Short Notes P3

ACCA P3 PROFESSIONAL LEVEL
Business Analysis
SMART Revision notes

Prepared by Darren Sparkes
Email: darrensparkesnotes@sky.com
ACCA P3 - Business analysis
These notes are not intended to cover the whole of the ACCA P3 syllabus
Darren Sparkes, 2009
Contents
Page no.
A message from Darren3

Paper 3 Examiners Approach..... 4
Extracts from the Examiners report Dec 08...5
Examination Technique.....7
Background and examination format............10
Syllabus Overview...........11
Strategic Planning........12
Mission and Objectives13
Business & Professional Ethics......14
Internal Analysis...15
External Analysis......16
Strategic Options..18
Method of Growth............19
Portfolio Analysis..20
Strategic Choice & Change Management....21
Marketing...22
Organisational Structure..23
International Market Place......24
Business Process Change.....25
Information Technology.............26
Quality.......27
Project Management...28
Role of Finance...29
Review and Control....30
Strategy and People31
ACCA P3 Business Analysis
Thank you for requesting a copy of my SMART Revision Notes.

The notes act as a learning and memory aid for the core models, theories and academic tools included in the syllabus.
However, in order to pass your examination the academic knowledge must be combined with extensive question practice
leading up to the examination.
Your examiner is not interested in the regurgitation of your knowledge but how you APPLY that knowledge to the
scenarios provided in order to answer the requirement set.
I suggest that you should practice as many exam standard questions as possible before the examination. Your practice
answers can be a mixture of answer plans and full written answers to get through as many questions as possible.
However, I would also suggest that it is essential for you to practice at least one full examination to time before entering
the exam room. It is only by replicating the time pressure in the exam that you can appreciate the importance of time
planning on the day.
Keep a look out for relevant articles appearing in your professional magazine or on the Institutes website prior to the
examination, particularly if they are written by the examiner.
I would welcome feedback on the notes.
And remember.
Whether you believe you can or you cant, youre right. (Henry Ford)
Regards,
Darren Sparkes
Approach Required
Differentiation is important to individuals seeking to pass a management and
strategy examination.
It is the ability to link strategic and financial analysis;
it is the confidence to use creative thinking in the way you answer a
particular problemwith alternative ways of viewing and solving a problem
Ralph Bedrock (Paper 3 Assessor)
There is no absolutely correct answer candidates who provided

coherent justification awarded appropriate marks
Steve Skidmore (P3 Examiner)
Extracts from the Examiners comments December 2008

In
general:
Performance showed an improvement on the previous sitting
Answers much more within the context of scenarios than previous sittings
Financial and quantitative data figured more prominently in answers
The three optional questions were equally popular
Q1b was biggest problem for candidates where many answers did not address the question
Q1a (PESTEL) so popular it lead to some candidates over-answering it, leading to time problems
As a result, answers to the final optional question often appeared rushed
Vast majority of papers were well written and well presented
Hand writing still remains a problem for some it is no use having great ideas if no-one can read them
Section A - Question 1
Q1a there were plenty of clues in the case study, most of which featured in candidates answers, with the
exception of legal responsibilities
Some candidates strayed onto internal issues (strengths and weaknesses) which were not given marks
Q1b The case study is rich in material to support the cultural web approach
Asked to explain the three strategy lenses Some candidates very well prepared showed great
understanding and gained full marks - Others showed very little knowledge and only scored two or three
marks.
Overall many candidates provided good answers to question 1
Reference to the case study context was much better than on previous papers
Section B
Many more candidates than before supporting their argument with financial analysis
Many who used financial data in part a failed to do so in part b
The model answer suggests that MMI should not acquire the company many candidates approved the
acquisition with justification through IT synergies credit was given for this approach
Candidates do not always have to agree with the examiners analysis to gain the marks on offer!
Question combined the themes of project management, quality and the systems development life-cycle
Part a relatively straight forward which candidates either knew or did not
Consequently, some candidates scored very few marks whilst others gained full marks
Part b answered relatively well many candidates giving a wide range of options.
Part c often overlap with part b
Many candidates did not clearly justify their answer
In some cases not enough points made to get the marks on offer
Part b relatively difficult in the time-constrained pressurised environment of the examination
Well answered many scoring eight or more out of ten.
This was very heartening!!!
Therefore, to pass P3 learn from the examiners

comments:
Analyse the requirements verbs and keywords
Planning think before you write the answer
Application, application, application
Theoretical answers score few marks
You can only apply what you know learn it!
Use and interpret the numbers (they are usually
easy calculations so its the interpretation that
gets the marks)
Time management the marks are your guide
Examination Technique to give the Examiner what he wants

