DR Dino Revision Series

Dr.
Constantine
“Dino” Kiritsis
Strategic
Business Leader
2018-2019
Webinar series
“100”
1. Introduction - Strategic Business Leader - SBL
 Introducing your trainer – “Dino” (Dr. Constantine Kiritsis)

 The key areas to pass – 100 AREAS to ‘master’
 The Flowchart Methodology
 Agenda
 Knowledge & Skills
 Strategy to pass
 Do’s & Don’t’s for the exam
 How to write a solid script
 What the examiners and markers are looking for
 KEEP NOTES!
2 23/08/2018 Title of presentation - enter in the Header & Footer field ©ACCA
3 23/08/2018 Dr. Constantine “Dino” Kiritsis ©ACCA
1.1 The aim of the exam
The aim of the Strategic Business Leader (SBL) exam is to

demonstrate organisational leadership and senior consultancy or
advisory capabilities and relevant professional skills, through the
context of an integrated case study. The examination requires
candidates to demonstrate a range of professional skills
demanded by effective leaders or in advising or supporting senior
management in directing organisations.
Role play
The basic structure of each exam will require the candidate to take
the role of an organisational leader or as a consultant or adviser
to senior management.
1.2 What is the Exam all about?
4 hour duration allowed (240 minutes)
100 marks, 80 for application of technical content and 20 for professional

skills
50 marks to pass
12-15 pages of case study information
All questions are based on same scenario
The emphasis is on a combination of technical and professional skills

©ACCA
1.3 Key term for passing SBL
Professionalism
What does it mean?
Actual “work environment” reports &

discussions
This is a NEW exam!

1.4 General principles of professionalism (in SBL syllabus)
 Making the most important or crucial points

 Showing a clear understanding of the underlying issues and integrating
knowledge
 Only making relevant points
 Not repeating points
 Addressing the requirements as written
 Showing an ability to prioritise and make points in a logical and
progressive way
 Structuring and presenting the answer in a professional manner
 Evidencing sound knowledge from underpinning exams
 Demonstrating professionalism
©ACCA
1.5 Managing the time
 Reading & Annotating the case: 40 min. apx.

 Reading the background to the case
 Scan the list of exhibits
 Read the requirements
 Read the exhibits - once requirements have been identified
 Your objective: What are the implications of what you are reading – what are the issues the
organization is currently facing.
 Writing & Planning: 200 min. apx. (2.5 min per technical mark. Professional Skills are
EMBEDDED in this part, NOT EXTRA)
Key point: Make sure you know how to annotate
©ACCA
1.6 Managing the time - summary
Time planning and management

There are 4 hours 240 minutes
• Reading: assume 40 minutes (40)
• Producing an answer 200
• 200 minutes allocated to 80 marks = 2.5 minutes per mark
• The Professional Skills wont need a separate time allocation
©ACCA
1.7 Managing the time
Time planning and management

There are 4 hours, during which time activities will be
• Reading
• Planning
• Producing an answer
©ACCA
Sample exhibits from Specimen 2*
Exhibit 1 - Website page

Exhibit 2 - A newspaper transport report
Exhibit 3 – Extracts from passengers survey and competitor analysis
Exhibit 4 – The board meeting minutes reports
Exhibit 5 – Chief Executive person specification
Exhibit 6 – An analysis of fraud
*NOTES:
We will be using Specimen 2 in the webinars so make sure you become familiar with it!
I will ask you to read Specimen 2 and annotate the information after the completion of
webinar 1, so as to be more effective when handling the questions!
©ACCA
1.8 Similarities in the Strategic Business Leader exam
 Role of student
 Format
 Audience
 Verb used – task based
 Mark allocation
 Professional skills marks
1.9 Key points when reading the requirements
• What role are you adopting?

• Who is the task addressed to and what do they want?
• What verbs have been used to express the requirement?
• Are there any limitations of scope highlighted?
• Are there any key issues mentioned that need addressing?
• Which professional skill is being explicitly tested?
• Are any calculations, ratios or other quantitative analysis required?
• Does the question lend itself to the use of a specific theoretical model?

1.10 A system to use – “RARTIS”
READ & ANNOTATE - the questions & exhibits

AUDIENCE – Who are your writing to?
ROLE – What is your role?
THEORIES – Any theories to use in relation to the
VERB?
ISSUES – What are the underlying issues of the case?
SKILL – What is the skill required?
14 23/08/2018 ©ACCA
1.11 Key words to help identify theories and models!
Environment: PESTEL mainly & 5 Forces

Competition: 5 Forces mainly & PESTEL
Performance: Baldridge, Balanced Scorecard, CSFs & KPIs,
Benchmarking, BCG
Evaluation of Strategies: Generic Strategies / Strategic Clock & SAF
Position Analysis: SWOT, including areas from other models
Portfolio or Subsidiary performance analysis: BCG Matrix
Value (or value activities) or “coordination” of activities : Value chain
& discussion of supply chain
Directions for Growth: Ansoff’s matrix
©ACCA
1.12 Key words that can lead us to know which theory/areas to
use!
National competitive advantage: Diamond
Stakeholders – interest & influence: Mendelow Matrix
Risk Management Process (full): Risk ID, Assessment, Strategies,
Monitoring
Risk Strategies: TARA
Risk Heat Map: Impact by Likelihood
Social Responsibility: Carroll’s Theory
Corporate Governance Arrangements: Board? NEDs? Chairman & CEO?
Committees? Diversity? Family? Code?

1.13 Key words that can lead us to know which theory/areas to
use!
Marketing Mix/Elements: 7Ps
Why Market online / Why do e-commerce: 6 I’ theory
Corporate Culture: Cultural Web
Outsourcing: Harmon’s Matrix
Change: Lewin’s 3 stage model or POPIT (depending on question)
Big Data: 3 Vs Theory, Knowledge Management, Cloud, Business Analytics +
Security, Privacy etc.
Ethical Decision making: Tucker
<IR> - Integrated Reporting
Disclaimer: These terms do not cover all possible terms coming up, but may be considered
more common.

1.14 Overall
 Address the requirements as written, taking particular notice (again!) of the verbs used
 Make sure you include the most important, relevant and crucial points relating to the
requirement.
 Only make relevant points and try not to include superfluous information or make
unsupported points.
 Show deep/clear understanding of underlying or causal issues and integrate or link
different sources of information from various parts of the scenario or different exhibits to make
points
 Avoid repeating points already made.
 Show your ability to prioritise and make points in a logical and progressive way, building
arguments rather than using a random or ‘scattergun’ approach to answering the question.
 Structure and present your answers in a professional manner through faithfully simulating
the task as would be expected of the person being asked to carry it out and always have a
clear stakeholder focus in mind when constructing the answer.

1.15 How to use the resources & study tips
1. The Flowchart’s rationale

2. The index with the 100 areas in bullet format (and some extras!)
3. Gaining momentum– Make sure you study SBL over a longer study
period, as the material is 50% more than other ACCA Strategic
Professional exams

1.16 Intellectual levels
www.accaglobal.com study-skills/intellectual-levels
Level 3
Synthesis and evaluation requires demonstration of the • Create new
following capabilities: insights
 Creation of new ideas from, or new insights into, • Compare
existing knowledge • Evaluate
 Generalisation, comparison, and discrimination using • Infer
complex and unstructured information • Make a
judgement
 Assessment and evaluation of complex information
• Justify
 Use of reasoned argument to infer and make • Recommend
judgement
 Presentation and justification of valid
recommendation
©ACCA
1.17 Professional skills – 20% of exam, but embedded!
Scepticism Commercial Analysis

• 20 marks for Acumen
professional skills Probe
Question
Demonstrate Investigate
Enquire
awareness
• All five will be Challenge Use judgement Consider
Show insight
examined
• Mark weightings Communication Evaluation
across the skills Assess
Inform
will vary Persuade Estimate
Appraise
Clarify
1.18 Communication
Inform concisely, objectively, and unambiguously, while being sensitive to

cultural differences, using appropriate media and technology.
Persuade using compelling and logical arguments demonstrating the ability

to counter argue when appropriate.
Clarify and simplify complex issues to convey relevant information in a way

that adopts an appropriate tone and is easily understood by the intended
audience.
©ACCA
1.19 Commercial acumen
Demonstrate awareness of organisational and wider external factors

affecting the work of an individual or a team in contributing to the wider
organisational objectives.
Use judgement to identify key issues in determining how to address or
resolve problems and in proposing and recommending the solutions to be
implemented.
Show insight and perception in understanding work related and
organisational issues, including the management of conflict, demonstrating
acumen in arriving at an appropriate solutions or outcomes.
©ACCA
1.20 Analysis
Investigate relevant information from a wide range of sources, using a

variety of analytical techniques to establish the reasons and causes of
problems, or to identify opportunities or solutions.
Enquire of individuals or analyse appropriate data sources to obtain
suitable evidence to corroborate or dispute existing beliefs or opinion and
come to appropriate conclusions.
Consider information, evidence and findings carefully, reflecting on their
implications and how they can be used in the interests of the department
and wider organisational goals
©ACCA
1.21 Scepticism
Probing deeply into the underlying reasons for issues and problems, beyond
what is immediately apparent from the usual sources and opinions available.
Question facts, opinions and assertions, by seeking justifications and
obtaining sufficient evidence for their support and acceptance.
Challenge information presented all decisions made where this is clearly
justified, in a professional and courteous manner; in the wider professional,
ethical, organisational, or public interest
©ACCA
1.22 Evaluation
Assess and use professional judgement when considering organisational

issues, problems or when making decisions; taking into account the
implications of such decisions on the organisation and those affected.
Estimate trends or make reasoned forecasts of the implications of external
and internal factors on the organisation or of the outcomes of decisions
available to the organisation.
Appraise facts, opinions and findings objectively with a view to balancing
the costs, risks, benefits and opportunities, before making or
recommending solutions or decisions.
©ACCA
1.23 Dealing with the volume of information – the case
 Case will contain:

 Intro section
 List of exhibits
 Requirements i.e. the tasks set
 The exhibits themselves
©ACCA
1.24 Methods of controlling the information
 Annotate the requirements

 Annotate the exhibits
 Highlighting
 Mindmapping
 Draw up a separate plan
 Familiarise yourselves with the

Specimen exams (Specimen 2
especially) to make the webinars
more effective!
©ACCA
1.25 Layout for a report/briefing paper
REPORT/MEMORANDUM/BRIEFING PAPER
To:
By/From:
Title/about or RE:
Date:
Introduction
.
Paragraph 2 title
.
Paragraph 3 title
.
Conclusion/recommendations/further action etc.
29 ©ACCA
1.26 Layout for letters
Letters
Should start with (fake) name and address of sender, name and address of
recipient, date,
Dear Mr X/Dear Sir
Concerning / What the letter is about
Letter – divided into paragraphs but not usually numbered
Finish of with something like “If you need any further information please do not
hesitate to contact me”
If the letter starts ‘Dear Sir’ it is usual to end it ‘Yours faithfully’ If it starts Dear M.
X/Ms Y’ it is common to end it ‘Yours sincerely’.

