategy: ways of enhancing uniqueness Sustaining competitive advantage by differentiation Cost leadership: The strategic advantages of low costs Ways to reduce costs Aims, analysis and implementation of a strategy of cost leadership Economies of scale Sustaining a low level of costs Interpreting competitors costs Focus strategy Niche Marketing Bowmans Strategy Clock : Competitive strategy options Sustaining competitive advantage: Locking out competitors by Lock In

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Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Chart Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Chart Chart Mnemonic Chart Chart Mnemonic Mnemonic Mnemonic Keeping ahead by maintaining market sustainability Sustainability: Superior access to resources or customers Sustainability: Maintaining optimum size in the target market Sustainability: Experience effects Sustainability: Restricting competitors options Sustaining competitive advantage Hyper-competitive conditions Hyper-competitive conditions: Attack (offensive) strategy Hyper-competitive conditions: Defensive (hold sustain) strategy Hyper-competitive conditions: Confusing competitors Hyper-competitive conditions: Guerrilla warfare carried out by small companies Hyper-competitive conditions: Collaboration Competitive strategy in hypercompetitive conditions Competition and collaboration Ansoffs Components of strategy Ansoffs Components of strategy Responding to SWOTs Ansoffs Components of strategy: Market penetration strategy Ansoffs Components of strategy: Appropriateness of Market penetration strategy Ansoffs Components of strategy: Product development strategy

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Mnemonic Chart Mnemonic Mnemonic Chart Ansoffs Components of strategy: Appropriateness of Product development strategy Ansoffs Components of strategy: Market penetration and Product development strategies Ansoffs Components of strategy: Appropriateness of Market development strategy Ansoffs Components of strategy: Appropriateness of product-market diversification strategy Ansoffs Components of strategy: Market development and Product-market diversification strategies Ansoffs Components of strategy: Classification of synergy Ansoffs Components of strategy: Forms of synergy Ansoffs Components of strategy: Business synergy Ansoffs Components of strategy: Consolidation of strategy Ansoffs Components of strategy: Product-market gapclosing growth strategies Ansoffs Adapted Product/Market Growth Vector Matrix Reasons for a diversification strategy Diversification strategy: Horizontal diversification Diversification strategy: Strengths of horizontal diversification Diversification strategy: Limitations of horizontal diversification Diversification strategy: Potential benefits of buyside (upstream or backward) integration (or vertical diversification) Diversification strategy: Problems associated with buyside (upstream or backward) integration

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Mnemonic

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Mnemonic Diversification strategy: Advantages of sellside (downstream or forward) integration) The issues involved with integration strategy Diversification strategy: Disadvantages of conglomerate diversification The issues involved with conglomerate diversification Divisional (SBU) decision structure Two levels of strategic management Styles of managing relationships between parent and business units. Parenting Styles of Management The role of parents (head office) in a diversified group: Portfolio managers, synergy managers and parental developers Diversification strategy: The need for corporate-wide strategic architecture Diversification strategy: The problems associated with a holding company structure Diversification strategy: Porters Three essential tests for diversification (or acquisition) Diversification strategy: Porters Attractiveness test for diversification or acquisition Diversification strategy: Porters Better-off test for diversification or acquisition Diversification strategy: Porters Cost-of entry test for diversification or acquisition Group of companies or divisions: Roles of the corporate board (parent) in a group of companies (or group of divisions)

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Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Chart Mnemonic Chart Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Group of companies or divisions: Head office as parent Group of companies or divisions: Head office intervening within business units Group of companies or divisions: Head office as a synergy manager Group of companies or divisions: Head office as a portfolio manager Porters premises of corporate and business unit strategies Group of companies or divisions: Parent (head office): value-destroying activities of the parent Aspects of product-market diversification strategy Group of companies or divisions: Strategic orientation in markets overseas Boston Consulting Group (BCG) Growth Share Matrix: Portfolio management: The aim of Portfolio Models Reasons for using the BCG product-market growth matrix Portfolio management: The BCG logic - The cash advantages of a holding a high relative market share Portfolio management: The BCG logic - The Cash Cow Portfolio management: The BCG logic - The Star Portfolio management: The BCG logic - The Problem Child Portfolio management: The BCG logic - The Question Mark (Wildcat) Portfolio management: The BCG logic - The Dog Portfolio management: The BCG logic - Strategic management of the business portfolio Portfolio management: Limitations of the BCG matrix