1. USE 15 MINUTES READING TIME WISELY
Examine section B questions and choose the two on which you can MAXIMISE MARKS (not necessarily
those on your favourite topics)
If you have some time left then analyse Question 1 requirements and skim read the Q1 scenario to get a feel
for the relevant issues and identify where the information is for each part of the requirements.
2. WORK OUT TIMINGS
Q1 = 90 minutes. Planning = 20-25 minutes, Writing answer = 65-70 minutes
Section B Questions = 45 minutes each. Planning up to 10 minutes, Writing answer 35 minutes.
Break down the time required for each part of the requirements using the marks as a guide. 1.8 minutes per
mark in total, 1.4 minutes per mark after planning.
I suggest you start with Question 1 as you know you have 90 minutes to complete it.
START PLANNING IN YOUR ANSWER BOOK
3. ANALYSE THE REQUIREMENTS
Identify the verb, or verbs, and make it stand out. The verb tells you what the examiner wants you to do, e.g.
evaluate, recommend, analyse, calculate. Be sure to identify all the verbs in the requirement just in case
there is more than one thing to do, e.g. analyse and discuss, evaluate and recommend.
Identify key words. These tell you what to do it on or about, e.g. evaluate what?, recommend what?
4. ALLOCATE MARKS TO EACH VERB IN THE REQUIREMENT
This can now determine how much to write for each verb in the requirement
5. IDENTIFY RELEVANT MODELS, TOOLS, THEORIES FROM YOUR KNOWLEDGE BANK
6. DEVELOP HEADINGS AND NUMBERS LAYOUT

Put key elements of model in plan as headings, e.g. Porters 5 Forces analysis = 5 headings. Headings will
give your answer a framework and structure.
Use requirements to develop headings to show marker that you are answering the question asked
7. DISTRIBUTE MARKS ACROSS HEADINGS
This can now determine how much you write under each heading
8. ANALYSE THE SCENARIO
Make brief notes in your plan under relevant headings from models/tools/theories and requirement
Find relevant numbers for calculations
9. WRITE UP YOUR ANSWER TO MAXIMISE MARKS
Layout calculations in a logical and easy to mark format put them in an appendix in your answer plan
Add value to calculations by asking SO WHAT?
Use as many headings as possible to give the answer structure
Short sentences in short paragraphs
Work on 2 sentences for each mark 1 sentence making your point/answering the question + 1 sentence for
application
A third sentence giving some SO WHAT? could get you another mark
Leave a blank line between points/paragraphs to make your answer easy on the eye
Be strict with timings. When time is up on a question, or part of a question, move on.
Stick to answering the requirement use your plan to keep you on track
REMEMBER THE THREE GOLDEN RULES 1)APPLICATION 2) APPLICATION and 3)APPLICATION
Exercise professional
judgement
Select relevant
data
Determine appropriate
techniques
Candidate Requirements
Apply knowledge
and skills
Assess the strategic position of the organisation

Evaluate strategic choices available to an organisation
Discuss how an organisation might go about its strategic implementation
Model and redesign business processes and structures to implement and
support the organisations strategy taking account of customer and other
major stakeholder requirements
Integrate appropriate information technology solutions to support the
organisations strategy
Apply appropriate quality initiatives to implement and support the
organisations strategy
Advise on the principles of project management to enable the implementation
of aspects of the organisations strategy with the twin objectives of managing
risk and ensuring benefits realisation
Analyse and evaluate the effectiveness of a companys strategy and the
financial consequences of implementing strategic decisions
The role of leadership and people management in formulating and
implementing business strategy
Paper Background
Objectives of the
paper
Format of paper
Section A 50%
Compulsory
Major case study
Usually four parts
Case will include numbers
Choice of two from three

Each question likely to include
two parts
Will include short scenario
May include numbers
Section B 50%
10
Governance and Corporate Social Responsibility
Syllabus Overview
Cultural Web
SMART
Mission and objectives

Purpose, Strategy, Policies, Values
Mendelow's power-interest matrix
Stakeholder Analysis
PEST
Resource audit
External Analysis
Porters 5 Forces
Internal Analysis
Core competences
Corporate
Appraisal
Porters Diamond
Product Life Cycle
Benchmarking
SWOT
Porters Generic
Strategies
Porters Value Chain

CSFS
BCG, PSPM, DPM, APD,
Mkt attract/SBU strength
Portfolio analysis
The Strategy Clock
Strategic
Options
TOWS Matrix
Withdraw
Ansoffs productmarket matrix
Risk
Acquisition vs organic vs joint development
Suitability, Acceptability, Feasibility
Strategic Choice
Cost/Benefit
Change Management
International
Trading
HRM
IT
Structure
Project Management
Implementation
Sources of Finance
Marketing
Quality
Software Quality
Review and Control

Business Process Change
Not for Profit Organisations
Software Solutions
Financial Measures
Investment Appraisal
Non-financial Measures
BSC
11
Integrates activities
Competitive advantage
Position
Analysis
Corporate =
Strategic level
Relationship with environment
Whole
organisation
Business = Tactical
level
Interdependant
Functional = Operational level
All stakeholders
Long-term
Choice
Strategy
Freewheeling Opportunism
Market Driven reactive
Hands on management
Exploit complacent players
Relies on leaders vision
No formula for success
Take advantage of market
opportunities
Stock market problems
a course of action, including

the specification of resources, to
achieve a specific objective
Alternative
Incrementalism (Lindblom)
Building block approach
Build strategy through incremental steps not radical
shifts
Accepts uncertainty of future
Builds commitment
May be too slow
Ideas often compromised
Emergent Strategy - Bottom up (Mintzberg)

Intended
Strategy
Unrealised
Strategy
Deliberate
Strategy
Realised
Strategy
Emergent
strategy
E.G. Hondas entry into the USA, 3M

