business strategy study guide 2015
DESCRIPTION
ICAEW Business study guideTRANSCRIPT
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The Institute of Chartered Accountants in England and Wales
BUSINESS STRATEGY
Study Guide
For exams from 2015
www.icaew.com
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Contents
1 Introduction 1
2 Business strategy 3
3 Study guide 4
4 Syllabus and learning outcomes 28
5 Technical knowledge 31
6 Key Resources 35
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Study Guide 1
1 Introduction
ACA Overview
The ICAEW chartered accountancy qualification, the ACA, is one of the most advanced learning and professional development programmes available. Its integrated components provide you with an in-depth understanding across accountancy, finance and business. Combined, they help build the technical knowledge, professional skills and practical experience needed to become an ICAEW Chartered Accountant.
Each component is designed to complement each other, which means that you can put theory into practice and can understand and apply what you learn to your day-to-day work. The components are:
Professional development
ICAEW Chartered Accountants are known for their professionalism and expertise. Professional development prepares you to successfully handle a variety of different situations that you'll encounter throughout your career.
The ACA qualification improves your ability and performance in seven key areas:
Adding value Communication Consideration Decision making Problem solving Team working Technical competence. Ethics and professional scepticism
Ethics is more than just knowing the rules around confidentiality, integrity, objectivity and independence.
Its about identifying ethical dilemmas, understanding the implications and behaving appropriately. We integrate ethics throughout the ACA qualification to develop your ethical capabilities so you will always know how to make the right decisions and justify them.
3-5 years practical work experience
Practical work experience is done as part of a training agreement with one of our 2,850 authorised training employers or authorised training principals around the world. You need to complete 450 days, which normally takes between three and five years. The knowledge, skills and experience you gain as part of your training agreement are invaluable, giving you the opportunity to put what you're learning into practice.
15 accountancy, finance and business modules
You will gain in-depth knowledge across a broad range of topics in accountancy, finance and business.
There are 15 modules over three levels. These can be taken in any order with the exception of the Case Study which has to be attempted last. You must pass every exam (or receive credit) there are no
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Business Strategy 2
options. This ensures that once qualified, all ICAEW Chartered Accountants have a consistent level of knowledge, skills and experience.
Certificate Level
There are six modules that will introduce the fundamentals of accountancy, finance and business.
Each module is examined by a 1.5 hour computer-based assessment which can be sat at any time. You may be eligible for credit for some modules if you have studied accounting, finance, law or business at degree level or through another professional qualification.
These six modules also provide as a stand-alone certificate, the ICAEW Certificate in Finance, Accounting and Business (ICAEW CFAB). Once you have completed all six Certificate Level assessments, you can apply for the ICAEW CFAB certificate of completion, visit icaew.com/cfab for more information.
Some of the issues in this exam were introduced at the certificate level in Business and Finance and, to a lesser extent, in Management Information. These two areas are the foundation of Business Strategy.
Professional Level
The next six modules build on the fundamentals and test your understanding and ability to use technical knowledge in real-life scenarios. Each module has a 2.5 3 hour exam, which are available to sit four times per year. These modules are flexible and can be taken in any order. The Business Planning: Taxation and Business Strategy modules in particular will help you to progress to the Advanced Level.
The knowledge base that is put into place at Certificate Level is developed further in this Professional Level exam Business Strategy. Here, the aim is to ensure students can utilise and combine theoretical frameworks to provide advice to management on the strategic management of their businesses. The exam questions are practical scenarios and it is for the candidate to decide which framework or model will provide the most useful analysis of the situation.
Advanced Level
The Corporate Reporting and Strategic Business Management modules test students understanding and strategic decision making at a senior level. They present real-life scenarios, with increased complexity and wider implications from the Professional Level modules.
The Case Study presents a complex business issue which challenges your ability to problem solve, identify the ethical implications and provide an effective solution. The Case Study tests, through contextualisation, the ability to apply your knowledge, skills and experience.
The Advanced Level exams are fully open book, so they replicate a real-life scenario where all the resources are at your fingertips. The Corporate Reporting and Strategic Business Management exams are 3.5 hours and the Case Study is 4 hours. The Strategic Business Management exam will consist of two scenario-based questions, forming a stepping stone to the Case Study.
Access further exam resources and support at icaew.com/dashboard
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Study Guide 3
2 Business Strategy
The full syllabus and technical knowledge grids can be found within the module study guide. Visit icaew.com/dashboard for this and more resources.
2.1 Module aim To provide candidates with an understanding of how businesses develop and implement strategy.
2.2 Specification grid This grid shows the relative weightings of subjects within this module and should guide the relative study time spent on each. Over time the marks available in the assessment will equate to the weightings below, while slight variations may occur in individual assessments to enable suitably rigorous questions to be set.