1.27 Layout for Press release
Press release:
Company name
Date for release:
“Press release”
Signed: PR office

1.28 Slides and notes layout
1. State “Slide 1” or “Slide 2” depending on slide

2. State “Notes” after the slide bullets
3. Bullet points should be in appropriate length and number
4. Avoid repetition
5. Logical Structure
6. Use appropriate language
7. Make 2 – 3 times as many notes as each bullet
1.29 Writing tips 1
Spacing; The marker needs to understand when you finish writing a

requirement; - Be clear.
Introducing & Concluding; Professional answers may require an
introduction and a conclusion / recommendation. Make sure you write
such sections and underline them. The marker will not “look for
them”!
Defining: The examining team has stated that candidates will not
receive marks for definitions, however it may be relevant to explain
certain areas, if this would be worth something for the reader.
33 ©ACCA
1.30: Writing tips 2
Avoid harsh or ‘definite’ language; After all, you are a candidate and
you cannot be “sure” in many cases - especially in business– on what
will work for a company. Examples of words to avoid: “surely”,
“definitely”, ”of course” etc.
80/20 principle: The above point implies that there are NO CORRECT
answers, and you are free to write your own assessment.
34 ©ACCA
1.31 Answer Plan (brief)
1. Read Questions twice to know what to look for;

2. Annotate using bullets for areas that are relevant
3. Check your role!
4. Check your audience!
5. Check your layout!
6. Check the skill!
7. Check the mark allocation!
8. Follow your outline
9. Apply model or theory (if you are using one to structure your thoughts);
WHEN WRITING:
1. Use appropriate exhibits and do not be afraid to correlate exhibits if you feel issues are relevant
2. Provide “limitations” or “however points” (if the task indicates this is relevant)
3. Use Examples & Assume if required
4. Conclude & Recommend
5. Remember: Spaces & handwriting!
35 ©ACCA
1.32 The good points to mention!
 Only one case + story line to work on

 Professional marks are earned at the same time as the knowledge marks
 After the first couple of hours you will be more familiar with the exhibits and case
information and take less time looking for your annotated areas that will help
you answer

100 Areas to master for SBL
100 things you need to know –

and how to apply them in exams
For Strategic Business Leader*
* A few areas have been grouped as they are closely related

The 100 areas – index
Corporate Governance – Why? Board of Directors - Role Risk Management Internal Controls – “sound” IC
Agency theory Composition & committees Dynanic Risk Internal Audit – objectives?
Key concepts:  Risk committee ALARP Principle Internal Control system
o Integrity  Remuneration committee Risk process Information Flows for Management

Reporting
o Transparency  Audit committee  Identification Internal Audit & Independence
o Responsibility  Nominations committee
 Prioritization/assessment Corporate Social responsibility
o Independence Director’s remuneration & rewards (heat mapping) (Carroll)
o Honesty Role of Chairman, CEO  Strategy (TARA) Profession & Professionalism
o Accountability Unitary vs two tier boards (+/-)  Monitor Code of Ethics & Professional Values
o Fairness NED’s and role Types of risks (Strategic / Tucker’s 5 step model - ethical
Operational Risk) decisions
o Judgement Induction & CPD
Risk Mapping Social Responsibility of Accountants
o Probity Diversity
Risk Strategies (TARA) Professional Codes of Ethics (i.e.
Stakeholders Disclosure (mandatory – voluntary) IESBA)
ERM – COSO
Stakeholder Mapping BoD effectiveness (how?) Conflict of Interest, Ethical threats &
Safeguards
Related & Correlated Risk
Normative vs Instrumental Rules vs Principles & limitations of
governance Corruption
Risk culture & Risk appetite
Institutional Investors
Public sector governance & 3 E’s criteria Integrated Reporting & Value
Role of risk manager
Contribution of codes?

The 100 areas – index (continued)
6 capitals of an integrated report 6ICyber – security (methods) SAF – Suitability, Acceptability, PID
Feasibility
Environmental & sustainability accounting E-business (types, pros & cons) - full
Business Structures Project manager vs Project
Vision & Mission
Disruptive technology & examples Sponsor
PESTEL (environment) Outsourcing pros & cons & Harmon’s
’s theory Matrix Elements of a project Plan
5 Forces (competition)
Marketing Mix in the digital era Shared Services Post implementation review
Diamond (national comp. advantage)
Market Segmentation Collaborative working
Scenarios Post audit review
Supply chain management / e- Business process redesign
Capabilities, Resources & Competencies procurement Leadership / Leadership Traits
Change Management
CSF’s & KPI’s Entrepreneurship /
SWOT analysis
Balanced Scorecard Lewin’s model Intrapreneurship
Organizational Culture - Web
Baldrigdge Balogun Hope Hailey model Financial Analysis
Ansoff’s growth matrix
Benchmarking POPIT model Short & Long term financing
Growth methodologies (common)
Generic Strategies Resistance to change
 Franchising
Forecasting & Budgeting
BCG matrix
Project Management
 Internal growth Variance Analysis
Value Chain
Project Constraints
Big data (3 V’s theory)  Mergers Investment appraisal
Business Case, CBA & Risks
Cloud Systems (pros & cons)  Acquisitions Ratio Analysis
Data Analytics & Business Intelligence  Joint Ventures Costing

Areas 1 – 5/100 – THE SKILLS
Area 1: Communication – Inform, persuade, Clarify

Area 2: Analysis – Investigate, Enquire, Consider
Area 3: Evaluation – Assess. Estimate, Appraise
Area 4: Commercial Acumen – Demonstrate awareness,
Use judgement, show insight
Area 5: Scepticism – Probe, Question, Challenge

Area 6/100 - Why Governance? What is it all about?
Why governance?
What is corporate governance?

“The way in which companies are directed & controlled in the best
interests of stakeholders”
What could be asked in this area?
©ACCA
Area 7/100 – What is agency relationship and what are the costs
associated?
Why? Separation of ownership & control, especially after businesses
were growing and required people that were not ’family’
How? Contracts, requirements, remuneration etc.

Agency relationship assumes that the agent and the principal may
act in their own self-interest and that these interests may conflict.
Costs? Incentive schemes for directors, providing and reviewing data,

having meetings, accepting higher risks, Monitoring, Benefits etc.
What could be asked in this area and how?

©ACCA
Example question (SBL Specimen 2)
You have been asked to prepare a briefing paper for the Rail Co Trust Board
which:
(a) Identifies and explains the agency relationship of the parties involved in Rail
Co and discusses the rights and responsibilities of those parties. (8 marks)
Professional skills marks are available for demonstrating communication skills
in clarifying the agency relationships involved in Rail Co. (2 marks)
(b) Assesses the role and value of non-executive directors on the board of Rail
Co, as a public sector company. (6 marks)
Professional skills marks are available for demonstrating evaluation skills in
assessing the role and value of non-executive directors in a public sector
environment. (2 marks)
Total: 18 marks

From the examining team – Important!
For the Strategic Professional Examinations it is not always possible to publish

suggested answers which comprehensively cover all the valid points which candidates
might make. Credit will be given to candidates for points not included in the
suggested answers, but which, nevertheless, are relevant to the requirements. In
addition, in this integrated case study examination candidates may re-introduce
points made in other questions or parts of questions as long as these are made
in the specific context of the requirements of the question being answered.
The suggested answers presented in the model answers inevitably give much
more detail than would be expected from most candidates under examination
conditions, and include most of the obvious points evidenced from the case
information. The answers are therefore intended to provide a structure of the approach
required from candidates, and cover the range and depth of knowledge relating to each
task which might be demonstrated by the most well prepared and able candidates.
They are also intended to support revision and tuition for future examinations.

Sample answer (a) – Discussed live
(a) Briefing Paper
FAO: Rail Co Trust Board
The agency relationship of the parties involved in Rail Co and their rights and responsibilities
Rail Co is what would be called a devolved government body operating within the public sector. In terms of strategic purpose, Rail Co exists to
implement government policy in regard of passenger rail services. Therefore, its organisational objectives will largely be determined by the political
leaders of Beeland. Ultimately it is the responsibility of the chief executive of Rail Co to report to the government of Beeland (through the Rail Co Trust
Board) on Rail Co’s stewardship of the public funding it receives.
The main parties involved in the agency relationship of Rail Co are the government, in the form of the Ministry for Transport of Beeland as the principal
and the Rail Co Trust Board and the board of directors, comprising a mix of executive and non-executive officers, acting as the agents. As stated
above, ultimately the chief executive of Rail Co is responsible to the government for Rail Co’s management and stewardship of the public
funding it receives. It is important to note that the way in which Rail Co is regulated and governed is focused on value for money rather than on the
achievement of profits.
There is also a further agency relationship within Rail Co, in that the Rail Co board of directors is accountable to the Rail Co Trust Board. It is the
responsibility of the Rail Co Trust Board to set a range of performance targets each year and to hold the Rail Co board to account for the effective and
efficient use of the funds allocated by government and by the fare paying passengers.
A further aspect of the agency relationship in Rail Co is that the ultimate principal is the taxpayer and the customers, in that it is he or she who pays
for the rail service and Rail Co exists for their benefit. It is the ultimate responsibility of the board of Rail Co to ensure that Rail Co carries out its
passenger services on behalf of those who fund the activity (mainly taxpayers) and those who use and pay for the services (rail passengers). Funders
(i.e. taxpayers) and customers are sometimes the same people (for instance, taxpayers who commute on Rail Co’s trains) but sometimes they are not,
and this could give rise to disagreements on how much is spent and on what particular provisions. Rail Co has a responsibility to all of its principals to
deliver its services efficiently, effectively and offering good value for money. As is evidenced in the recent article in the Beeland Herald, many
customers are not satisfied with the value for money offered by Rail Co.
It is the responsibility of the Rail Co Trust Board to ensure that the key outcomes of Rail Co are delivered by setting a range of performance targets,
against which performance is measured periodically.