Johnson,
Scholes &
Whittington
Design
Strategic
Lenses
Action
Experience
Ideas
Strategic
Planning
Purpose
Rational Top Down Approach
Mission & Objectives
Respond and fit to environment

Utilise scarce resources
Provide direction
Ensure consistent objectives
Monitor progress
Corporate appraisal
Strategic options
Strategic choice
Implementation
Review
Advantages
Identification of
strategic issues
Consistency of goals
Improve
performance/survival
Pro-active
Recognises
environment
Optimum use of
resources
Disadvantages
Expensive (time
and money)
Bureaucracy
Stifles creativity
Less relevant in
a crisis
12
Purpose
Advantages
Resolve stakeholder conflict
Set direction
Help formulate strategy
Communicates values to
employees
Marketing to customers
Strategy
Policies and
standards
Criticisms
Meaningless terms used
Written retrospectively?
Not communicated to
employees
Ignored by managers
S
M
A
R
T
Specific
Measurable
Attainable
Relevant
Timebound
Mission
Values
the most generalised type

of objective which can be
thought of as its raison detre.
Objectives
Mission Statement
Culture
Published version of the

Mission
Stakeholders
Mendelows Power Interest Matrix

Low
Low
Interest
High
Minimal Effort
Keep Informed
Give Direction
Education /
Communication
High
Mission and
Objectives
Keep Satisfied
Key Players
Intervention
Participation Keep
Close
Critical Success
Factors
"The limited number of areas
in which results, if they are
satisfactory, will ensure
successful competitive
performance for the
organization.
They are the few key areas
where things must go right for
the business to flourish.
Power
The way we do things around here
If results in these areas are

not adequate, the
organization's efforts for the
period will be less than
desired."
Cultural Web
cultural paradigm
Routines & Rituals
Stories & Myths
Symbols
Power structure
Organisation structure
Control systems
Not for Profit Organisations
Features of objective setting

Multiple and contradictory objectives
Participation in objective setting
Providers of funding different to beneficiaries of service
Priorities may change frequently
Value for money a requirement not an objective
Increased role of personal objectives
Efficiency
Economy
Effectiveness
13
Equal opportunities
Corporate Governance
C
O
P
P
I
T
Divorce of ownership and control

Separate roles of CEO and Chairperson
Audit Committee / Remuneration Committee
Directors re-election at least every 3 years
Non-exec Directors
o Independent
o Role on audit / remuneration
committees
o Corporate conscience
o Mentors to inexperienced execs
o Strategic value through expertise
Competence
Consumer health and safety
Objectivity
Professional due care
Politeness
Bribes
Safety in the workplace
Integrity
Technical Standards
Environment
Professional Ethics
Innovation &
ideas from
close links to
community
Multiple
stakeholder
obligation
Reputation
and branding
Competitive
advantage
Recruitment
Shaper of
society
Views on Business Ethics
Business and
Professional
Ethics
Small company
advantage in the
supply chain
Attract ethical
investor funds
The business of
business is business
(Shareholder View Friedman)
Long-term Self-Interest /
Stakeholder view
Avoid future Government policy
Benefits to Business
Reduced risk
Honesty in Advertising
Corporate Social
Responsibility
Johnson, Scholes & Whittington Ethical Stances

Long-term
shareholder
interest
Fair Trade
Sustainability
Self control, not self interest
Short-term
shareholder
interest
Issues
Firms should acknowledge their social

responsibilities.
Potential problems
No universal acceptance of
morals & ethics
Management to concentrate on
maximising profits and
shareholder wealth.
Businesses have no duty to
society.
Societal benefits will arise as a
result of commercial success.
Conflict of CSR with shareholder wealth
Reduced revenues
Increased costs
Diverts funds from shareholders
Distracts management
Competitive disadvantage
Disclosure of business information
Deciding what is ethical

Bad publicity from monitoring and enforcement
14
Same as
competitor / easy
to copy
Different to
competitor /
difficult to copy
Resources
Basic
Unique
Competences
Threshold
Core
Manpower
Management
Money
Make-up
Machinery
Methods
Material
Markets
Management Info
Strategic
Assets
9 Ms
Strategic Capability
Resource audit
Valuable
Rare
Cant be copied
Not substitutable
Give access to wide
range of markets
Uncover Knowledge
Discover Knowledge
Capture Knowledge
Share Knowledge
Distribute Knowledge
Lever Knowledge
Maintain Knowledge
Explicit
Porters Value Chain
Internal Analysis
(Strengths & Weaknesses)
Benchmarking
1.
2.
3.
4.
5.
6.
7.
Select processes to be
benchmark
Assign responsibilities
Choose type of benchmarking
Choose partner
Interaction
Collect data
Implement changes
Roving role
Temporary roles
Selection based on skill & competences
Input into own development
Separate & relevant incentive schemes
Remote locations
Flexible working
Competitive
identify activities within the firm which

add value to customers and those that
do not
Primary Activities
Value Networks
Knowledge Workers
Reputation
Innovative
Ability
Core Competences
the activities or
processes that critically
underpin competitive
advantage.
Knowledge Management
Tacit
Architecture
Internal
Inbound Logistics
Operations
Outbound logistics
Marketing and sales
Service
Support/secondary activities
Procurement
HRM
Technology development
Firm infrastructure
Uses
Streamline linkages
Eliminate non-value added activities
Business Process Re-engineering
Benchmark key processes
Process/Activity
BEST IN PRACTICE
15
Economic
Globalisation
Economic cycle
Interest rates
Inflation
Employment levels
Exchange rates
Social & Demographic