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Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Chart Chart Chart Chart Chart Chart Chart Chart Portfolio management: The benefits of the BCG business portfolio matrix Portfolio management: Directional Policy Business Portfolio Matrix Portfolio management: Directional Policy Business Portfolio Matrix: Dimension 1 - Market attractiveness Portfolio management: Directional Policy Business Portfolio Matrix: Dimension 2 - Competitive strengths of an business Portfolio management: Directional Policy Business Portfolio Matrix: Its limitations Directional Policy Matrix: The framework Nine strategic vectors of the Directional Policy Matrix Presentation of the Directional Policy Matrix Evaluation of strategic proposals Testing a strategic proposal for acceptability, suitability and feasibility. Assessment of the suitability of a strategy Assessment of the feasibility of a strategy Assessment of the acceptability of a strategy

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ACCA Paper P3 Business Analysis

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Title
Chart Chart Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic A planning framework for the implementation of strategic initiatives The Acquisition versus Start-up decision Implementation of strategy: Resource planning Main purposes of acquisition or merger Marketing objectives behind acquisition Financial objectives of acquisition Start-up versus acquisition merger Business alliances Difficulties associated with joint ventures The benefits of a franchise - for the franchisor Disadvantages of a franchise - for the franchisor Advantages of alliances Disadvantages associated with business alliances

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Chart Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Chart Mnemonic Mnemonic Chart Mnemonic Mnemonic Mnemonic Mnemonic Chart Chart Mnemonic Chart Mnemonic Five basic components of an organisation (Mintzberg) Mintzbergs Operating core Mintzbergs Strategic apex Mintzbergs Strategic apex: The role of direct supervision Mintzbergs Strategic apex: Environmental (boundary) management Mintzbergs six bases for organising work Criteria used to select the bases for grouping positions Mintzbergs five orgnanisational configurations Mintzbergs structural configurations Mintzbergs structural configurations: Machine bureaucracy Organisational structures: Functional organisation Mintzbergs structural configurations: The adhocracy Mintzbergs structural configurations: Professional bureaucracy Mintzbergs structural configurations: The simple structure Mintzbergs view on the Structural dilemma Which organisation structure is best? Goold and Campbells Structural fit Which organisation structure is best? Goold and Campbells Good Design Principles Organisational consequences of cross-functional teams Internal relationships External relationships: Related and supporting industries

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Mnemonic Mnemonic Chart Chart Chart Mnemonic Chart Mnemonic Chart Chart Chart Mnemonic Mnemonic Chart Chart Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic External relationships: Outsourcing External relationships: Issues involved in virtual systems Virtual Supply Chain: Producer/supplier driven Virtual Supply Chain: Integrators-driven Management of change Types of strategic change Contextual features and their influence on strategic change The Cultural Web An organisations cultural web The existing paradigm of a hypothetical railway company The required paradigm of a hypothetical railway company Culture: The culture of excellence Culture: The management cultures of Miles and Snow Charles Handys Four cultural stereotypes Charles Handys Shamrock organisation Strengths of a culture Possible weaknesses of a culture Main reasons why people resist change Main reasons why people resist change: A persons own vested interests Main reasons why people resist change: Social Fears Key issues in successful change management

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Mnemonic Mnemonic Mnemonic Mnemonic Chart Chart Chart Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Chart Constructive conflict: Views of Mary Parker Follett Where resistance to change may occur The role of the manager in the change process The characteristics of the change agent Intended and Emergent strategies Emergent strategy developed from a learning process Emergent strategy caused by short-term pressures Reasons why a company may adopt the emergent strategy approach Problems with the emergent strategy approach Strategy in the entrepreneurial firm Strategy in the medium-sized organisation Characteristics of a large to very large organisation Advantages of long-term and structured planning systems The rational model of planning Incrementalism Strategic drift Strategic drift

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Business process change

ACCA Paper P3 Business Analysis

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Contents
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Chart Chart Chart Chart Chart Chart Chart Chart Chart Chart Chart Mnemonic Chart Constituents of a business process Traditional organisation structure versus Porters Value Chain Porter's value chain applied to business processes Levels of business-process analysis The enterprise/strategy alignment cycle Business Process Management (BPM) Relationship between strategy and process redesign The scope of business process change Processes, techniques, tools and methodologies Capability Maturity Model (CMM) Features of the Capability Maturity Model (CMM) Business process change: The extent of change required Business process change from automation through to paradigm shift