Area 8/100 Key concepts for Corporate Governance -
(Critical Success Slide!)
Fairness
Openness / transparency
Independence
Probity / honesty
Responsibility
Accountability (key in the area of agency)
Reputation (companies cannot afford to harm reputation)
Judgement
Integrity
©ACCA
Key term: What is Accountability?
In most cases an agency agreement is contractual. When a contract

exists, the principal and the agent are answerable under the terms and
conditions of the contract.
This is the main difference with “responsibility” in the sense that you can
be responsible without a contract.
48 23/08/2018 ©ACCA
Area 9/100: What is a “Stakeholder”?
“Stakeholders are the various individuals and groups who have an

interest in or can influence the organisation.”
A strategy must ensure a convergence in corporate and stakeholder

objectives. We should take them into consideration when formulating
strategies. In essence, all Stakeholders need to be SATISFIED!
©ACCA 49
Example of stakeholders
Pressure Competitors
groups Media
Inner circle
Outer circle
Customers Suppliers
Board
Employees Shareholders
Unions Government Analysts

©ACCA 50
Area 10/100 – How can we map stakeholders?- Mendelow

Strategic Business Leader - Specimen exam 2 Q3
You are the non-executive chairperson of an ad hoc sub-committee constituted by the

NCG of the Rail Co board.
Prepare two presentation slides, with accompanying notes, to explain to the NCG, the
contribution which the chief executive should be expected to make in terms of talent
management, to support the necessary change program required at Rail co (6 marks)
Professional marks are available for demonstrating communication skills in conveying

relevant information in an appropriate tone to the NCG committee (2 marks)

Answer – Slide 1
Talent
– Individuals who can make a difference to organisational performance through their
immediate contribution or, in the longer term, by demonstrating high future potential.
Talent management
– The attraction, identification, development, engagement, retention and deployment of
individuals who are of particular value to an organisation.
– It is critical for Rail Co to develop, manage and retain individuals as part of a planned
talent management strategy.

Answer (continued) - Notes
Notes:
The definition of talent emphasises that these are individuals who can make an impact
on the performance of Rail Co. This is of utmost importance in the near future as Rail Co
attempts to turn around its business performance.
Importantly, talent management should be seen as a key strategic management activity
which sits alongside and indeed underpins the whole corporate strategy.
Many organisations consider the ‘talents’ of all their staff and work on ways to develop
their strengths. Talent management programmes may include a range of activities such
as formal and informal leadership coaching, networking events and board-level and client
exposure. It can also include ensuring that all staff are adequately and effectively trained
and motivated at all levels of the business

Answer (continued) – Slide 2 & Notes
Slide 2:
The contribution of the chief executive in talent management
– Important that talent management strategy is led from the top
– Senior management team must assess the human talent needs of the change programme
– Driving force in attracting talent and building a high performance workplace
Notes:
Ensuring that the talent management strategy is closely aligned with the corporate strategy must be a priority. The
CE must lead the senior management team in understanding the main priorities of the change programme in Rail
Co which should then be used to develop a human talent forecast, which can help shape Rail Co’s talent
management strategy.
Visible senior-level support for talent management is critical, and this is best done by the CE.
The ability to attract external talent depends upon how potential applicants view Rail Co. The creation of an
attractive employer brand is an important factor in recruiting external talent. Again, the CE will be a driving force in
this, as the figure head and mouthpiece of the organisation he will be integral in creating the employer brand which
will attract talent to Rail Co.

Area 11/100 – Why should we think of
stakeholders?
Instrumental view:
To not take stakeholders into consideration would have an impact on
primary objectives of organisation
Devoid of any moral obligation (“We don’t have to..”)
Normative view:
We have a moral duty towards others
We need to act in general sense of what is right
©ACCA
Area 12/100: Key Stakeholder: “Institutional investors” –
Why are they important?
Example: Goldman Sachs Institutional shareholder intervention – How? – When?
Types Strategy
Importance Operational performance
Solution: shareholder activism Acquisitions and disposals
Institutional shareholder Remuneration policy

intervention Internal controls
Succession planning
Social responsibility
Failure to comply with relevant codes
©ACCA
Area 13/100 – What is the board of directors?
 ROLE  LEGAL ISSUES

 Direction  Fiduciary duty to the company
 Time limited appointment
 Leadership
 Retirement by rotation
 Supervision
 Contracts
 Management  Removal & Disqualification
 Risk management  Conflict & Disclosure of
interests
 Control
 Composition
 Strategy
©ACCA
Possible exhibit to check:
Website page
©ACCA
Area 14/100 – Types of boards?
Unitary (UK, USA, Japan etc.)

Executive director
NEDs
Two – tier (Germany, France, Netherlands)

Management Board (lower tier)
Supervisory board (upper tier)
Advantages? Disadvantages?
©ACCA
Area 15/100: What is a Non Executive Director? (NED)
 NED is a director who is neither  Executive

an executive director nor Directors:
employed by the company and,  Full time members
therefore does not participate in of staff
the day to day management
 Have management
 Strategy Role position
 Expertise  Industry experience
 Risk Role
 Scrutinising Role, Discipline
 People Role (remuneration,
succession etc.)
©ACCA
Area 16/100 What are the threats to independence
for NEDs?
 Employee in last 5 years

 Cross – directorship
 Receive other benefits apart from director’s fee
 Close family ties with director
 Significant shareholder
 Material business with company in last 3 years
 Served on board for more than 9 years
©ACCA
Area 17/100 – Why is board Diversity important?
The concept of diversity encompasses acceptance and respect of visible and nonvisible
differences that exist between people
Race
Ethnicity
Gender
Sexual Orientation
Socioeconomic
Status
Age
Physical Ability
Religious beliefs - Political beliefs
Experience - background
Other issues:
Women on boards
Diversity of NEDs
©ACCA
Area 18/100 Why split the role of Chairman & CEO?
Reasons for:
 Representation
 Segregation of duties
 Accountability
 Avoid possible abuse of power
Reasons against:
 Unity (Since there are 2 leaders)
 Ability
©ACCA
Possible exhibits - CV
Chief Executive person specification
©ACCA
Possible exhibits – Board meeting minutes
The board meeting minutes reports

(Drawn up by Chief Compliance
Officer / Company Secretary)
©ACCA
Area 19/100 What are the components of a Director’s
remuneration package?
Reason for rewards: ATTRACT, RETAIN & MOTIVATE!
Needs to be Legal, Ethical, Competitive, Regulatory
Basic Salary
Pension
Benefits
Share options
Termination
Performance – related (Advantages? Disadvantages?)
 PRPs
 Bonus
©ACCA
Area 20/100 Why is Induction & CPD required for
Directors?
 CPD: Continuing Professional Development

 Induction programme - Why? – Reasons?
 How?
 Training & Development

 Updating and upgrading knowledge
©ACCA
Area 21/100 How can we evaluate a board? (its
performance)
 Why & How boards are appraised
 Performance appraisal (Board as a whole and
as individuals)
 Decisions
 Agenda
 Expertise
 Participation
©ACCA
Area 22/100 Why do we have Board
Committees? What is the best practice?
 Why?
 How many?
 Which ones?
 You need to know their role & their composition (i.e.
based on Sarbanes Oxley):
 Audit (100% NEDs)
 Remuneration (100% NEDs)
 Risk (Majority NEDs)
 Nomination (Majority NEDs)
©ACCA
Example: Audit committee duties: Internal & external
Reviews the company’s internal financial controls

Reviews all the company’s internal control and risk management systems
Give approval to internal control and risk management statements in annual report
Receives reports from management about effectiveness of control systems
Receives reports on tests carried out on controls by internal auditors
Provides recommendation on appointment, re-appointment and removal of auditors
Oversees selection process
Approves terms of engagement and remuneration
Ensures independence and objectivity
Reviews scope of audit
Ensures appropriate plans at start of audit
Carries out post-completion audit review
©ACCA
Area 23/100 – Why Disclose?
Of what? (statements, environment reports, other reports, profit warnings,
stakeholder meetings etc.)
Aim: To improve public understanding of the firm, attract capital, increase
investor confidence, attract new investors etc.
It is part of “good corporate governance”
Voluntary vs Mandatory?
Advantages of Voluntary?
Transparency
Attracting investors
Reputation
Useful information about company for all Stakeholders
©ACCA
Possible exhibits
©ACCA
Area 24/100 – Rules vs Principles
RULES (i.e. SOX, USA) PRINCIPLES (i.e. UK CG Code)

Short time horizons Long time horizons
Acts as a deterrent to prevent Prevention
Detailed – bureaucratic maybe Core principles
Focuses on strict interpretation Spirit of law
Objective Subjective
Mandatory Discretion permitted
Regulation overload?
Flexible
Box ticking?
74 23/08/2018 Title of presentation - enter in the Header & Footer field ©ACCA
Area 25/100 – Public Sector Governance
A range of organisations exist in most economies with three types predominant:

 Private sector – exist to make a profit
 NGO’s (i.e. charities) or quasi-NGO forms (partly funded by government)
 Public sector – delivering goods or services not provided by “for profit” entities
All types of organisations NEED governance arrangements (fire department, public

hospitals, police etc.)
©ACCA
Important: Stakeholders in Public Sector Governance
Stakeholders and the Public Sector

The stakeholder relationship is more complicated in the public sector, as the taxpayer
also pays the salaries of those working in the public sector making them a “key player”
These can be perceived to be used for services which are of no benefit to the person
paying the tax.
This creates an issue between agent and principal within the Public sector
Public Service organisations need to deliver their services Efficiently, Effectively and
Economically (3Es)
©ACCA
Area 26/100 – What are the contributions of Governance Codes
and what are their limitations?
 Reactionary process  Stressed governance importance
 Impact varies  Highlighted dangers
 Restricts individual decision-making  Provided benchmarks
power
 Emphasised accountability and
 Bureaucracy transparency
 Harms competitiveness
 Cannot stop fraud

Useful points on codes and the material you are using
Do NOT attempt to learn every provision of every law and code

The examiners expect you to be aware of best practices
You can use examples from your own country
The examination is not country specific.
Can’t we have International Standards of Corporate Governance?
Quick answer: Extremely difficult due to cultural differences, different ethics

perspectives & resources…
OECD – Organization for Economic Cooperation & Development example
ICGN – International Corporate Governance Network
27/100 Risk & Risk Management
Risk management is concerned with the coherent and balanced

assessment and treatment of risk and uncertainty in business
organisations. The term ‘certainty’ refers to lack of doubt, while
‘uncertainty’ refers to doubt about the future and our ability to
predict it. Risk and uncertainty are constant features of the
business environment.
If you are prepared to pay to eliminate the risk (possibly more

than the value of the decision), you are said to be ‘risk averse’
Risk aversion may differ between individuals and, for each
individual, between situations.
There is a certain degree of ‘risk’ in almost everything we do daily!
©ACCA
Area 28/100 – Dynamic Risk
Dynamic Risk: This means that Risk is not static. It changes over time and
between situations, therefore risks are DYNAMIC.
Example: The fast pace of technological change, the political changes

globally, economic changes (recession, currency fluctuation etc.)
environmental issues trigger changes that affect the organization (PESTEL
areas). These changes need constant assessment.
©ACCA
Area 29/100 – The ALARP Principle
ALARP – “As low as reasonably practicable”
The ALARP level is reached when the time, trouble and cost for further reduction
measures become unreasonably disproportionate to the additional risk reduction
obtained.