Income distribution
Education levels
Population size
Age profile
Lifestyle changes
Fashions and tastes
Consumerism
Technological
Internet
Government
spending on RnD
Communications
Speed/rate of
change
Processes and
methods of
production
PESTEL analysis
(External, Environmental analysis)
Political
Taxation
Government policy
Foreign trade
regulations
Protectionism
Globalisation
External Analysis
(Opportunities and Threats)
Threat from New Market Entrants

Barriers to Entry:
Economies of Scale
Other cost advantages
Capital requirements
Access to distribution channels
Patents, Government policy
Reaction of existing firms
Competitive Rivalry
Greatest where:
Competitors of similar size
Slow market growth rate
High fixed cost industry
Lack of differentiation
Power of Buyers
External Analysis
Legal
Health And Safety
Employment
Consumer protection
Monopoly legislation
Industry watch dogs
Threat from Substitute

Technologies
Power greatest where:
Few buyers
High number of suppliers available
Cost is high proportion of buyers total cost
Low switching costs
Buyers have low profits
Buyers have full information
Little product differentiation
Porters 5 Forces
(Competitive,
Industry analysis)
Ecological
Globalisation
Pollution
Energy usage
Disposal of waste
Sustainability of
resources
Can same features be produced

cheaper?
Can new features be provided for same
cost?
Level of danger may be influenced by
barriers to entry and/or power of buyers
Power of Suppliers
Power greatest where:
Few suppliers
Few substitutes
High switching costs
Threat from forward integration
Customer not significant to supplier
Supplier has differentiated product
16
Problems:
No common shape
Unpredictable
Self-fulfilling
prophecy
Product orientated
ignores market
Firm structure, strategy, rivalry
Product Life-cycle
Stages:
Introduction: high risk, little competition, low volume, high advertising = losses + negative cash
Growth: increased competition, growing volumes, EOS, high advertising = losses to profits + negative
to positive cash
Maturity: steady repeat sales, high volumes, EOS, low level advertising = profits + positive cash
Decline: falling volumes, falling prices = profits to losses + positive to negative cash, divest
Porters
Diamond
Factor
conditions
National
Competitive
Advantage
Demand
conditions
Related and supporting industries
Balance the portfolio
External Analysis
Corporate Appraisal
Internal + External Analysis
= Corporate Appraisal = Position
Appraisal= SWOT Analysis
Strengths
Weaknesses
Internal Analysis
INTERNAL
Factors specific to the organisation
External Analysis
Factors open to all in the industry
EXTERNAL
Opportunities
Threats
TOWS
These notes are not intended to cover
the whole of the ACCA P3 syllabus
17
High
Hybrid
Differentiation
Focused
Differentiation
To beat the five

forces
Porters Five
Forces
PESTEL
Porters Generic Strategies

Benefit
Low
Strategic
Clock
Low Price
No Frills
Fail
Price
Low
Method of Growth? (See next page)
Fail
Differentiation
Focus (Niche)
(Cost or Differentiation, focus on market
needs, develop core competencies)
What Basis?
Strategic Options
What Direction?
competitive products,
Do nothing
/ Withdraw
complementary products, by-products
Vertical Integration
Advantages
Economies of combined
ops
Economies of control and

coordination
Avoiding the market
Tap into technology
(better margin, potential price cuts, entry

barrier, reduce supplier power)
Beware of Stuck in the Middle
Definition of market
Ignores factors such as competitors
Suggests strategies in isolation
Horizontal diversification
Overall Cost Leadership
(Premium price, better margin, barrier,

reduce buyer power)
Positioning view
Resource Based View
Market Facing
High
Limitations
Strategically develop
organisation in line
with environment
Fail
Disadvantages
Increased operational
gearing
Reduced flexibility to
change partners
Capital investment needs
Ansoffs Matrix
Products, existing and new (PEN)
Markets, existing and new (MEN)
Market Penetration (cost reductions,
price reductions, advertising, minor product

modifications)
Conglomerates
Product Development (exploit

Advantages
existing customers, RnD, buy-in and badge,
Disadvantages
Flexibility
JVs, Licensing)
No additional benefit to
Quick growth
shareholders through
Market Development (new markets
Access to capital
synergies
such as foreign markets, new segments such
Portfolio effect
No operating advantages
as adult to child or industrial to consumer)
Avoidance of anti
Diversification (related = vertical
monopoly legislation
integration or unrelated = conglomerate
Uses
Analyse rivals
Suggest own strategy
SBU level strategy
Limitations
Unclear definition of industry
Defines advantage in terms of position not
resources
Lack of empirical evidence

