Business Analysis

ACCA P3

Instructor: Nguyen Hoang Lan

Hanoi, 2023
 Preface Contents

RELATIONAL DIAGRAM OF MAIN CAPABILITIES

Strategic Strategic Strategic Action

position (1) Choices (2) (3)

Business Information Project Financial

process technology Management Analysis
change (4) (5) (6) (7)

People (8)
 Strategic Position

Environmental Competitors and

Business Strategy
Issues Customers

Stakeholders,
Strategic Capability
ethnics, cultures
 1: Business strategy

This chapter gives you an overview of the

fundamentals of strategy and strategy
Topic List formulation, and how they relate to business
analysis.
What is strategy?
Levels of strategy in an organisation
Elements of strategic management
The importance of context
The strategy lenses
 What is Levels of strategy Elements of The The
strategy? in an organisation strategic importance strategy
management of context lenses

STRATEGY: a course of action over the long term, including identifying the competences and
resources required, to achieve a specific objective and fulfil stakeholder expectations.

Areas for decision making Four elements of mission

Strategic decisions Purpose and planning
Long term direction Characteristics Values
Scope of activities Strategy
Complex
Policies and standards
Competitive advantage Subject to uncertainty
Adapting activities to fit business
Impact operational decisions
environment
Affect whole organisation
Exploiting resources/competences
Lead to change
Expectations of key stakeholders GOALS: General aim
OBJECTIVES: SMART
and PRIME
 Characteristics of Functions of objectives
objectives - SMART - PRIME

PLANNING
Define what the plan about

RESPONSIBILITY
Responsibilities of managers and departments.

INTERGRATION
Integrates the efforts of different departments

MOTIVATION
Knowing what is to be done. Objectives must
be created for all areas of performance

EVALUATION
Performance is assessed against objectives
and control exercised
 Example: Characteristics of Objective
SMART

Broad Goal: I want to start a business

??? Building characteristics of Objective (Following SMART)
10 minutes

Within a month, I am going to get set up to sell handmade cards on

handmade.com, which will allow me to benefit financially from my
favorite hobby. Within six weeks, I will have an inventory of 30
handmade cards to sell and aim to sell a minimum of five cards per
week, building customer relationships through word of mouth,
referrals, and local networking.
 Example: Characteristics of Objective
SMART

Broad Goal: I want to start a business

??? Building characteristics of Objective (Following SMART)

 Specific: I will sell handmade cards through handmade.com

 Measurable: I will be ready to take my first product order within six weeks, and I
will aim to sell a minimum of five cards per week.
 Achievable: I will get set up on handmade.com first. Then I will build an inventory
of 30 handmade cards to sell. Finally, I will promote my business and build
customer relationships through word-of-mouth, referrals and local networking.
 Relevant: Selling handmade cards will allow me to benefit financially from my
favorite hobby.
 Time-Based: My store will be up and running within six weeks, and I will have an
inventory of 30 cards to sell within six weeks.
 5 minutes

Each student set up a SMART

GOAL EXAMPLE
 What is Levels of strategy Elements of The The
strategy? in an organisation strategic importance strategy
management of context lenses

Three main levels of strategy in an organisation

Corporate Strategies: is concerned with the overall purpose and

scope of an organization and how value will be added to different
Corporate parts of an organization

Business Strategies: The level is about how to complete

Business successfully in particular markets

Operational Strategies: The level is concerned with how

the component parts of an organization deliver
Operational
effectively the corporate and business strategies in terms
of resources, processes and people.
(Marketing/Production/Finance/HR/IT/R&D)
1: Business strategy
Question

Gany Co is a company selling widgets. The finance director says: 'We plan to issue
more shares to raise money for new plant capacity – we don't want loan finance –
which will enable us to compete better in the vital and growing widget markets of
Latin America. After all, we've promised the shareholders 5% profit growth this year,
and trading is tough.‘

Identify the corporate, business and functional strategies in the above statement.

Answer

 The corporate strategy is the decision that this will be achieved by entering new
markets.
 The business strategy suggests that those markets include Latin America.
 The operational or functional strategy involves the decision to invest in new
plant (the production function) which is to be financed by shares rather than
loans (the finance function)
 What is Levels of strategy Elements of The The
strategy? in an organisation strategic importance strategy
management of context lenses

The context of strategy

The organisational setting in which strategy is developed. Possible contexts include:

Small business
Multinational
The public sector
Not for profit organisation
Intangible products
Limited product range, markets and resources (especially financial), but
significant pressure from competitors
Diverse products, processes and markets, with significant resources and
multiple operations
Constraints on funding, commitment to service provision and the
need to demonstrate value
Diverse sources of funds, strong underlying values and purpose
Product information, after-sales service, brand values, staff performance
(for both manufacturing and service companies)

??? Why is context important when you suggest strategies?