Area 30/100 Strategic & Operational Risk
Risk can be categorized in two main broad categories to help managers analyse
the probability that the risks will materialise and the hazard if they do materialise.
Strategic Risks: Those that arise from the fundamental decisions that directors
take concerning an organisation’s objectives.
Operational Risks: Risks connected with the internal resources, systems,

processes and employees of the organization.

Area 31/100: Risk Management Process
The 4 steps of managing risk

1. Identify the risk & categorize (i.e. Strategic
Risk, Operational Risk, or Financial Risk,
Reputation Risk, technology risk etc.)
2. Assess the Risk – See model on the right
(heat map)
3. Chose a Strategy (TARA)
1. TRANSFER
2. AVOID
3. REDUCE
4. ACCEPT
4. Monitor

Area 32/100 – Risk Categories (example)
There are a number of ways to

categorize risks and each company may
have a different method.
Categorizing risk helps manage and

organize risk mitigation for the business.

Area 33/100 – Risk mapping – Heat Map
A risk heatmap is a way to visualize

the results of a risk assessment. It
is based on step 3 of the risk
process and it also helps visualizing
risk in a holistic manner.
Drafting a heat map over time can

also help on assessing the
‘movement’ of certain risks.

Area 34/100 - Risk Strategies
Organisations need to decide on how to ‘deal’ with each risk. As noted in the Risk Management
Process, TARA can be used to help remember strategies:
Transfer
Avoid
Reduce
Accept
Note: Risk, in many cases can be assessed differently.

Objective Risk: Assessment made with high degree of certainty
Subjective Risk very difficult to assign value to impact & likelihood
(Companies use Software systems, simulations, decision trees etc. to assess)

Area 35/100 - ERM – Enterprise Risk Management
ERM is an integrated framework. The

Framework defines essential enterprise risk
management components, discusses key
ERM principles and concepts, suggests a
common ERM language, and provides
clear direction and guidance for enterprise
risk management (COSO, 2004).
Basic principles suggest risk management

as everyone’s responsibility and embedding
risk in the culture of the organization and
taking a holistic approach to risk

Area 36/100 – Risk Management and the board
The role of the board, apart from crafting the strategy of the organisation is to also
set the “Risk Appetite” of the organisation; or how much risk is the organisation
willing to accept as well as its attitude towards risk (Risk Attitude).
This is usually based on the organisation’s overall Risk Strategy and influenced by
the Risk capacity (how much risk the business can accept).

Area 37/100 – What is the role of the risk manager?
 Assists with the overall risk management of the organization

 Is a member of the risk committee, assisting the Board of Directors
 Leads the risk management policies
 Helps create the “Risk awareness” within the organization at all levels
 Companies need to “EMBED” Risk management into their systems, to

ensure employees understand risk management as a normal activity. There
needs to be a ’no blame’ culture

Example requirement from Specimen 1
Draft a section of the report to identify and briefly discuss THREE main risks
which DCS Company currently faces and plot them on a heat map,
recommending appropriate strategies to manage those risks using an
appropriate risk management framework. (6 marks)
Professional Skills marks are available for demonstrating commercial acumen in

identifying and locating the risks appropriately. (2 marks)

Answer (outline marking notes)
The potential risks which the company could face whether or not it re-aligns its business are
as follows:
(Note: Candidates only need to discuss any three of these to gain maximum marks)
Strategic risk, business risk, financial risk and environmental risk.
(Note: Markers can give additional credit for any reasonable risks identified from the case
information and give a Professional Skills mark for a reasonable positioning of the risks in the
heat map)

Answer
Strategic risk
The key strategic risk which DCS faces is the increased competition in the data communications components manufacturing
market, the reduced margins and potential decline in the future. At the same time DCS faces the risk of missing an opportunity to
use its competencies to develop the potentially more profitable area of its business. DCS currently faces lower market share and
declining shareholder value and this is projected to be a 10% decline year on year for the next three years. To reduce or avoid these
risks, DCS could re-align its business towards the more profitable domestic market by investing in the network support business
in terms of increased R&D, fixed asset investment and improvements in policies relating to staff retention and recruitment to support
this potential growth area. This would also reduce its general cost base.
Business risk
As already explained in the five forces analysis, apart from heavy dependence on its main business sector of data
communications (65% of its total turnover), DCS is facing economic risk from overdependence on key customers (one of the OEM
customers accounts for 40% of its sales). DCS is also overreliant for its supplies of data communications sub-components on two
large multinational suppliers from which it currently faces serious supply shortages. It also risks further losses of staff and greater
recruitment difficulties caused by poor staff morale and due to the unattractive location of DCS’s headquarters. Under the TARA
framework, it is advisable to reduce these risks by widening the supplier and customer base. From a supply perspective, the benefits
of this strategy would be to spread the risk of a disruption to the supplies from one or both of the two current suppliers. The strategy
would also help DCS in terms of bargaining power, particularly if it is not getting favourable terms from them. Similarly, widening the
customer base, or concentrating on a higher value strategy will reduce its dependence on the data communications business and also
the bargaining power of their main OEM customer and help their profitability. DCS can reduce the staff retention and recruitment risk
by adopting tactics and implementing policies to improve the culture of the organisation and the morale of their key staff. This could be
achieved through offering greater empowerment and devolving more authority to middle managers. An improvement in intrinsic
rewards and in pay and conditions, or allowing staff to relocate, or work from other geographical locations which are more attractive to
them, may also help to mitigate this risk.

Answer (continued)
Note: Heatmap is a blank sample
Financial risk
The main risk is the devaluing currency in the main market into which DCS sells
a significant proportion of its data communications components. A weakening
currency in the economic community from which customers settle their
payments means that DCS is facing a currency translation exposure as monies
received in the devaluing currency will effectively reduce the turnover collected
from customers in these markets. Under the TARA framework, the risk could be
reduced or transferred by using foreign currency hedging instruments or by
taking out loans in the denomination of the weaker foreign currency, using the
payments from the continental customers to offset the liability. The other main
financial risk is the high level of gearing and the risk of breaking bank covenants
and of default. This risk could be mitigated by either converting some of the debt
into equity or by repaying or redeeming loans from DCS’s considerable cash
reserves, or by issuing more shares.
Environmental risk
DCS is not itself at risk of potential environmental impact, but is facing a risk of
creating an increased carbon footprint or environmental impact which it is not
effectively managing and which may itself create environmental costs and incur
a carbon tax liability. This risk could be transferred through carbon offset
strategies, avoided by ceasing to manufacture or distribute goods in a way that
creates such a significant carbon footprint, or reduced through pursuing tactics
or strategies to avoid waste and reduce emissions.

Area 38/100: Risk Management needs Internal Controls –
Defining Internal Controls
Controls help with minimising risks
An internal control system of an organisation helps provide reasonable assurance

that the organisation’s objectives will be achieved (i.e. through reviews, procedures,
checks and balances).

39/100 – What are the objectives of an internal control system?
To ensure as far as practicable:
-Orderly and efficient conduct, including adherence to internal policies

-Safeguarding assets
-Prevention / detection of fraud & error
-Accuracy and completeness of records
-Timely preparation of financial information
©ACCA
Area 40/100: What are “Sound” Internal Controls?
Internal controls need to be 'sound' which means that they have to be

 Efficient
 Economic
 Effective – able to respond to risks
 Embedded in the systems
All employees, at all levels, have a responsibility to ensure they follow the controls.

Area 41/100 Information Flows for Management Reporting
Information is required at all levels of the organisation and it is important for this information to
‘flow’ effectively so that management can have timely information & data to perform their tasks.
Management requires information from external and internal sources in order to monitor the
performance of the organisation.
Information needs to have the following characteristics (ACCURATE):
 Accurate
 Complete
 Cost-beneficial
 User-targeted
 Relevant
 Authoritative
 Timely
 Easy to use

Area 42/100: What factors affect the need for an Internal Audit
Department?
Scale, diversity and complexity of company’s activities
Number of employees (size)
Cost / benefit
Changes in organisational structures
Changes in key risks
Problems with existing internal control systems
Recent ‘events’ or scandals

Area 43/100 - What is the role of an Internal Audit
department and how does it differ from compliance?
 Internal audit role:
 Assisting with the identification of risk
 Investigate
 Help with any compliance regulations
 Review accounting and Internal Control systems
 Reviewing the effectiveness, economy and efficiency of operations
 COMPLIANCE = Laws & Regulations (i.e. data protection)

Area 44/100 – Why does internal Audit need to be
Independent?
Threats to independence:
 Familiarity
 Self Interest
 Advocacy
 Self-review
 Intimidation
 Internal Auditors should not accept accept explanations without checking, ignore
issues, fail to report an issue and/or turn a blind eye.

Strategic Business Leader - Specimen exam 2 Q2b
A few days later Alex Reed called you into his office to discuss Rail Co’s governance and internal
controls. During that meeting he referred to the transport report in the Beeland Herald newspaper (Exhibit
2) and handed you a copy of the minutes of the latest board meeting held by Rail Co (Exhibit 4).
Required:
Alex has asked you to draft a letter to be sent to the chairman of the Rail Co Trust Board which:
(b) Reviews the effectiveness of the internal controls at Rail Co using evidence from the minutes of
the latest Rail Co board meeting and any other suitable source and justifies that the chief executive of
Rail Co is failing in his fiduciary duties to the trustees of Rail Co. (8 marks)
Professional skills marks are available for demonstrating scepticism skills in questioning the opinions
and assertions made by the chief executive at the recent board meeting. (2 marks)
(24 marks)

Answer
The Rail Co Trust Board
Beeland
Xx/xx/xxxx
Dear Chairman
The following is our report on the effectiveness of internal controls of Rail Co based on the evidence I have been able to collect and analyse. Having
thoroughly reviewed the Rail Co performance data, the recent board meeting minutes of Rail Co and the transport report in the Beeland Herald, a
number of internal control weaknesses can be highlighted.
First, there appears to be a serious weakness in the control of passengers accessing trains without tickets. This is referred to in the Beeland Herald
transport report, where it is mentioned that this issue had already been raised in the last two annual reports. This creates a significant business risk
which does not seem to have been acted upon or mitigated by the Rail Co board. It has been highlighted for over two years that Rail Co believes that
significant numbers of passengers are travelling on Rail Co’s network without tickets. A key internal control weakness would appear to be that
approximately 40% of Rail Co’s stations do not operate ticket barriers, allowing the potential for customer ticket fraud. This potentially will have
seriously damaging consequences on the performance of Rail Co in that revenues are not being optimised.
Second, there appears to be a weakness in staff management and safety procedures, in that there has been an increase in the number of injuries to
staff reported by Rail Co in the last year. This is evidenced in the recent performance information analysed by one of my colleagues in Exhibit 3.
Although Kim Lun has assured the BHSO that a thorough investigation would be undertaken immediately, it indicates that Rail Co has potential
weaknesses in safety procedures and also in staff training procedures. The performance statistics indicate that Rail Co has lower levels of training than
its competitors and Kim Lun (non-executive director) has noted that there had been a lack of investment in the training of staff in the last three years,
which is also a key internal control weakness and one which could seriously impede the performance of Rail Co. Staff who are not appropriately trained
are more likely to have accidents and to make mistakes. Again, this will have serious repercussions on the overall performance of Rail Co and could
have seriously damaging impact upon reputation if serious injuries occur.