Ignores middle ground
Restricts firm to position in present
industry
Requires perfect information
Risks
Product
Market
Operations and
management
Financial
18
Advantages
Disadvantages
Quick
Lower risk
Overcomes barriers to entry
Same number of competitors
Can block a competitor
Possible synergies
Possible under-valuation of
target
Acquisition
The attractiveness test
The cost of entry test
The better off test
Disadvantages
No premium for assets

People development
Staged investment
Established culture
Introduction of new
technology and systems
easier
Possibility of grants
Acquisition versus
Organic growth
Porters 3 Tests for

Acquisitions
Advantages
Purchase premium
Integration issues
o Systems
o People
o Culture
Synergies do not
materialise
Reputation of target
Slow
Increases number of
competitors
Overcoming barriers to
entry
No opportunity for
synergies
Higher risk
Organic
Growth
Divestment
Possible synergies
Market
Economies of scale
Shared activities
Surplus assets
Vertical integration
Skills transfer
Dilution of risk
Reduced power of
buyers/suppliers
Tax advantages
Method of
Growth?
Withdrawal
Joint Development
Methods
Strategic Alliance
Licensing
Long-term agreement to
share knowledge,
competences, technology
for mutual benefit
Franchising
Giving the right to exploit a business
method/model in return for a capital sum
plus a share of the profits. Franchisor
usually provides support e.g. marketing,
training, technical
Demerger
Joint Venture
Separate business entity
with equity form two or
more businesses
Quick
Higher price due to
strategic value
Giving the right to

exploit brand, recipe,
process etc for a
share of the profits
Gives shareholders
an exit route
Management can
focus on core areas
Two companies can
develop separate
identities
Management Buyout
(MBO)
Quick growth
Access to competences
Less financial risk/outlay
Overcome product, market,
operational risk
May lose competences
Train future competitors
Brand infection
Operational and contractual
disputes
Ownership of assets
Sharing of profits
Consider
On-going involvement of
holding company
Why is holding company

selling?
Loss of Holding company

help, e.g. technical support,
finance services
Quality of management team
Price
Personal risk, e.g. home at

risk?
19
Problems:
Definition of axes
Definition of market
No account of complimentary goods
Assumes high market share = advantage
Business Sector
Prospects
Directional Policy Matrix

Unattractive
BCG Matrix
Relative market
share
High
High
Market
growth
Low
STAR
Build then Hold
Losses to profits, negative
to positive cash
PROBLEM CHILD
Build or Divest
Losses, negative cash
CASH COW
Hold then Harvest
Profits and positive cash
DOG
Harvest then Divest
Profits to losses, positive
to negative cash
Low
Weak
Withdrawal
Companys
Competitive Avge
capabilities
Phased
withdrawal
Average
Phased
withdrawal
Proceed with
care
Proceed with
care
Attractive
Double or quit
Try harder
Growth
Growth
Strong
Cash
Generation
Leader
Leader
Public Sector Portfolio Matrix

Value for money
High
Low
High
Public sector Star
Public
need &
Funding
effective
ness
Political hot box
Portfolio
Analysis
Market Attractiveness/SBU Strength matrix
Business strength/Competitive position
Golden Fleece
Back drawer issues

discontinue
Low
Low
High
Opportunities to add value
Ballast
Strong
High
High
Heartland
Edge of
Heartland
Long-term
Industry
attractiveness
Med
Ability to
Add value
Low
Low
Alien Territory
Average
Weak
Enhance Lead
Diversify
Re-invest
Hold leadership
Leverage
strengths
Use EOS
Maintain
leadership
In
attractive
segments
Avoid me too
Differentiate
Re-invest
Segment
between growth
and harvest
Harvest
Price-up
Cut costs
Line pruning
Segment focus
Seek
advantage
Harvest through
sale of business
Divest/Liquidate
Value trap
Ashridge Portfolio Display Corporate Parents
20
Acceptability
Suitability
Feasibility
Will the proposed strategy meet

the objectives of the organisation
and, therefore, be acceptable to
the major stakeholders?
Is the proposed strategy suitable for the

present situation and circumstances of the
organisation?
i.e. Is it suitable given the SWOT
analysis?
Has the organisation got, or can it get,

the necessary resources to carry out the
strategy?
Strategic
Choice
Risk
`
Cost/Benefit
Strategic Drift
Strategy
Environment
Types of Change
Transformation
Incremental
Extent of change
Evolution
Realignment
Driving Forces
Change
Management
Revolution
Strengthen
Unfreeze
Change
Kaleidoscope
Diversity
Weaken
Reconstruction
Power
Preservation
Restraining Forces
Social
Factors
Time
Scope
Personal
Factors
Adaptation
Speed
of
Change
Big Bang
Job Factors
Lewins Force
Field Analysis
Readiness
Capability
Capacity
Change
Organisational
Factors
Refreeze
Supporting
Mechanisms
Participation
Education & communication
Facilitation & support
Negotiation
Manipulation
Coercion
21
Coordinated marketing
Implementation Issues
Customer needs
Profitability
Analyse environment
and competitors PEST
/ Porters five forces
Marketing
Strategy
Target Markets
Kotlers Four
Pillars
A
I
D
A
Marketing
identify, anticipate and satisfy
customer requirements
Awareness
Interest
division of the market into

homogenous groups of potential
customers who may be treated
similarly for marketing purposes
Desire
Action
Production
Physical
Evidence
Processes
Communications Mix:
Advertising
Sales promotion
Public relations
Personal selling
Place
Distribution
channels
Market coverage
Outlet locations
Warehousing
Marketing Mix 4Ps