Weighting (%)
Strategic analysis 35 Strategic choice 35 Implementation and monitoring of strategy 30 100
Your exam will consist of three questions.
Time available 2.5 hours.
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Business Strategy 4
3 Study guide
3.1 Help yourself study for your ACA exams
The right approach 1 Develop the right attitude
Believe in yourself Yes, there is a lot to learn. But thousands have succeeded before and you can too.
Remember why you're doing it You are studying for a good reason: to advance your career.
2 Focus on the exam
Read through the Syllabus on page 28 of this guide
This tells you what you are expected to know.
3 The right method
See the whole picture Keeping in mind how all the detail you need to know fits into the whole picture will help you understand it better.
The Practical significance and Working context to each chapter in the study guide put the material into context.
The Learning objectives and Section overviews in the study manual show you what you need to grasp.
Use your own words To absorb the information (and to practise your written communication skills), you need to put it into your own words.
Take notes. Answer the questions in each chapter. Draw mindmaps. Try 'teaching' a subject to a colleague or friend.
Give yourself cues to jog your memory
The Study Manual uses bold to highlight key points.
Try colour coding with a highlighter pen. Write key points on cards.
4 The right recap
Review, review, review Regularly reviewing a topic in summary form can fix it in your memory. The Study Manual helps you review in many ways.
Each Chapter Summary will help you to recall that study session.
The Self-test actively tests your grasp of the essentials. Go through the Examples in each chapter a second or
third time.
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Study Guide 5
3.2 Study cycle The best way to approach the Study Manual is to tackle the chapters in order. We will look in detail at how to approach each chapter below but as a general guide, taking into account your individual learning style, you could follow this sequence for each chapter.
Key study steps Activity
Step 1 Topic list
This topic list is shown in the contents for each chapter and helps you navigate each part of the book; each numbered topic is a numbered section in the chapter.
Step 2 Introduction
The practical significance and working context sections for each chapter, set out in this study guide give you the big picture in terms of the context of the chapter. The content is referenced by the Study Guide and the Examination context guidance shows what the examiners are looking for and tells you why the topics covered in the chapter need to be studied.
Step 3 Section overviews
Section overviews give you a quick summary of the content of each of the main chapter sections. They can also be used at the end of each chapter to help you review each chapter quickly.
Step 4 Explanations
Proceed methodically through each chapter, particularly focusing on areas highlighted as significant in the chapter introduction or study guide.
Step 5 Note taking
Take brief notes, if you wish. Don't copy out too much. Remember that being able to record something yourself is a sign of being able to understand it. Your notes can be in whatever format you find most helpful; lists, diagrams, mindmaps.
Step 6 Examples
Work through the examples very carefully as they illustrate key knowledge and techniques.
Step 7 Answers
Check yours against the suggested solutions, and make sure you understand any discrepancies.
Step 8 Chapter summary
Review it carefully, to make sure you have grasped the significance of all the important points in the chapter.
Step 9 Self-test
Use the Self-test to check how much you have remembered of the topics covered.
Step 10 Learning objectives
Ensure you have ticked off the Learning objectives.
Moving on... When you are ready to start revising, you should still refer back to the Study Manual.
As a source of reference (you should find the index particularly helpful for this). As a way to review (the Section overviews, Examination context, Chapter summaries and Self-test
questions help you here).
Remember to keep careful hold of the Study Manual you will find it invaluable in your work.
3.3 Detailed study guide Use this schedule and your exam timetable to plan the dates on which will complete each study period below.
Revision phase your revision should be centred around using the questions in the ICAEW Question Bank.
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Bus
ines
s St
rate
gy
6 Stud
y Pe
riod
Prac
tical
sig
nific
ance
W
orki
ng c
onte
xt
Ap
pro
ach
Sy
llabu
s re
fere
nces
and
exa
m c
onte
xt
Due
D
ate
1 In
tro
duc
tio
n t
o t
he
Bus
ines
s St
rate
gy
pap
er
The
pur
pos
e of
the
Bus
ines
s St
rate
gy
pap
er a
t th
e Pr
ofes
sion
al le
vel o
f the
A
CA
exa
ms
is t
o he
lp y
ou d
evel
op
and
dem
onst
rate
the
kno
wle
dge
and
skill
s ne
cess
ary
to e
nsur
e an
or
gani
satio
n w
ith w
hich
you
are
in
volv
ed c
an f
ind
its w
ay i
n th
e w
orld
.