Answer - Continued
A further internal control weakness could be seen as the lack of investment in online booking systems. Several other
national train operators offer online booking facilities and evidence suggested that this had positively impacted upon
revenue growth and customer satisfaction in all of these businesses (Appendix 3). Lack of focus upon IT investment and
development in key strategic information systems could be seen as an internal control weakness and could hamper the
long-term performance of Rail Co.
A further internal control weakness could be the current pay structure. Poorly paid staff who are dissatisfied will leave or
may take strike action. HR policies on fair pay could be considered to be weak if they are not commensurate with the
expected pay rate.
Throughout the board meeting, there is evidence of the chief executive’s inability to react to these key internal
weaknesses effectively and it would seem that in some cases, this reluctance and inactivity could have seriously
damaging consequences for Rail Co. In a number of cases, there is evidence of a failure to achieve his fiduciary duty to
the trustee of Rail Co.
First, his comments in relation to Rail Co’s performance are inaccurate and reflect his own opinion, based on historic
performance and not the actual performance in 2016. Clearly, some narrow aspects of performance have improved, but it
is not in line with competitors and customer expectations in the current climate. His comment that the target for punctuality
set by the Trust Board was unachievable and not relevant is highly inappropriate and shows a breach of his fiduciary duty
to the trustees. It is his role as chief executive to ensure that these targets are achievable and they cannot simply be
ignored. Also, his statement that customers do not understand value for money demonstrates his lack of understanding of
the customers’ perception of this critical measure. It is wrong for him to make such a sweeping and unjust statement and
could seriously damage the reputation of Rail Co if these views were made public.

Answer - Continued
His response to the investment in ticket barriers is unfounded and demonstrates a lack of understanding of a key internal control
weakness in relation to the potential level of fraud in Rail Co. He had made a significant judgement founded upon no evidence of costs
outweighing the benefits and his assessment that most fraud being unpreventable is ill-judged and incorrect. Again, his lack of
understanding of such an important issue is a failure of his fiduciary duty. His comment that there is no evidence to suggest that staff
morale is low is incorrect, as staff turnover is increasing, strongly indicating low morale. He pointed to evidence in the customer survey
report which indicated an annual growth in customer satisfaction levels in relation to staff helpfulness and attitude but this is not linked
to staff training in any way. His logic is flawed and his attitude towards staff and adequate training could be seriously damaging to Rail
Co.
The CE also commented that online ticket facilities went against the traditional values of customer service focus of Rail Co. His
reluctance to invest in such technology could prove to be seriously damaging to Rail Co’s performance. It is clear that customers are
not happy with ticket buying facilities and should this continue more will use other means of transport. To delay this decision could be
damaging to Rail Co, should customers continue to choose other forms of transport to commute.
The chief executive’s attitude towards the unions could be severely damaging to Rail Co, should the unions decide to take strike
action. The CE commented that the unions were merely taking advantage of the latest survey results to put the board under pressure
to increase levels of pay for its members. Although Rail Co must negotiate with the unions, to take an aggressive stance could be
counter-productive. His comment relating to the media as an unimportant stakeholder is incorrect as adverse media reports about Rail
Co are a potential reputational risk to the organisation.
In conclusion, my overall opinion is that the comments made by the chief executive demonstrate a number of serious failures and
weaknesses in his fiduciary duty to the principals and trustees of Rail Co. I have grave concerns regarding his awareness of the
current situation facing Rail Co and his abilities to respond effectively to the changes which will be required in the coming months.
Yours sincerely
Assistant auditor, NAA

Area 45/100 – CSR Defined – Corporate Social Responsibility -
Companies have 4 responsibilities
The company acting as a corporate

citizen
Carroll defined CSR as including 4 points
(responsibilities)
Economic responsibility
Legal responsibility
Ethical responsibility
Philanthropic responsibility
©ACCA
Area 46/100 What is a Profession and what is
Professionalism?
Profession is a body of knowledge & theory Independence
Professionalism is taking action to support Must be seen to be free from
the public interest. One needs to have outside guidance, influence or
professional competence to act control
professionally, follow a set of rules and
values (i.e. ACCA code of ethics) Managing potential threats:
 Integrity  Fees not too high % of income
 Objectivity  Gifts/hospitality must be
insignificant
 Professional competence
 No financial involvement in clients
 Confidentiality
 Avoid close relationships between
 Professional behaviour senior staff and client
©ACCA
Area 47/100 – What is a code of ethics?
Written moral principles adopted to promote ethical conduct

Purpose:
 Framework of moral principles
 To promote high standards of practice
 Self-evaluation benchmark
 Mark of occupational maturity
Law and regulation or voluntary (e.g. CSR)
Codes usually include
 Introduction (e.g. explain leadership commitment)
 Purpose, relevance, audience and context
 How to use the code
 Tools/sources of support
 Summary of ethical decision making framework
©ACCA
IESBA Code of Ethics
IFAC
Objectives for accountancy profession:
Committed to protecting the public interest:
 Highest standards of professionalism  high quality international standards
 Highest levels of performance  strong ethical values
 Meet the public interest requirement  quality practice requirements
 worldwide development support
Underpinning needs:
Creates standards (ISAs, IESs, IFRSs, etc):
 Credibility  Advocates convergence in financial reporting
 Professionalism  Provides best practice guidance
 Quality of services  Implements a membership compliance program
Members must implement similar (or stricter)
 Confidence ethical codes
©ACCA
Some examples of ethical threats
Options that create ethical dilemmas

Causes
 Cultural differences
 Ethical dilemmas not reported/discovered
 Unrecognised ethical dimensions/sensitivity
 Understanding issues/consequences
 Internal/external pressure
 Absence of leadership
 Lack of education/knowledge
 Lack of effective governance
©ACCA
Area 48/100 – Tuckers 5 question model - Ethical conflict
resolution
The decision should be:

 Profitable
 Legal
 Fair
 Right
 Sustainable or environmentally sound
©ACCA
Area 49/100 - What is Corruption?
Corruption includes bribery and any other behaviour in relation to

persons entrusted with responsibilities in the public or private sector
which violates their duties and is aimed at obtaining undue
advantages of any kind for themselves or for others.
The main forms of corruption are:

 Bribery /facilitation payments/”excessive” hospitality
 Embezzlement
 Fraud and
 Extortion.
©ACCA
Possible exhibits – analysis of fraud
An analysis of fraud
©ACCA
Strategic Business Leader - Specimen exam 2 Q4a
Required:
You have been asked by the chair of the audit and risk committee to review the
findings of the financial controller and present a report which requires you to do the
following:
(a) Analyse the information presented in the spreadsheet produced by the financial
controller, questioning any assumptions he may have made, and explain the
implications of the findings for Rail Co. (8 marks)
Professional skills marks are available for demonstrating scepticism skills in
considering the information presented in the spreadsheet and reflecting on the
impact on Rail Co’s revenues. (2 marks)

Answer
The spreadsheet prepared by the financial controller has identified the estimated fraud per month in Region 1, based upon the
variance between actual tickets sold and estimated tickets sold per town (based on estimated percentage of railway users per
town). This is then estimated as a percentage based on the total population of each town. It is notable that for each railway
station which has a ticket barrier that the level of fraud is markedly lower than those stations without ticket barriers (stations C, D, G
and I). Therefore, it can be assumed that ticket barriers are clearly having a direct impact on preventing fraud. The
estimated railway users in the towns need further investigation. How was this calculated? Was this based on surveys or
on demographic factors or both? This would have to be examined further.
The spreadsheet also calculates the percentage of unpreventable fraud at 1·28%, based upon an average of those stations which
have ticket barriers (stations A, B, E, F, H, J). This presumes that there is an element of fraud occurring on Rail Co’s network
which cannot be prevented with the installation of ticket barriers. There will always be some degree of fraud occurring which
is almost impossible to control. Again there is an assumption about preventable versus unpreventable fraud. Further information
may be required to understand how this estimate was arrived at and whether this is the same at all stations and regions.
Therefore the spreadsheet takes this into account when calculating the percentage of fraud due to poor internal control
(preventable fraud) at those stations without ticket barriers.
If we then use this information to calculate the total preventable fraud based upon the total population in each town, then it can be
calculated that total annual preventable fraud is estimated to be nearly $B27 million in Region 1 alone. If we were to
extrapolate this across 20 regions, it gives an estimated annual fraud of $B542 million. The assumption that this region is
perfectly representative of other regions allowing such an extrapolation is a tenuous one. It is unlikely that the profile of
towns, their demographics, and the proportion of rail users or preventable versus unpreventable fraud levels will be the
same across regions. However, if these assumptions can reasonably be made, this is a significant amount and if we were to take
this as a percentage of total revenue in 2016 it amounts to 12% of annual revenue. This is a staggeringly high figure and clearly a
significant control problem for Rail Co. Even if the level of preventable fraud was assumed to be 50% of the calculated figure above
(say $B270 million), this level of fraud is still unacceptable.