Price
set of controllable
marketing variables used to
produce desired response in
the target market
Price levels
Discounts
Allowances
Payment terms
Delivery options
Product qualities
Features, options,
range, warranty,
branding, packaging
Product
Product Life Cycle
Product
to meet
needs
Sales
Marketing
Promotion
7 Ps
Product
Firms orientation
People
Market Segmentation and

Target Market
Marketing Research
Geographic
Demographic
o Age
o Gender
o Income
o Family life-cycle
Social class
Psychological
Education
Hobbies
Undifferentiated
systematic gathering,
recording and analysing of data
about problems relating to the
marketing of goods and services
Field Research
(Primary data)
Interviews, focus groups,
questionnaires,
experiments, Test
marketing
Differentiated
Concentrated
Desk research
(secondary data)
Internal
Accounts, Sales
reports, Customer
complaints
External
CSO reports,
Business
monitors, Trade
journals,
newspapers
Product
mix
22
Divisional
Entrepreneurial
Functional
Fast decisions
Responsive to market
Congruence
No career structure
No autonomy
Single product & market
Economies of scale
Specialists with some autonomy
Career structures
Frees up entrepreneur
Slow decisions (bureaucratic)
Functional silos
Few products & markets
Centralised vs Decentralised
S
T
O
P
T
I
E
S
Multiple products &

markets
Autonomy for SBU
managers
Training of SBU managers
Frees up senior managers
Focus on specific
products/markets
Loss of congruence?
Duplication of effort
Isolation of SBU
managers
Matrix
Types of Structure
Strategy
Network
Organisation
Technology
People
Planning and control

Tasks
Ideology
Size
Decentralisation
Advantages:
Frees senior
management
Better local decisions
Better motivation
Flexibility
Training/career path
Virtual
Organisation
Outsourcing
Objectives
Environment
Breakdown of silos
Shared knowledge
Skill development
Innovation and creativity
Dual command
Dilution of functional
authority
Time consuming meetings
Direct supervision
Internal market
Organisational
Structure
Planning processes
Mintzbergs
Structural
Performance
management
Managing
Business
Units
Culture
Self-control
Disadvantages:
Loss of control
Loss of congruence
Duplication of effort
Extra costs of control
External
Relationships
Strategic Apex
Technostructure
Strategic
Planning co.s
Synergy
Manager
Financial
Control co.s
Portfolio
Manager
Strategic
Control co.s
Parental
Developer
Middle Line
Operating core
Support
Staff
Reduced cost
Skill shortages
Flexibility
Focus on core business
Loss of control
Supplier dependency
Confidentiality
Loss of in-house skills
Simple structure =
entrepreneurial
Machine bureaucracy
= functional
Professional
bureaucracy =
decentralised
Divisional form
Adhocracy = matrix
23
Country
specific costs
Economies
of scale
Political
Influences
Acquire
resources
Cost advantages
Convergence of Markets
Political
Diversify
sources of
sales &
supply
Expand sales
Legal
Economic
Social/cultural
Reasons for growth in

international business
Objectives of
international
growth
Trend to Global
products
General
risks
Technological
Competitive
Forces
Exporting
The International
Market Place
Low capital outlay

Low risk
Can learn about market
May not meet customer needs
Perceived lack of commitment
High distribution costs
Methods of International Expansion
Joint Venture &

Franchising
Access to local resources

Reduced national sentiment
Shared capital input
Access to competences and
knowledge
Shared profits
Lose competences
Train competitor
Operational disputes
Global
Perceives foreign markets as

similar to domestic market
Products & marketing mix
constant
Standardisation to save time and
money
Supply-driven policy
Multi-Domestic
See overseas market as distinctive

Customised products and
marketing mix
Increased overseas sales volumes

BUT
Fewer EOS giving higher costs, so

volumes not turned into profits
Hybrid
Foreign Direct Investment
Closer to market
Retain profits
More control
Reduced operational conflicts
High financial risk
Staffing decision
Integration difficulties
Standardise wherever possible,

e.g. RnD, Branding
Market convergence may allow
standardised product
BUT
Demand-driven
Customised marketing mix
where necessary = GLOCAL
STAFFING
Overcomes lack of host skills,

unified culture, Transfers
competencies
Resentment by host, single
cultural view
Multi-cultural view, inexpensive

Limits career mobility, isolates HQ
from subsidiaries
Efficient use of HR, builds strong

culture and management
network
Subject to National immigration
policies, expensive
24
Transition
Strategic
Importance
Low
High
Process
Complexity
Dynamics
Low
Development
High
Process Re-engineering
Complex but not core

competence
- Outsource
Complex & dynamic

High strategic value for
advantage
- Process Improvement
Static / commodity
Outsource/Automate
Minimum resources
Static but valuable