1: Business strategy
 What is Levels of strategy Elements of The The
strategy? in an organisation strategic importance strategy
management of context lenses

Johnson,Scholes and Whittington’s (J, S &W) model of strategy

Strategic position Strategic choices Strategy into action

Environment •Made at corporate and Structuring

Opportunities business levels Processes
Threats •How to achieve
Complexity Relationships
competitive advantage
Capability • Scope Enabling
Resources and competences Management of resources
Strengths •Direction of development
Weaknesses Method of development Change
Stakeholder expectations Change management
Purpose of strategy
Power/interest
Governance
Ethics Position Action Action is not simple a linear model

Need to recognize the interdependencies between position

(analysis), choice and action (implementation)
 What is Levels of strategy Elements of The The
strategy? in an organisation strategic importance strategy
management of context lenses

Multinationals

1: Business strategy
 What is Levels of strategy Elements of The The
strategy? in an organisation strategic importance strategy
management of context lenses

Small Business

1: Business strategy
 What is Levels of strategy Elements of The The
strategy? in an organisation strategic importance strategy
management of context lenses

The public sector

The public sector has distinct strategic characteristics.
(a) Influence of ideology on strategy
(b) External influence and even control, especially by government
(c) Political constraints on funding and strategic choice even for state-
owned organisations with a commercial role
(d) Requirement to provide a universal service
(e) Competition for resource inputs within a political arena for non-
commercial organisations
(f) Need to demonstrate best value in outputs
(g) Increasing need to demonstrate improvement in social outcomes

1: Business strategy
 What is Levels of strategy Elements of The The
strategy? in an organisation strategic importance strategy
management of context lenses

Non-for-Profit Organization
Not-for-profit organisations also have their particular features.
(a) Importance of underlying values and purposes
(b) Diverse sources of funds that may have to be competed for
(c) Potential for conflict between stakeholders and need for transparency of
governance may require centralised decision-making

1: Business strategy
 What is Levels of strategy Elements of The The
strategy? in an organisation strategic importance strategy
management of context lenses

Intangible Products
Factors such as product information, after-sales service and brand values
have become as strategically important to manufacturers as intangibles, such
as staff competence and manner, have always been to providers of services.

1: Business strategy
 What is Levels of strategy Elements of The The
strategy? in an organisation strategic importance strategy
management of context lenses

Johnson,Scholes&Whittington suggest that strategy, and the development of strategic thinking, can
be examined through three lenses.

1 Strategy as design

2 Strategy as experience

3 Strategy as ideas
 What is Levels of Elements of The The
strategy? strategy in an strategic importance strategy
organisation management of context lenses

Johnson,Scholes&Whittington suggest that strategy, and the development of strategic thinking, can
be examined through three lenses.

1 Strategy as design A rational, top-down process – rational managers, clear objectives.

Strategy is exclusively management’s responsibility, and the
organisation's role is to implement management’s plans.

2 Strategy as experience An adaptation of what has worked in the past – based on

experience, assumptions, and decisions to satisfice rather than
optimise. Strategies develop in incremental and adaptive ways, and
emerge from lower levels of the organisation.

3 Strategy as ideas Strategy based on innovation, diversity of ideas, informal interaction

and experimentation. Managers create the context and conditions for
new ideas to emerge, but must prevent strategic drift. Organisational
culture must support innovation.
 What is Levels of Elements of The The
strategy? strategy in an strategic importance strategy
organisation management of context lenses

Question
Apply the three strategic lenses to a process you are familiar with, such as choosing
a holiday.
Answer
 Strategy as design
- Prices
- Method of travel, distance, cost
- Quality of accommodation
- Availability of activities/things to do
- Weather
- Language
 Strategy as experience
- I've been to that area before, so I know it quite well and I like it there.
 Strategy as ideas
- Let's try something different.
Quick Quiz

1. What is strategy?
2. What are the qualities of SMART objective?
3. What are the three strategy lenses and apply them to an
example