Why is corruption wrong?
The ethical argument

Corruption is inherently wrong:
The reality that laws making corrupt practices criminal may not always be enforced is no
justification for accepting corrupt practices.
To fight corruption in all its forms is simply the right thing to do.
The business arguments-
1.Legal Risks
2.Reputational Risk
3.Financial Cost
4.Pressure to repeat offend
5.Blackmail
6.Impact on staff
7.Impact on development
©ACCA
50/100 - Economic Activity
Companies need to ensure that take into consideration 3 areas that they ‘affect’
through their operation/activities:
ECONOMIC
SOCIAL Footprint
ENVIRONMENTAL & Sustainability Footprints
Sustainable development is development that meets the needs of the present

without compromising the ability of future generations to meet their own needs
Sustainability is an attempt to provide the best outcomes for the human and
natural environments both now and into the indefinite future

51/100 - Integrated Reporting
The concept of integrated reporting (<IR>)

Integrated Reporting (<IR>) is seen by the International Integrated Reporting Council(IIRC)as
the basis for a fundamental change in the way in which entities are managed and report to
stakeholders.
Purpose of integrated reporting <IR>
"The primary purpose of an integrated report is to explain to providers of financial capital how
an entity creates value over time. An integrated report benefits all stakeholders interested in an
entity’s ability to create value over time, including employees, customers, suppliers, business
partners, local communities, legislators, regulators, and policymakers.”
Organizations also use Environmental Management Systems and ISO standards to
ensure they follow guidelines.
It is important for an organisation to know what they WANT to measure, then find the
benchmarks through KPIs to quantify what they are measuring and manage their
impact.
©ACCA
Sample – Integrated Report

Value of Integrated Reporting
Combines significant information about strategy, governance, performance and prospects

Presents, in a single report, information from:
 financial statements
 governance reports
 sustainability reports
Reflects commercial, social and environmental context within which the organisation
operates
Provides a clear and concise representation of the organisation’s stewardship and how it
creates value
Case content may draw upon any of the main elements of the <IR> Framework
©ACCA
Area 52/100: Social and Environmental Reporting –
Why?
Stakeholders want to know about performance and potential risk
Because the ethical performance of a business is a factor in some
investors' decision to invest.
Because employees may use ethical performance as a criterion in
their choice of potential employer
Because consumers will not always buy goods or services from
unethical companies
Because it assists good corporate governance practice.
©ACCA
Area 53/100 - What is Vision and What is Mission?
Vision: The grand idea. Where the company wants to go.
Mission: The purpose – Why the organisation exists – it is the “why,

how, what” of the business.

Area 54/100 – Strategy & Strategy Lenses
Strategy is the direction and scope of an organisation over the long term: which achieves advantage
for the organisation though its configuration of resources within a changing environment, to meet the
needs of markets, customers or clients and to fulfil stakeholder expectations.
Know the term strategic drift as well ( when companies depart from their initial deliberate strategy)
Strategy Lenses:
EXPERIENCE
IDEAS
DESIGN

Levels of Strategy – Organisational (Corporate) – Business &
Functional
HQ
Corporate
Business
Marketing R&D
Functional
125 23/08/2018 Dr. Constantine “Dino” Kiritsis Operations ©ACCA
Strategy
Strategy is the direction and scope of an organisation

over the long term: which achieves advantage for the
organisation though its configuration of resources within
a changing environment, to meet the needs of markets,
customers or clients and to fulfil stakeholder
expectations.

Area 55/100: Environment: How can I assess it? PESTEL – 6
areas
Political (P)
Legal Legal?(L)
Economic (E)
Social (S)
Environmental (E)
Technological (T)
PwC
Area 56/100 – Competition – How can I analyse it? The
5 Competitive forces
©ACCA
Example - real-life
Apple’s iphone
Can you analyse the competitive environment of Apple in the USA?
How would you do this?
Which model would you use?
The answer will help you “Assess the profitability of the industry” and help you
shape strategy
129 ©ACCA
Strategic Business Leader - Specimen exam 1 Q1
From the information you have collated, draft a section of the consultancy report
for the directors of DCS Company to include the following:
(i) An analysis of the industry and market which DCS Company is competing
in, using an appropriate model. (15 marks)
(ii) An evaluation of the overall performance of DCS Company between 2012
and 2015 from an integrated reporting perspective. (12 marks)
Professional Skills marks are available for demonstrating evaluation skills relating
to DCS Company’s environment and performance. (4 marks)

Answer to (a)
Background section of consultancy report
One mark per relevant point for discussing any relevant environmental model such as Porters five forces, or PESTLE.
Introduction
The first part of this report analyses DCS Company’s market and the industry using the Porter’s Five Forces model.
(i) Bargaining power of buyers DCS is competing in two markets. In the data communications component market which is more mature and where it
has less than 1% of the market share, it is a supplier of marginal significance, despite 65% of its gross profit or cash contribution being generated in
this segment. Its customers in the neighbouring single market (30%) with its own currency are likely to demand low prices, high quality and reliability.
They may not accept late delivery of orders. It appears that alternative sources of supply are readily available and that switching costs are relatively
low. Multinational OEMs have significant bargaining power in this market, particularly the OEM which accounts for 40% of DCS’s current data
communications component sales. In the second market, where network management systems are supplied to mainly domestic, SMEs and a few
larger companies, the buyers appear to have less bargaining power. DCS is catering for each customer’s specific needs and so each solution is, to
some degree, a bespoke solution. This makes it much harder for buyers to compare products and prices of potential suppliers. Alternative sources of
supply are much more difficult to find as there only three companies (including DCS) in this specialist marketplace.
The bargaining power of suppliers Although DCS manufactures 50% of all components used in its data communications products, reducing its
overall reliance on suppliers in this sector, it seems unlikely that DCS will be able to exert much influence on its suppliers, which provide the other 50%.
As a relatively small player in the data communications market, the company does not have the power to exert buyer pressure on its two large
suppliers, either in terms of price or delivery. Current problems associated with the delivery of components are having a significant impact on the
company’s ability to meet customer deadlines and expectations. Suppliers of financial capital, namely lenders, have gained more bargaining power as
DCS has had to borrow more to sustain their recent growth. If labour is seen as a supplier, then evidence again suggests that DCS is in a relatively
weak position particularly since there has been a limited trade union membership since 2006. However, the union members are mainly in the data
communications components division where employee remuneration and employment rights are already compliant with Prydain’s national employment
laws. The scenario also indicates the difficulty of finding high calibre network staff with DCS’s small size and location making it difficult to attract the key
personnel necessary for future growth in this sector.

Answer - continued
Threats from new entrants DCS is operating in an industry where the costs of entry are significant because it is
capital and knowledge intensive. Economies of scale compel new entrants to enter at significant output levels or
suffer a cost disadvantage. Furthermore, the need to offer comprehensive aftersales support, although a problem
for DCS, does also create a significant barrier to new entrants. Finally, the exit costs and barriers such as industry-
specific knowledge, skills and assets, reduce the attractiveness of the marketplace to new entrants.
Threats from substitutes There is evidence that large, successful, high technology companies are particularly
vulnerable to ignoring the challenge from disruptive new technologies which can replace the need for certain high
technology products and services overnight. However, the relatively small size of DCS may give it a competitive
advantage in its ability to respond quickly and flexibly to change, as long as it can attract the right calibre of
expertise to achieve this.
Rivalry amongst competitors Very different levels of competition are being experienced in the two market places
DCS is operating in. It is clear that the high volume, low-margin component business offers intense competition with
buyers who are able to use their size to extract favourable prices. DCS only has 1% of this market. The ability of
DCS to generate better market share and volumes through product innovation in this market seems highly unlikely.
The intensity of rivalry in the network management systems sector is significantly less in this specialist market. DCS
is dealing with a smaller number of large and medium-sized users, designing products specific to their needs. In
Porter’s terms, DCS is adopting a focused differentiation strategy. In these low-volume high-margin markets, the
emphasis has to be on increasing the volume side of the business, but at the same time making sure that they have
the resources to attract and support new customers.

Useful points on PESTEL
PESTEL may be appropriate when the requirement states “Macroenvironment” or

“Environmental Analysis”.
Overlaps: Is it a “P”? Or an “L” or an “E”? The markers are not too strict in this
case, as it's the relevance to the task and the context of the case that they are
looking for
Remember to explain WHY something is Political, or Environmental etc. as there

will be no marks awarded if you do not!
©ACCA
Area 57/100 –
Analysing the National FAVOURABLE
Competitive FACTOR CONDITIONS
Advantage - Porter’s
Diamond
DEMAND RELATED AND
CONDITIONS SUPPORTING
INDUSTRIES
FIRM STRATEGY,
STRUCTURE AND
RIVALRY
©ACCA 134
Example
Analyse the competitive advantage of Italy in the fashion area.

You may have a country featured in the case that has an important
resource, like ‘know-how’ in a certain area.
The model to use is Porter’s Diamond
It assesses 4 main areas as in the previous slide.
Make sure you find the ‘factor condition’
Make sure the demand starts with the locals
Make sure there are supporting industries
Make sure there are no monopolies (there needs to be a competitive
environment)
135 ©ACCA
Area 58/100: Other methods to analyse the environment
Scenarios (to predict the future)
Time series analysis - Exponential smoothing (when there seems to be no pattern)
Linear regression
The coefficient of determination
You will not necessarily be asked to undertake the mathematics of any of the
techniques, but you will have to focus on the principles, evaluations and consequences.
©ACCA
Area 59/100: How can I assess the resources of an
organisation? Through a Resource Audit (Ms model)
An organisation's resources can be organised into the following categories:
 Men
 Money
 Markets
 Materials
 Management
 Make-up
 Manufacturing/Machinery
©ACCA
Area 60/100 – What is Critical Success Factor Analysis?
and what is a Key Performance Indicator? (KPI)
Definition: Those areas that the company must do well in order to succeed!
Usually there are only a FEW areas (i.e. 3 – 4)
The company must have capabilities in these areas!
Key Performance Indicators (KPIs) used to measure attainment of CSFs
KPIs need to be SMART (Specific Measurable Achievable Realistic and Timely)
©ACCA 138
Example - Critical Success Factor Analysis and KPIs
For a restaurant
Music
Quality food
Customer service
Clean
Prices
Furniture
Parking
Location
Live events
Wi-fi
©ACCA 139
Area 61/100 - Balanced Scorecard – Based on CSFs
PwC
Example of an airline - Lufthansa
What are the CSFs in the airline industry and Lufthansa specifically and why?
Safety – KPI?: # of accidents
On-time - % of flights NOT on time: i.e KPI = less than 5% - SMART!!!
Customer service – Survey
How can we ensure we are ’doing well’ in these CSF’?

What could be the KPIs?
Remember: If we can measure it, we can manage it…
141 ©ACCA
Area 62/100 M. Baldridge Model
©ACCA
Key points from the Baldridge model
 Its focus is Performance

 Related models: Balanced Scorecard, Benchmarking
 CSFs theory is important
 Main objective of model: In essence, if you incorporate these criteria in your
organizational practices, you can expect to achieve higher/better
performance. According to Malcolm Baldridge, It is a way of measuring
and rewarding those organisations that have performed better than
others.
©ACCA
What each area means
Leadership: Clear? Governance?