- automate for efficiency
Redesign
Process Redesign
Analysing
Process Improvement
Planning
Improving Processes
Harmons
Process-Strategy
Matrix
Business
Process Change
Feasibility
Analysis
Software
System
Project
Process
Measures
Value -added
analysis
Eliminate non-value
added activities
Feedback control systems
TARA
Action
Technical
Operational
Economic
Social
Weighting and Scoring
Design
Implementation
Simplification
Eliminate duplicated
activities
Software Solutions
Systems Development Life
Cycle
Interviews
Questionnaires
Observation
Documenting tools
Workshops
Protocol Analysis
Prototyping
Staff training
Installation
File conversion
Testing
Gaps &
disconnects
Failures in
communication
Review
Review
Input-Process-Output
Targets
Actuals
Quality of Support
User Friendliness
Ability to meet needs
Compatibility/Integration
Costs
Supplier factors
Generic Solutions
Speed
Cost
Risk
Support
Unique needs
Supplier power
Compatibility/Integration
These notes are not intended to cover
theadvantage
whole of the ACCA P3 syllabus
No
25
McFarlan's Strategic Grid

Strategic impact of future systems
Value chain
Low
L
o
w
Strategic
impact of
current
systems
High
Support
Turnaround
No strategic value
Expect info system

to become
strategically
important in the
future
Generic strategies
H
i
g
h
Factory
Strategic
See strategic value

of info system now
but expect value to
decrease in the
future
Depend on info
system for
competitive
advantage
E-commerce
Strategic
Context
E-marketing
E-branding
7Ps
4Ps
People
Processes
Physical evidence
Push vs Pull
Supply Chain
Management
Downstream
(Customers)
6 Is
Integration
Industry structure
Independent
locations
Individualisation
Intelligence
Interactivity
-Recency
-Frequency
-Monetary
value
WebPresence
Information
Technology
Retention
Extension
E-business
Integrated
E-commerce
Customer Life
Cycle
Acquisition
Porters Five Forces
Customer
Relationship
Management
Selection
Barriers
Technophobia
Security
Set-up costs
Running costs
Limited
opportunities
Limited resource
Disinterested
customers
Switching costs
Disintermediation
Re-intermediation
Updates
Communication
User community
Tracking
preferences
Customisation
E-sourcing
E-procurement
Upstream
(Suppliers)
E-purchasing
E-payment
Risks
Technology
Organisational
No cost savings
26
Internal
External
Quality
Certification
Failure
Commitment
Communication
Appraisal
Quality
Standards
Costs
(PAF)
Preventative
Competence
6 Cs
Customers
Proactive
Continuous
improvement
Quality Assurance
Reactive
Quality Control
TQM
Fitness for
Use
Level 1
Performed process
Quality
Capability
Maturity
Model
Integration
(CMMI)
Level 2
Managed process
99.99966%
Get it right
first time
Six
Sigma
Quality
Software
Level 3
Defined process
Key
Requirements
Level 4
Quantitatively Mangd
Level 5
Optimising process
Problem Solving
Process
(DMAIC)
The V Model
Team Roles
Define
Test Plans
Requirement spec
Functional spec
System Design
Unit Design
Acceptance testing
System testing
I
T
Coding
Integration testing
3.4 defects in
1 million
Measure
Analyse
6 Cs
6 Sigma
Champion
Master Black belt
Implementation
Leader
Black Belt
Improve
Unit testing
Green Belt
Control
27
Technological
Operational
Economic
Social
Resources
Tolerate / Accept
Treat / Reduce
Transfer / Insure
Terminate / Avoid
Project
Initiation
Document
Risk
Quality
Time
Sponsor
Manager
Team
Formally terminate
project
Gantt Chart
Stakeholders
Initiation
Work
Breakdown
Structure
Quality
Resources
Evaluation
Dissemination
Exit
Sustainability
Statements of
Work
Project
Management
(IPECC)
Ensure
Completed
Critical
Path
Analysis
Time
Project
Appraisal
Feasibility
Planning
Product
Breakdown
Structure
Cost
Breakdown
Structure
Execution
Put plan into action
Completion
Monitor
And
Control
Final report & audit
Evaluate performance
Project Evaluation & Review Technique (PERT)
Purpose
Scope
Deliverables
Costs
Time
Objectives
Stakeholders
Org structure
SWOT
Tie up loose
ends
Compare PID
to Outcome
Project Leader
TARA
Smooth
handover
Corrective
Action
Frequency
Adjust Plan
Fast Track
Complexity
Risk
Cost
Project
Initiation
Document
Motivation
Planning
Co-ordination
Communication
Problem solving
Change Mgt
Budgeting
Meetings
Crashing
Motivation
Increase
resource
28
Economy
Efficiency
Effectiveness
Spend funds
effectively
Competitive
Strategy
Raise
maximum
funds
Core Costs
Objectives
Investment
Strategy
Management
R&D
Support Services
Cost
Gearing
Control
Security
Cash flow
Availability
Exit routes
Retained earnings
Ordinary shares
Considerations
Financial
Strategy
Not for Profit