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Contents (continued)
Title
Chart Mnemonic Mnemonic Mnemonic Mnemonic Chart Chart Mnemonic Chart Mnemonic Chart Examples of business process change from automation through to paradigm shift The streamlining, rationalising or simplifying pattern of redesign The gaps and disconnects pattern of process re-design Business process change: Business Process Re-Engineering (BPR) - Hammers 7 Principles Business process change: Business Process Re-Engineering (BPR) and information technology Features of Business Process Re-engineering (BPR) Hammers 7 Principles of BPR Business process change implications Harmons Process-Strategy Matrix Application of Harmons Process-Strategy Matrix Application of Harmons Process-Strategy Matrix Using as an example a medium-size engineering company involved in both home and export marketing of engineered products. Implications of outsourcing Business process change: Methodology for an organisation Harmons Business Process Redesign Methodology The Process Redesign Process Davenport and Shorts 5-Step Approach to a Business Process Re-design Project Business process change: Why use a methodology for change? Analysing business processes Evaluating IT outsourcing suppliers proposals

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Paper P3: Business Analysis

Business process change

Contents (continued)
Title
Mnemonic Mnemonic Chart Chart Mnemonic Chart Chart Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Chart Chart Chart Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Advantages of outsourcing IT work Disadvantages of outsourcing IT work Evaluating and selecting a generic software solution Improving the processes of the organisation Business change: Value-added pattern of process change Improving the processes of the organisation Feasibility of possible redesign options Technical feasibility Operational feasibility Social feasibility Feasibility: One-off capital costs Feasibility: Operating costs Feasibility: Costs of human resources Types of information system Evaluating, selecting and implementing a generic software solution Evaluating and selecting a generic software solution Characteristics of effective information Contents of a generic software package Choosing a generic software package Advantages of using generic packages Disadvantages of using generic software packages

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Information technology

ACCA Paper P3 Business Analysis

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Paper P3: Business Analysis

Information technology

Contents
Title
Chart Mnemonic Chart Chart Chart Chart Chart Mnemonic Mnemonic Chart Mnemonic Mnemonic Mnemonic Applications of e-business E-Business and Human Resources Management (HRM) E-business: Internal business systems E-business: communication and collaboration E-business: e-commerce Tangible and intangible benefits from e-commerce and ebusiness Barriers to the development of the adoption of e-commerce and e-business E-Business: Advantages of B2C e-commerce E-Business: Advantages of B2B e-commerce The main business and marketplace models for delivering e-business Uses of the Internet Business impact of the Internet: A challenge to conventional management thinking? Problems with the Internet

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Information technology
Contents (continued)
Title
Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Chart Chart Chart Chart Chart Chart Chart Chart Chart Mnemonic Mnemonic Mnemonic Chart Chart Benefits of an Intranet Uses of an Intranet Business impact of the Internet: Electronic Data Interchange (EDI) Business impact of the Internet: Difficulties with Electronic Data Interchange (EDI) Tasks which a website may automate E-Business: Uses made of extranets E-Business: Problems associated with extranets A five-layer model of e-business infrastructure E-business strategy The supply-chain and its terminology Push and pull approaches to supply chain management Michael Porters generic value chain Deises revised value chain model Members of the value network (system) of an organisation The supply-chain continuum The methods, benefits and risks of e-procurement Benefits of e-procurement Risks associated with e-procurement Different options and models for implementing e-procurement The off-line (conventional) marketing stages involved in the development and launch of a new product The scope of e-marketing

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Information technology
Contents (continued)
Title
Chart Mnemonic Chart Chart Chart Chart Chart Chart Chart Chart Chart Chart Chart Chart E-marketing system Variables used when segmenting a market in order to position a marketing mix strategy TOWS analysis for the B2C company McDonald and Wilsons 6 Is of e-marketing Interactivity and communication models for (i) traditional media and (ii) new media Individualisation and communication models for (i) traditional media and (ii) new media Integration of channels Industry re-structuring The internet used as a relatively low-cost method of market intelligence The e-marketing targeting strategy Online segmentation and targeting techniques E-marketing mix strategy The extended product A process for establishing a pricing strategy for products and services that recognises both economic and non-economic factors Determinants of price elasticity of demand Cost-based pricing strategies: cost variables Cost-based pricing strategies Demand-based pricing strategies Pricing strategy: Overview

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Information technology
Contents (continued)
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Mnemonic Mnemonic Mnemonic Mnemonic Chart Mnemonic Mnemonic Chart Chart Chart The virtues of branding from the manufacturer/distributors perspective The virtues of branding from the customer/consumers perspective Branding policy Success factors for building brand awareness online The four marketing activities that comprise customer relations management (CRM) on the customer lifecycle What is e-CRM? Benefits of e-CRM The three key e-marketing activities Methods of acquiring customers through electronic media The software components of CRM technologies