Strategy: Clear? Based on capabilities & Resources?
Customers: Service? Support? Interactive? Segmented?
Workforce: IDPs? T&D? Engagement?
Operations: Process improvement?
Results: Improvement in financial, customer, HR etc. based on market
benchmarks
Measurement: Big Data? – Knowledge Management?
©ACCA
Area 63/100 - Benchmarking
Benchmarking is the process of systematic comparison of

a service, practice or process. Its use is to provide a target
for action in order to improve competitive position.
Types:
 Strategic
 Best in class
 Industry / sector
 International
©ACCA 145
Example – What is benchmarking?
Pros and Cons? –

Let’s do this together!
 Pros:  Cons:
 Lack of innovation
 Rank
 Wrong benchmark
 Improvement
 Ill motivation
 Motivate
 Costly
 Ideas
 How can you get the info?
©ACCA 146
Area 64a/100: Competitive Advantage Generic Strategies – How to
compete

Important points for Generic Strategies
Sources of Cost advantages: Sources of differentiation:

Product design
Product features
Lower input costs
Convenience
Speed
Lower process costs Image/brand
Security/brand
Product design Product quality/reliability
Service quality/reliability
Responsiveness

Can a combination of strategies be used?
Porter says that companies may be “stuck in the middle”
Success may be evident only through SBUs using a different strategy
Example
TOYOTA & LEXUS (owned by the same company)
Emirates & Fly Dubai (owned by the same company)
149 ©ACCA
Area 64b/100 - Strategic Clock (Bowman) – Based on the same logic as
Generic strategies
High
Differentiation
4 Focussed
Hybrid differentiation
3 5
Perceived value/ Low 2 6

benefit price
1 7
8 Strategies
destined for
No frills
ultimate failure
Low
Low Perceived price High

The Product Life Cycle

Relative market share (Note 1)
>1 1.0 <1
Area 65/100 – The Cash in balance Cash user
BCG Matrix –
High
Analysing the
performance of Market growth STAR PROBLEM CHILD
Products, rate (%) Cash generator Cash in balance
(Note 2)
Services or SBUs
Low
CASH COW DOG

High Low
Relative market share (log scale)
©ACCA 152
Example: BCG matrix - VW
Used for Subsidiary analysis, portfolio analysis and for product analysis
In essence, it helps us understand the performance of a product line, our divisions
etc.
VW cars example
153 ©ACCA
Possible exhibits – spreadsheet
Extracts from surveys and competitor analysis
©ACCA
Area 66/100: What is the Value Chain?

Value chain points to remember
How can a company add value?

9 Activities
Need to be coordinated
Outsourcing is ‘allowed’
Ingredients are there to add value, but how “well” are you using them
156 ©ACCA
Area 67/100. The Value System and the supply chain
How is the organisation’s value chain linked to your suppliers and

your customers? Are there sources of competitive advantage here?
Supplier Channel Customer

value value value
chains chains chains
The
Organisation’s
value chain
©ACCA 157
Supply chain management
(Key terms: Upstream and Downstream)
©ACCA
Area 68/100 Big Data
The issue of Big Data is a phrase used to mean a massive volume of both
structured and unstructured data that is so large it is difficult to process using
traditional database and software techniques.
Characteristics of Big Data: 3 Vs
Volume
Velocity
Variety
Handling big data efficiently can be a capability of an organisation

Area 69/100 – Dangers of big data
 Cost
 Regulation (i.e. GDPR)
 Loss and theft of data
 Incorrect Data
 Employee monitoring
 Hacking / Security

Communication exercise
SPECIMEN 1, Q1c)
Under the Strategy and resource allocation heading in the October board report, the
possibility of DCS Company supplying and supporting such technologies as cloud
computing and big data analytics is referred to. To accompany the consultancy
report a presentation is needed about the exploitation of such new
technologies.
REQUIRED
Prepare information for two presentation slides to be presented to the DCS
Company board, including relevant bullet points and supporting notes, highlighting
the key benefits and identifying the main opportunities presented by big data
analytics to DCS Company and its customers. (6 marks)
Professional Skills marks are available for demonstrating communication skills in
highlighting the key points to include in the slides and for clear supporting notes.
(2 marks)
©ACCA
Inefficient and Ineffective answer?

How to organise data
Why and how Data management can become a capability if analysed effectively
(managing knowledge).
The analytical findings can lead to:

 Better marketing
 Better customer service and relationship management
 Increased customer loyalty
 Increased competitive strength
 Increased operational efficiency
 The discovery of new sources of revenue.

Area 70/100: Cloud systems
Managing, securing and sharing knowledge can also be done through the “cloud” (i.e.
Google Drive, Dropbox, AWS etc.)
Benefits:
Sharing
On demand
Updated at real time
Cost effective
Back – up
Security

Area 71/100 - Innovation and Disruptive technologies
 Why innovate?
 From ideas to “innovation”
 Examples of failed companies & products/services
 Innovation as a requirement for sustainability
 Lots of innovation sources from technology & the internet (hence the use of e-
methods, apps and continuous improvement through ‘open’ innovation methods)
 Benefits of e-business + dangers
©ACCA
Innovation and Disruptive Technologies (continued)
 Using Big Data to transform your business model & innovate (i.e. Amazon)
 Data Analytics & Business Intelligence
 Disruptors: UBER, Skype, itunes, Airbnb etc.
 Cloud & mobile computing
 In essence, disruptive technologies can lead to a different business model pushing

competitors and the whole market to adjust.
 (May also be used to describe substitutes in 5 forces theory, value chain analysis, big
data, knowledge management, 6Is, etc.)
©ACCA
Area 72/100 – What is Organisational culture & the Cultural Web?
The concept of the cultural web is a useful model for mapping out areas of change and it helps
identify the elements of culture in an organisation.
7 ELEMENTS
Organisational culture may be defined as
THE WAY THINGS ARE DONE AROUND HERE
1. Power
2. Controls
3. Structure
4. Stories & Myths
5. Routines & rituals
6. Symbols
7. Values (Paradigm)
©ACCA
Marketing
The management process which identifies, anticipates and

supplies customer requirements efficiently and profitably.
Basic Marketing Activities
 Customer analysis
 Market Research
 Advertising, promotion
 Marketing Mix
 Digital Marketing
©ACCA 169
Area 73/100 - Market Segmentation
“Market segmentation is the process of splitting customers, or

potential customers, within a market into different groups
within which customers have the same or similar
requirements”
McDonald & Dunbar
©ACCA 170
Area 74/100 The Marketing Mix
PRODUCT
Design/sizes colors
Materials PRICE
Specification List price
Quality Discounts PLACE
Packaging Payment terms Location
After-sales service Service/spares prices Retail/wholesale
Mail/telephone order
Delivery methods
PROMOTION PEOPLE
Advertising Skills
Competency
Brochures/data sheets PROCESS
Personal selling & networks Capabilities
Time saving
Exhibitions Resources
Customer focused
Gifts User friendly
Social Media
PHYSICAL EVIDENCE
Dress code
Building, premises
Vehicles
©ACCA 171
Area 75/100 – Pricing Considerations
 Pricing Strategy:
Remember Generic Strategies here (cost vs differentiation
New Product and Market, New Product/ Existing Market, Existing Product.
 General Factors:
Capacity, Costs, Quality, Rivalry, Bargaining Power, Perceived Value.
 Pricing Techniques:
Cost Based, Demand Based, Competition Based, ABC
©ACCA 172
Area 76/100 - E-marketing
E-marketing and the marketing mix (7Ps)

Product: More options on-line, extensive information on products…
Price: On-line offers cross checking, price comparison, direct sales in many
cases from the company itself (not a middleman or wholesaler), multiple apps and sites +
social media, transparency
Place: The location is on the web, convenient…
Promotion: Social, peer to peer, interactive, individualized, reach more customers…
People: people can be replaced with automated processes, such as ‘FAQ’ pages
Process: new processes are required for online marketing, linking to other
operational systems
Physical evidence: customers’ experience such as ease of use of website, navigation,
availability and overall performance. Responsiveness to email enquiries is a key aspect.
©ACCA
Area 77/100 - 6 Is
Characteristics of the media of e-marketing: the 6 Is
•Independence of location
•Integration
•Interactivity
•Individualisation
•Intelligence
•Industry structure

Area 78/100: Customer Relationship Management (CRM)
There are 4 stages in the customer life cycle:
 Selection
 Acquisition
 Retention
 Extension
IT can play a pivotal role in improving all aspects of CRM
©ACCA
Customer relationship management
CRM systems focus on four general areas

— Sales automation: lead management, order taking,
sales support
— Service management: help desk, problem tickets, FAQs
— Marketing automation: prospects database, campaign
management
— Management reporting: tables, graphics, analysis of
data
©ACCA
Area 79/100 - Principles of e-business
Benefits
Cost reduction in procurement and headcount needed to handle customers
Capability – increase penetration in new countries; help reduce inventory
levels held
Communication – improved, more interactive communication with customers
Control – better monitoring and control
Customer service enhanced – basic enquiries can be dealt with via a
website
Competitive advantage – will be dependent on competitors’ use of e-
commerce.
Can you find any Disadvantages?
©ACCA
Area 80/100 - SWOT Analysis – Position Analysis
Based on assumption an effective strategy derives from a sound “fit” between a firm’s
internal resources and its external situation
Opportunities Threats
A major favorable situation in A major unfavorable situation in a
a firm’s environment firm’s environment
Strengths Weaknesses
A resource advantage relative A limitation or deficiency in one or
to competitors and the needs of more resources or competencies
markets firm serves relative to competitors
©ACCA 178
Area 81/100 - Directions for Growth - Ansoff
Products
Existing New
Existing Market Product

Markets
penetration development
New Market Diversification

development
©ACCA
Area 82/100 Means and Methods for growth – You need to know
the theory behind these methods!
Direct investment – Organic Growth

Merger
Acquisition
Joint Venture (Alliance, Consortium)
Licensing
Franchising
Exporting
©ACCA 180
Area 83/100: Evaluating Strategic Options
SUITABILITY: Does option address circumstances in

which organisation operates. To do with
strategic logic, mission, vision…
ACCEPTABILITY: Is option acceptable to key stakeholders

and in terms of risk and return (financial
attractiveness).
FEASIBILITY: Does the organisation have the capability

to deliver the option. Cash? Resources? To do
with implementation practicalities.
©ACCA 181
Area 84/100 Organisational structures
Entrepreneurial -The leader
Everyone else
©ACCA
Functional Structure

Divisional Structure

Matrix structure

Mintzberg’s organizational configurations / Building Blocks
Strategic Apex
Mintzberg argues that
structure exists to
coordinate the
activities of different Techno- Support
individuals and work structure
Middle
Staff
processes. Line
Operating Core
BY MINTZBERG
©ACCA 187
Area 85/100: Centralisation & Decentralisation
Relative terms
Classic views see decentralisation with a degree of distrust
(control and empowerment reasons)
Neither “good or bad” (contingency view)
Information, delegation, morale, quick responses, coordination
and ability is required
Advantages and Disadvantages?
©ACCA 189
Area 86/100 Boundaryless Organisations
Boundaryless organisations can Types of boundaryless

be defined by a lack of Organizations:
structures and an approach to
business that is based on the
free flow of information and
Network
ideas to drive innovation,
efficiency and growth in a world Virtual
that’s constantly changing.
Modular
Learning
Typical Boundaries found in
organizations: Collaborative Working
Vertical, Horizontal, External.