Organisations
Strategy
Equity
Financing
Decisions
Alternatives
Pref shares
Debt
Grants
ROCE
Payback
Role of Finance
Traditional
Methods
Investment
Appraisal
Ratios
Discounted cash
flow techniques
NPV
IRR
Asset turnover
ROCE
Receivables
Payables
Inventory
Revenue/employee
Profitability
Inter-firm comparison
Limitations
Accounting policies
Bias by large/small firms
Unrepresentative avge
Industry classifications
Financial periods
Limitations
Only comparative
Inflation
Definitions
Accounting policies
Availability of info
Historical
Debentures
Loans
HP/Leasing
Overdraft
Trade Creditors
ROCE
Gross/Net Margin
ROE
Efficiency
Liquidity
Current ratio
Quick ratio
Dividend cover
Interest cover
EPS
PE ratio
Gearing
Investor ratios
29
Examples
Gross margin
Net margin
Cost % sales
Profit
Problem:
no account taken of invested
capital used to generate
profits
Return On
Investment
(ROI)
Residual
Income (RI)
PBIT X 100 = %
CE
PBIT
(CE x imputed interest rate)
RI
Relative Measure %
Absolute Measure s
Profit Related Measures
Benefits
Longer-term
measures
More difficult to
manipulate
Measures
determinants and
results
Promotes goal
congruence
Includes
stakeholders
Potential
Drawbacks
Measures conflict
with each other
Requires cultural
change
Overload
paralysis by
analysis
Time and cost
No obvious
relationship with
shareholder wealth
Review and Control
Problems:
Problems:
The Balanced Scorecard

Financial Perspective
Customer
Perspective
Absolute measure
poor for
performance
comparisons
Joint issues when used in isolation

Internal Business
Perspective
Learning & Growth

Perspective
1.
2.
3.
4.
5.
Sub-optimal
investment
decisions
Deplete capital
assets too early
Identify CSFs
Identify competences required for CSFs
Develop KPIs for competences
Measure competence
Take action continuous improvement
Backwards looking measures

Short-termist decisions
Open to easy manipulation of discretionary costs and
capital employed
Conclusion
Financial measures should not be used in
isolation to measure performance but should
be combined with non-financial measures.
30
Current & future

HR needs
HR Gap
Labour supply
Current HR
position
Trait
Style
Contingency
Situational
Strategic and
coherent
approach
TARA
Analyse behaviour
Recruitment
Training needs
Manage
performance
Benchmarking
Purpose
Job design
Assessment
& Appraisal
Barriers
Performance
Measurement
Reward
Management
Motivation
Performance
Potential
Training
Recruitment
Strategy and
People
Competency
Frameworks
Communication
Teamwork
Delegation
Motivation
Trust
Leadership
Workplace
Learning
Knowledge
Management
Exploitative autocratic
Benevolent authoritative
Participative
Democratic
Likert's
Management
Styles
Learning
organisation
Charismatic
Transformational
Transactional
Classical
HR Planning
Scientific Mgt
Job enrichment
Japanese Mgt
BPR
Teamwork
Succession
planning
Categories
Levels
Design Issues
Techniques
Strategic alignment
Considerations:
Fair & consistent
Motivation
Reward performance
Recognise job factors
Control salary costs
Confrontation
Judgement
Chat
Bureaucracy
Event
Unfinished
business
Employee ranking
Rating scales
Checklists
Critical incident method
Free reporting
Performance contract
BARS
Appraisal interviews
31

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ACCA P3 PROFESSIONAL LEVEL

SMART Revision notes

ACCA P3 - Business analysis

Darren Sparkes, 2009

A message from Darren3

ACCA P3 Business Analysis

Darren Sparkes, 2009

Thank you for requesting a copy of my SMART Revision Notes.

ACCA P3 Business Analysis

Darren Sparkes, 2009

There is no absolutely correct answer candidates who provided

ACCA P3 Business Analysis

Darren Sparkes, 2009

Extracts from the Examiners comments December 2008

ACCA P3 Business Analysis

Darren Sparkes, 2009

ACCA P3 Business Analysis

Darren Sparkes, 2009

Therefore, to pass P3 learn from the examiners

ACCA P3 Business Analysis

Darren Sparkes, 2009

Examination Technique to give the Examiner what he wants

ACCA P3 Business Analysis

Darren Sparkes, 2009

6. DEVELOP HEADINGS AND NUMBERS LAYOUT

ACCA P3 Business Analysis

Darren Sparkes, 2009

Assess the strategic position of the organisation

Choice of two from three

ACCA P3 Business Analysis

Darren Sparkes, 2009

Governance and Corporate Social Responsibility

Mission and objectives

Mendelow's power-interest matrix

Porters Value Chain

The Strategy Clock

Ansoffs productmarket matrix

Suitability, Acceptability, Feasibility

Review and Control

Not for Profit Organisations

ACCA P3 Business Analysis

Darren Sparkes, 2009

Relationship with environment

Functional = Operational level

a course of action, including

Emergent Strategy - Bottom up (Mintzberg)

E.G. Hondas entry into the USA, 3M

Rational Top Down Approach

Mission & Objectives

Respond and fit to environment

Darren Sparkes, 2009

the most generalised type

Published version of the

Mendelows Power Interest Matrix

The way we do things around here

If results in these areas are

Not for Profit Organisations

Features of objective setting

Darren Sparkes, 2009

Divorce of ownership and control

Consumer health and safety

Views on Business Ethics

Avoid future Government policy

Johnson, Scholes & Whittington Ethical Stances