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Paper P3: Business Analysis

Project management

ACCA Paper P3 Business Analysis

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Paper P3: Business Analysis

Project management

Contents
Title
Mnemonic Mnemonic Chart Chart Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Chart Mnemonic Mnemonic Mnemonic Characteristics of a project Challenges presented to the managers of projects Six steps involved in project initiation Different project roles Project Steering Committee Responsibilities of the project sponsor Responsibilities of the project manager Core skills of the project manager Structure and nature of a project team Example of a matrix organisation used for an IS/IT project Advantages attributed to a project matrix team Disadvantages attributed to a matrix project team structure Project stakeholders

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Project management
Contents (continued)
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Mnemonic Chart Chart Mnemonic Mnemonic Mnemonic Chart Mnemonic Mnemonic Mnemonic Mnemonic Chart Chart Chart Chart Mnemonic Mnemonic Chart Chart Chart Project end users The implications of the triple constraint of scope, time and cost The project Business Case Characteristics of a successful business case Purposes of the business case Contents of a projects business case Analysis, description, assessment and classification of the benefits of a project investment Strategic value of information Possible benefits of developing an enhanced information system in the financial department Possible benefits of developing an enhanced information system in the production department Possible benefits of developing an enhanced information system in the marketing department The role of a benefits realisation plan The costs associated with a project development Investment appraisal techniques Initial stages of a project Project Initiation Document (PID) Setting project objectives Project management: The main management aspects Project management: Main management aspects: SCOPE of the project Project management: Main management aspects: QUALITY

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Project management
Contents (continued)
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Chart Chart Chart Chart Chart Chart Mnemonic Mnemonic Chart Chart Mnemonic Chart Chart Chart Chart Chart Chart Mnemonic Mnemonic Project management: Main management aspects: TIMING of the project Project management: Main management aspects: COST of the project Project management: Main management aspects: HUMAN RESOURCES of the project Project management: Main management aspects: COMMUNICATIONS of the project Project management: Main management aspects: RISK of the project Project risk and its management Types of project risk Managing project risk Project management overview Project documentation (Originated throughout the duration of the project) Contents of the Project Plan Importance of the project plan The Work Breakdown Structure Work Breakdown Structure (WBS) for Customising an offthe-shelf financial analysis software package The Work Breakdown Structure (from general to specific) Documenting and communicating a project Monitoring the project Common problems with projects Causes for project scope creep

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Project management
Contents (continued)
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Mnemonic Mnemonic Chart Chart Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Mnemonic Chart Mnemonic Dealing with project slippage Project change procedure Changeover methods Advantages and disadvantages of the various changeover methods Purpose and contents of the Completion Report Post-completion audit/review Post-implementation Review (audit) Project Management Software Inputs required by project programme-planning module of a project management software Advantages of using project management software Criticisms of project management software System testing Types of process quality maintenance On-going system maintenance reviews

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Paper P3: Business Analysis

Financial analysis

ACCA Paper P3 Business Analysis

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Paper P3: Business Analysis

Financial analysis

Contents
Title
Chart Chart Chart Chart Chart Chart Chart Chart Chart Mnemonic Chart Mnemonic Mnemonic The principal value objective Financial analysis Financial performance analysis - overview Common-size (vertical) analysis Horizontal analysis Ratio analysis A useful format for ratio analysis Financial performance analysis categories of ratios The RONA Pyramid Implications/issues of the ROI measure Measuring financial performance - overview The FIVE main groupings for financial performance analysis The implications of the growth measures used by financial managers

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Financial analysis
Contents (continued)
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Mnemonic Mnemonic Mnemonic Reasons/benefits of financial ratio analysis Limitations of ratio analysis Information required for meaningful ratio analysis

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Did you know? The Tower of Babel The Bible (Genesis 11: 1-9) states that humanity originally shared a common language. But people tried to build a tower to reach the heavens and God stopped this presumptuous project by making them speak in many tongues so that they might not understand each other. He then scattered the people abroad, so the tower was left unfinished, a symbol of human folly. The modern meaning of the word babel is A confused noise, typically that made by a number of voices.

The Tower of Babel by Pieter Bruegel the Elder (1563).

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Paper P3: Business Analysis

People

ACCA Paper P3 Business Analysis

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People

Contents
Title
Chart Chart Theories on the origins of leadership Alternative classical and modern theories of management/leadership in the effective implementation of strategic objectives Four approaches to job design The tensions and potential ethical issues related to job design The contribution of competency frameworks to human resource development

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Paper P3: Business Analysis

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