Area 87/100: Outsourcing
PROS and CONS of Outsourcing
• Cost savings • Dependency on

• Access to IT skills supplier
• Improved quality • Loss of confidentiality
• Headcount reduction • Difficult contract terms
• Flexible resourcing • Length of contract (lock
• Release of managers in costs)
to concentrate on other • Lost expertise
activities • Loss of competitive
advantage ©ACCA 191
Area 88/100: Harmon’s process-strategy matrix
According to Harmon, BPR (Business Process Reengineering) should be
focused on those activities which are of high strategic importance & likely to
be complex and dynamic. These are normally the processes that provide
competitive advantage and overall company success.
REMEMBER: Shared Service Centers (SSCs) & BPOs (Business Process
Outsourcing) as examples
©ACCA
Area 89/100 - What is change?
Driving forces Restraining forces

Resistance from individuals and
New technology groups:
Changing work values Habit, fear of loss,
Knowledge explosion Economic reasons
Competition Social ties
Market turbulence Resistance from the organisation
Globalisation Structure, rules, procedures
Socio-political changes Limited resources
Culture
Quasi-stationary equilibrium
©ACCA Lewin: Force-Field
193Model
Main points on change
What is it? : “Any disorganising pressure arising inside or

outside the organisation”
What is ‘trigger of change'?
Why do people resist change?
How can organisations deal with resistance to change?
©ACCA
Area 90/100: The Change Process
Lewin suggested that successful change is achieved in three stages:
 Unfreezing existing behaviour

 Making the change
 Refreezing the new behaviour
©ACCA
Processes of Managing Change: revolutionary change
Altering
Enhancing the behaviour Managing
Driving forces resistance Institutionalising
Disturbing the change
equilibrium
Moving
Unfreezing Re-freezing
The status quo
Weakening the
Restraining forces
Gathering and Making the
Giving feedback Change
Creating awareness
permanent
of the need to change
©ACCA 196
Area 91/100: Contextual Features of change –Check them prior to
any change
©ACCA
Area 92/100: POPIT™
What is the business motivation?
Business Models Business Information Models
External Business Environment Information Standards
Organisational Capabilities Technical Architecture
Organisational Memory Application Architecture
Organisation
Roles and Job Descriptions Value Propositions
Skills and Competencies Value Chains
Information
Management Activities Core Business Processes
&
Culture Business Services
Communication Technology
People Processes
Business Architecture Blueprints

©ACCA
Area 93/100: Types of Strategic Change (Balogun and Hope
Hailey) – characterising the type of change
Extent of Change
Transformation Realignment
Incr.
Speed of Change
Evolution Adaptation
Revolution Reconstruction
Big Bang
©ACCA
What is a business process?
Every business has unique characteristics embedded in its core

processes that help it achieve its goals and create competitive
advantage.
Strategic business processes, such as new product design or

high sensitivity customer care, provide unique and durable
business advantages to organisations.
Looking at the business in terms of activities and processes

opens up scope for challenging the ways in which things
are done, and coming up with improvements, or sometimes
more radical changes.
©ACCA
Business Processes example
©ACCA
Area 94/100: Project Management and Constraints
What is a project? – Defined
Project Constraints:
TIME
COST
SCOPE
©ACCA 202
Area 95/100: The business case
Why do we make a business case? Contents of a case:

To obtain funding for the project Intro
To compete with other projects for Exec. Summary
resources Current situation
To improve planning Options
To improve PM CBA
Impact assessment
Risk Assessment
Recommendations
Appendices
©ACCA
Projects should have benefits - Examples of benefits:
Strategic
Productivity
Management
Operational
Functional
Intangible
Emergent
©ACCA
Area 96/100: Financial analysis and decision-making
Types of costs
 Capital investment
 Consultancy
 Resources
 Disruption
Types of appraisal methods (advantages and disadvantages)
 Accounting rate of return
 Payback period
 NPV
 IRR
©ACCA
Area 97/100: Project Initiation Document (PID)
Summary of the business justification of the project

The scope of the project defined in terms of objectives and ultimate deliverables
Constraints and targets that apply to the project
Project roles & responsibilities
Resources
Risk and assumptions
©ACCA
PID sample
Typical contents:

Area 98/100: The project manager - characteristics
Roles and Skills required
 Budgeting, Planning, negotiations, Cost – benefit analysis

 Control, Quality, Technical Knowledge, Organisation skills
 Communication, leadership, Manage change, motivation
©ACCA
Project Management Tools
Work Breakdown Structure

Gantt Chart
Critical Path Method (CPM)

Work Breakdown Structure example

Gantt Chart example

Critical Path Method Sample example

Project control tools
Gateways (Review points within the projects)

Fast tracking
Extend project deadline
Crashing (shortening the time of project by reducing one critical activity)
Adding additional resources
Scope reduction
Compromising quality
Adopting higher risk
Motivate additionally (incentives etc.)
©ACCA
Area 99/100: Finalising the project
Project completion and Project audit
Post project review
Post implementation review (PIR)
Benefits review
Lessons learnt review
PM Software (for planning, estimating, monitoring & reporting)
©ACCA
Area 100/100 Leadership
The act or process of influencing, inspiring and guiding people so they will
strive willingly toward the achievement of group objectives through common
effort
©ACCA 215
Leadership traits
Intelligence
Scholarship
Dependability
Social participation and Interest
Socioeconomic status (in comparison with non - leaders)
Emotional intelligence (social skills, judgement, maturity and
emotional control)
©ACCA 216
Leadership styles
Authoritarian
Democratic
Laissez faire (free reign)
©ACCA 217
Situational theories of leadership
Theory argues that leadership depends on SITUATION

 Right person at right time
 According to contingency theory (Fielder), people become leaders also because
of situational factors
 2 types according to Fielder:
 Task – oriented style
 Relationship oriented style
 Managing Talent is crucial for the development of NEW leaders!

 How can companies manage their talent?
©ACCA 218
Entrepreneurship - Intrapreneurship
 Why are these terms important?

 Defined - & understanding the difference;
 The concept of Intrapreneurship has been related to innovation;
 The important point is how to create a culture of ideas and stimulate the
workforce to become engaged; (example is Google’s 20% rule, 3Ms access
to company resources etc.)
 Culture is crucial here (cultural web) and adaptability to change
©ACCA
IMPORTANT: Extra area 101: Remember your financial knowledge from
the Applied Knowledge and Applied Skills exams!
What Break Even analysis is, how it helps us

What contribution is
Important Ratios (ROCE, Gross margin etc.)
Margin of safety (budgeted sales – beak even point sales) – also in
terms of %
Limitations of all theories
©ACCA
Analysing Financial performance and position
(for tables in the case)
Financial performance measures:
 profitability - operating performance

 return on equity measures return on shareholders’ funds
 cash flow - better measure than profit?
 liquidity - ability to stay solvent in short term
 gearing - examining financial strength and capability
©ACCA 221
Thank you!

Final preparation for the Strategic Business Leader exam
Read and listen to the guidance from the examining team

Practise exam technique:
• Build your confidence in handling case studies
• Use the 4 hours as you would in the exam
• Write full answers, review carefully
• Three ACCA specimen exams, four more full case exams in Approved Content
revision question banks
• Specimen 3 was sat by a sample of students
• Examiner's report
• Webinar giving insight from marking team
• Examples of good/poor answer

Good luck in your
exam!
© ACCA PUBLIC

DR Dino Revision Series

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

DR Dino Revision Series

Uploaded by

Copyright:

Available Formats

Dr.

 Introducing your trainer – “Dino” (Dr. Constantine Kiritsis)

The aim of the Strategic Business Leader (SBL) exam is to

4 hour duration allowed (240 minutes)

100 marks, 80 for application of technical content and 20 for professional

12-15 pages of case study information

All questions are based on same scenario

The emphasis is on a combination of technical and professional skills

What does it mean?

Actual “work environment” reports &

This is a NEW exam!

6 23/08/2018 Dr. Constantine “Dino” Kiritsis ©ACCA

 Making the most important or crucial points

 Reading & Annotating the case: 40 min. apx.

Key point: Make sure you know how to annotate

Time planning and management

Time planning and management

Exhibit 1 - Website page

• What role are you adopting?

13 23/08/2018 Dr. Constantine “Dino” Kiritsis ©ACCA

READ & ANNOTATE - the questions & exhibits

Environment: PESTEL mainly & 5 Forces

16 23/08/2018 Dr. Constantine “Dino” Kiritsis ©ACCA

17 23/08/2018 Dr. Constantine “Dino” Kiritsis ©ACCA

18 23/08/2018 Dr. Constantine “Dino” Kiritsis ©ACCA

1. The Flowchart’s rationale

19 23/08/2018 Dr. Constantine “Dino” Kiritsis ©ACCA

Scepticism Commercial Analysis

Inform concisely, objectively, and unambiguously, while being sensitive to

Persuade using compelling and logical arguments demonstrating the ability

Clarify and simplify complex issues to convey relevant information in a way

Demonstrate awareness of organisational and wider external factors

Investigate relevant information from a wide range of sources, using a

Assess and use professional judgement when considering organisational

 Case will contain:

 Annotate the requirements

 Familiarise yourselves with the

30 23/08/2018 Dr. Constantine “Dino” Kiritsis ©ACCA

Date for release:

31 23/08/2018 Dr. Constantine “Dino” Kiritsis ©ACCA

1. State “Slide 1” or “Slide 2” depending on slide

Spacing; The marker needs to understand when you finish writing a

1. Read Questions twice to know what to look for;

 Only one case + story line to work on

36 23/08/2018 Dr. Constantine “Dino” Kiritsis ©ACCA

100 things you need to know –

* A few areas have been grouped as they are closely related

37 23/08/2018 Dr. Constantine “Dino” Kiritsis ©ACCA

Key concepts:  Risk committee ALARP Principle Internal Control system

o Integrity  Remuneration committee Risk process Information Flows for Management

o Honesty Role of Chairman, CEO  Strategy (TARA) Profession & Professionalism

39 23/08/2018 Dr. Constantine “Dino” Kiritsis ©ACCA

40 23/08/2018 Dr. Constantine “Dino” Kiritsis ©ACCA

Area 1: Communication – Inform, persuade, Clarify

41 23/08/2018 Dr. Constantine “Dino” Kiritsis ©ACCA

What is corporate governance?

What could be asked in this area?

How? Contracts, requirements, remuneration etc.

Costs? Incentive schemes for directors, providing and reviewing data,

What could be asked in this area and how?

44 23/08/2018 Dr. Constantine “Dino” Kiritsis ©ACCA

For the Strategic Professional Examinations it is not always possible to publish

45 23/08/2018 Dr. Constantine “Dino” Kiritsis ©ACCA