ACCA SBL - Self Study Notes PDF

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ACCA - Strategic Business Leader (SBL) - Self Study Notes

Introduction Content Chapter

Topics

Key Study Points

0

Introduction

Professional Skills

Part A - Strategy 1

Concepts of Strategy

Process of Strategy Development, Strategic Drift

2

External Environment Analysis

PESTEL, Porter’s Diamond, Porter’s Five Force Model

3

Strategic Capability

Concepts, Knoledge Mgt, SWOT, Value Chain & Network

4

Strategic Choices

Strategic Clock, Porter’s Generic Strateies, Benchmark

5

Portfolio Analysis

BCG Matrix, Public Sector Portfolio, Parenting Matrix

6

Methods of Strategic Development

Ansoff’s Matrix, Methods of Development, Assessments

Part B - Strategic Choices 7

Organising for Success: Structure and Process

Matrix, GBS, Mintzberg’s Organization Configurations

8

Managing Strategic Changes

Lewin 3 Stage, Cultural Web, Change Nature Matrix

9

Business Process Change

POPIT Model, Harmon’s Matrix, Swim Lane Diagram

10

Project Management

Investment Appraisal, Critical Path, Benefit Reliaation

Part C - Finance in Planning and Decision Making 11

Financial Decision Making

Ratios, Flexed Budget, CVP, Linear Regression, ICO

Part D - Technology and Data Analysis 12

E-Business & E-Marketing

E-Business, 7Ps, Pricing, 6Is, CRM

13

Using IT Successfully

E-Procurement, Big Data, Cloud Technology

Part F - Governance 14

Scope of Corporate Governance

11 Concepts, Mendelow, Institutional Investors

15

Approaches to Corporate Governance

Rule & Principle Based, SOX, Insider System

16

Stakeholders and Corporate Social Responsibility

Scope of Citizenship, Ethical and SR Stances

17

The Board of Directors

NEDs, Nomination Committee, Division btw CEO&Chair

18

Relations with Stakeholders and Disclosure

Shareholders, Institutional Investors

19

Social and Environmental Issue

Part G - Organizational Control and Audit 20

Managing Internal Control Systems & Reporting

21

Audit and Cpmpliance

Part H - Risk 22

Risk Attitudes and Internal Development

23

Risk Identification

Part E - Leadership 24

Professionalism and Corporate Ethics Effective Leadership 1

ACCA - Strategic Business Leader (SBL) - Self Study Notes

Paper Background Requirements for Students - Apply knowledge and skills - Determine appropriate techniques - Select relevant data - Exercise professional judgement Basic Structure and Format Role Play - as an organizational leader / a consultant / an adviser Marking - 80% from Assignments + 20% Professional Skills

Professional Skills Professional Skills Communications - Express convicingly in appropriate medium - Sensitive to need of intended audience

Aspects Inform Persuade

Meaning Addressing without going into excessive details Support arguments with facts

Clarify

Use keypoints/heading in arguement logically

Commercial Acumen - Awareness of wider business and external environment - Use commercially sound judgement and insight to resolve issues and exploit opportunities

Aware

Ensure appropriate and practical to the scenario

Judge

Prioritize key points, ensure relevant and justified

Insight

Ensures recommendations address issues found

Analysis - Investigate information with a variety of analytical skills - Obtain suitable evidence to collaborate - Recommending appropriate action

Enquire

Ensure data and evidence relevant to your points

Consider

Consider info carefully into their implications

Investigate

Give reasons why a problem has happened

Sceptism - Probe, question and challange information provided - Understand business issues - Establish facts objectively Evaluation - Assess situations, proposals and arguments in a balanced way - Predict future outcomes and consequences

Probe

Review info and underly reasons for variances

Question

Scrutinise any assumptions being made

Challange

Highlight weakness/issues of info provided

Assess

Assess potential impacts to stakeholders

Estimate

Estimate trends or make sound forecast

Appraise

Balancing cost, risk, benefit and opportunities 2

ACCA - Strategic Business Leader (SBL) - Self Study Notes

Identify action verbs in the question Action Verb

Meaning

Define

Give meaning

Explain

Make Clear

Identify

Recognise/Select

Describe

Give key features

Distinguish

Define 2 different terms/viewpoints/concepts on the basis of difference in between

Compare & Contrast

Explain similarities and differences btw 2 different terms/viewpoints/concepts

Analyse

Give reason for the current situation or what has happened

Assess

Determine the strength/weakness/importance/significance/ability to contribute

Examine

Critically review in detail

Discuss

Examine by using argument for & against

Explore

Discuss/Examine in a wide-ranging manner

Criticise

Present the weakness/problem of actions taken/viewpoint express, supported by evidence

Evaluate (Critically)

Determine the value in light of the arguments for and against (critically means more -ve?)

Construct the case

Present arguments in favour for or argainst, supported by evidence

Recommend

Advise the appropriate actions to pursue in terms the recipients will understand

Online Resources Kaplan e-Learning (Until 6 Dec 2019 only) https://elearn.kaplan.com.hk/login/?lang=en username: 2000070083 password: Jkcv0107 Mind Map for Strategic Management https://cmapspublic3.ihmc.us/rid=1220561047661_1522192978_18894/Strategic%20Management.cmap Own Mind Map for Strategy https://www.mindmeister.com/1348900850#

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ACCA - Strategic Business Leader (SBL) - Self Study Notes

Chapter 1 - Concepts of Strategy Definitions of Strategy -

A pattern of activities that seek to achieve the objectives of the organization and adapt its scopes, resources and operations to environmental changes in the long term. (Drucker) The direction and scope of an organization over the long term, which achieves advantage in a changing environment through its configuration of resources and competencies with the aim of fulfilling stakeholder expectations. (Johnson, Scholes and Whittington)

Levels of Strategy Corporate Strategy Concerned with deciding which business an entity should be in and setting targets (Short-term) for the achievement of the entity’s overall objectives (Long-term) Business Strategy (Competitive Strategy) Concerned with how each business activity within the entity towards achievement of corporate strategy. Focused on markets and concerned with how to compete successfully in the particular markets with the particular products Strategic Business Units (SBU) - A division within a large organization that has a significant degree of autonomy, typically being responsible for developing and marketing its own products and services. Functional Strategy (Operational Strategy) Being the detailed strategies of departments which supports the overall corporate strategy and business strategies of an organization Communication process is both top down and bottom up which ensures all levels are aware of the plan and have a stake in implementing it.

Elements of Strategic Management Strategic Position (Chapter 1-3) Environment - Threats and opportunities of the business environment Strategic Capability - Strengths and weakness of the entity Expectations and Purposes - Purpose of the entity and what is it trying to achieve Strategic Choice (Chapter 4-5) Generation, evaluation and selection of strategic options at corporate, business and operational levels Strategy into Action / Implementation (Chapter 6-8) Organising - An organization structure must be established to help entity to implementing its strategy effectively. Putting a management structure and delegating authority to different individuals to be responsible and accountable for different aspects of the strategy Enabling - Enable the entity to achieve success through the effective use of resources Managing Changes - Manage changes appeared during the planning and implementation

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ACCA - Strategic Business Leader (SBL) - Self Study Notes

Processes of Strategy Development Deliberate, Emergent and Incremental Strategy -

Deliberate Strategy (Prescriptive Strategy / Rationally-Planned Strategy) - Outcome from a formal strategic planning processes - Emergent Strategy - Not formally planned bhut emerges in response to unforeseen developments and opportunities - Incremental Strategy - Developed slowly over time by making small changes to existing strategy, which are not large or far-reaching as the management do not see the need for any substantial changes - only safe when an entity operates in a very stable environment. - Strategic Drift - When the business environment is changing, small changes to existing strategy may not be sufficient to ensure the survival of the entity. The incremental changes might be associated with aimlessness and strategic drift. - Freewheeling Opportunism - Freewheeling opportunism do not like planning and prefer to see and grab opportunities as they arise. Planning takes too much time and is too constraining. Such ppl are often entrepreneur who enjoy taking risks and the excitement of setting up new ventures. Strategic Drift -

Strategic Drift takes place when an organization progressively fail to address the changing strategic position which will lead to a continual deterioration in organization performance. - The company responds too slowly to changes in its external environment and simply continue with the past strategies. - Management, faced with the complexities of steering and organization, tend to look for solutions based on the current ways of doing and seeing things, grounded in the existing organization culture. - Management will face the challenge of standing apart from their own experience and organization culture so that they will be able to recognize the emerging strategic issues. To manage strategic changes, they may also require actions outsides the scope of the existing culture, which means that ppl within the organization may be required to substantially change their core assumptions and their ways of doing. Strategic Lenses (Johnson & Scholes) -

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Strategy Development as Design (Similar to Deliberate Strategy) Strategy can be seen as a design process which is logical, analytical and planned. This will be well-suited to an entity with a hierachical management structure whose employees are accustomed to receive directions from their senior. Strategy Development as Experience (Similar to Incremental Strategy) Future strategies are based on experience gained from past strategies. Changes are incremental as the organization adapts to new opportunities and threats in the environment. This is the strategy drived by taken-for-granted assumptions and ways of doing things embedded in the organization culture. It has to be addressed that the assumptions and practices of the organization may become so ingrained and difficult to question and challenge. Strategy Development as Idea (Similar to Emergent Strategy) Strategic development should rely on radical new ideas which may come from all levels in the organization. Innovation happens as a result of variety and diversity. This requires the entity to encourage new idea nad innovative thinking. Many ideas will then compete for support of management.

Strategic Planning Framework - The Rational Planning Model -

It sees the purpose of strategy as the achievement of clearly established objectives. It considers strategic planning as a formal process led by senior management It see strategic planning as a multi-layered process, with corporate, business and functional strategy This should be repeated at regular intervals (typically annually)

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ACCA - Strategic Business Leader (SBL) - Self Study Notes

Strategic Planning Framework Elements

Descriptions

Vision and Mission

Vision - Overall aspiration for future; Mission - Overriding purpose and core value

Objectives

Clear and achievable/measurable targets to achieve vision and mission

Environmental Analysis

Opportunities and threats within the business environment

Position Audit

Assessment of strengths and weaknesses of the entiry

Corporate Appraisal

Formal appraisal of strategy to assess what might be capable to achieve

Strategic Choice

Identify, evaluate and select strategic alternatives to achieve objectives

Strategic Implementation

Implement the selected strategy

Strategic Control

Monitor the strategy implementation and make neccesary adjustment

Chapter 2 - External Environmental Analysis

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ACCA - Strategic Business Leader (SBL) - Self Study Notes

Chapter 2 - External Environmental Analysis The PESTEL Model This model is used for looking into the general environmental factor in macro. Heading of each factor form the name “PESTEL” Political

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Taxation policy Government stability (Wars, Chaos, Corruption, Nationalisation) Trade regulation (Foreign Trade Barriers) Policies on Competition (Monopoly, Collusive Oligopoly/Cartel, Oligopoly, Corruption) Important in providing the following infrastructure a) physical infrastructure (transportation) b) social infrastructure (education) c) market infrastructure (enforceable contracts)

Economic

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Interest rates (affect the business financimg and also customer demand) inflation rate (if high will distort business decision) Business cycles (economic activities punctuated from time to time) Disposable income / GDP (affect demand for goods and services) Unemployment, energy availability, cost, trade barriers

Social

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Income distribution, lifestyle changes, education level, etc. Population demographics (Patterns of Demand, Tax Base, Productivity, etc)

Technological

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Government spending on R&D, Industry focus, rartes of obsolescence Technology contributes to overall economic growth by a) gains in productivity (increase in total output) b) reduced costs (inprove efficiency) c) innovation of new products/services (increase of variety of goods and income) It also make change in business a) The types of products and services b) The ways in which products are made (New raw materials, automatic processes) c) The ways in which goods and services are sold (Direct selling via internet) d) The ways in which markets are identified (Database system and analyst tools) e) The ways in which businesses are managed Communications, intranet) f) The means and extent communications with external customers (Online services)

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Ecological

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Environmental restriction Sources of raw materials Unions for environment/labour protection Businesses may improve public image with showing friendly attitudes

Legal

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Law of taxation, employment, competition, monopoly, environmental protection

Porter’s Diamond Michael Porter argued that the national domestic market plays an important role in creating competitive advantage for companies on a global scale. A country could create factors that give its firms a comparative competitive advantage over firms in the same industry in other countries. Companies operating in a strong domestic market can develop competitive advantage on which they can extend their business operations into other countries. Manager may use the diamond model to determine if the home market can support and sustain a successful internationalisation effort or to assess in which country to invest next.

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ACCA - Strategic Business Leader (SBL) - Self Study Notes

4 Inter-related Elements in Porter’s Diamond

1) Factor Conditions a) Basic Factors: Factors of production that are existing naturally in the country, like land, minerals and weather capital b) Advanced Factors: Factors that are created and developed over time, like labour skills, knowledge, technological resources and infrastructure c) Countries with poor factor conditions may force itself to inovate to overcome the situtuation like Japan 2) Demand Conditions a) Strong demand in the home market can help to build international competitive advantage b) Demanding and knowledgeable domestic demand often drives the business to innovate 3) Related and Supporting Industries A country’s successful industries often consist of a cluster of related businesses and other organizations in the same geographical area a) Vertical Relationships (between buyers and sellers) b) Horizontal Relationships (shraing common customers and common skills and technology) 4) Firm Strategy, Structure and Rivalry Countries will be able to develop competitive advantage internationally in industries for which they are culturally well-suited, by their organization structure and management practices. Rivalry between local firms will also force the producers to innovate and keep looking ways to better meet the customer demand. 5) Government Government can influence indirectly. It may help create favourable and suitable condition like education & training system to develop appropriate skills and knowledge and enforcing strict product standards to raise performance level 6) Chances Chance events are developments outside the control of the firms and the nation’s government like wars, external political developments and reduction in foreign demand

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ACCA - Strategic Business Leader (SBL) - Self Study Notes

Porter’s Five Forces Model It provides a framework for analyzing the strength of competition in a market. This is no a model for analyzing individual competitor performance.Porter’s five forces model is used to explain why profitability varies among different industries. Profitability is affected by strength of competition: the stronger the competition, the lower the profit. Five Forces that determine the strength and nature of competition in an industry/market

1) Threat from Potential New Entrants How easy or how difficult it would be for new competitors to enter the market. Barrier to Entry - Costs and practical difficulties of entering a market When barriers to entry are low, existing competitors in the market are likely to keep prices low and to meet customers need as effective as possible. The competition will be strong and the opportunity for high profit...