The
stra
tegi
c m
odel
s an
d th
eorie
s yo
u w
ill c
over
in t
his
Stud
y M
anua
l can
be
used
in
two
way
s in
rea
l life
:
1 To
an
alys
e an
d in
terp
ret:
A
pp
lyin
g th
e ap
pro
pria
te
mod
els
and
pers
pect
ives
to
a s
ituat
ion
will
hel
p y
ou
see
unde
rlyin
g ca
uses
be
tter
.
2 To
gen
erat
e so
luti
on
s:
Man
y of
the
mod
els
incl
ude
reco
mm
enda
tions
or
ap
pro
ache
s to
res
olvi
ng
prob
lem
s. T
his
advi
ce
coul
d be
pas
sed
on t
o m
anag
emen
t.
The
know
ledg
e, s
kills
and
bu
sine
ss a
war
enes
s th
at y
ou
will
dev
elop
in r
elat
ion
to
Busi
ness
Str
ateg
y w
ill h
elp
you
whe
n yo
u pr
ogre
ss t
o th
e A
dvan
ced
leve
l of t
he
AC
A s
ylla
bus.
Read
thr
ough
Cha
pter
1, p
ayin
g at
tent
ion
to
each
sec
tion,
but
par
ticul
arly
to
the
exam
inat
ion
tech
niq
ue a
dvic
e.
This
cha
pte
r is
des
igne
d to
be
an
intr
oduc
tion
to w
hat
is r
equi
red
in t
he
Busi
ness
Str
ateg
y p
aper
and
as
such
the
re
are
no s
pec
ific
sylla
bus
refe
renc
es.
Whi
lst
an a
pp
reci
atio
n of
mod
els
and
theo
ries
unde
rlyin
g bu
sine
ss s
trat
egy
is
impo
rtan
t, t
he fo
cus
of y
our
exam
inat
ion
is a
pra
ctic
al o
ne. Y
ou w
ill b
e re
qui
red
to
inte
rpre
t bu
sine
ss s
cena
rios
and
to p
rovi
de
pro
fess
iona
l adv
ice
to c
lient
s an
d m
anag
emen
t on
wha
t to
do.
You
will
not
be
req
uire
d to
rep
rodu
ce n
ames
and
m
odel
s fo
r th
e sa
ke o
f it
kn
owle
dge
will
al
way
s ne
ed t
o be
ap
plie
d.
-
Stud
y G
uide
7
Stud
y Pe
riod
Prac
tical
sig
nific
ance
W
orki
ng c
onte
xt
Ap
pro
ach
Sy
llabu
s re
fere
nces
and
exa
m c
onte
xt
Due
D
ate
2 St
rate
gy
and
bus
ines
s
Stra
tegi
es a
re t
he c
ours
es o
f act
ion
a fir
m fo
llow
s th
roug
h tim
e. A
bu
sine
ss t
hat
surv
ives
is o
ne t
hat
has
follo
wed
a s
ucce
ssfu
l str
ateg
y. O
ne
that
fails
or
that
lose
s-ou
t in
a
take
over
did
not
hav
e a
succ
essf
ul
stra
tegy
. Str
ateg
ies
affe
ct e
arni
ngs,
jo
bs, a
bilit
y to
pay
sup
plie
rs a
nd
dete
rmin
e w
hich
pro
duct
s an
d se
rvic
es c
usto
mer
s ge
t. O
nly
in
retr
osp
ect
can
we
say
with
any
ce
rtai
nty
whe
ther
it h
as w
orke
d or
no
t.
Man
agem
ent
need
s a
way
to
ensu
re
its s
trat
egie
s ar
e go
od o
nes
from
the
st
art.
Thi
s ch
apte
r co
ntra
sts
stra
tegi
es t
hat
are
pla
nned
in
adva
nce
with
str
ateg
ies
mad
e up
'on
the
run'
. It
also
con
side
rs w
heth
er
the
key
to c
ompe
titiv
e ad
vant
age
is
to a
dapt
the
org
anis
atio
n to
its
envi
ronm
ent
or t
o de
velo
p in
tern
al
com
pete
nces
tha
t ar
e ha
rd t
o co
py.
Stra
tegy
per
vade
s m
ost
area
s of
m
anag
emen
t. It
influ
ence
s ho
w t
he
busi
ness
is v
iew
ed b
y in
vest
ors
and
sign
ifica
nt b
usin
ess
part
ners
suc
h as
a
sup
plie
r or
the
cus
tom
er w
ho h
as
a m
ajor
con
trac
t to
aw
ard.
But
stra
tegy
the
ory
is a
lso
subj
ect
to
fash
ions
and
fads
. In
your
car
eer
you
will
lear
n to
sp
eak
the
jarg
on o
f st
rate
gy a
nd o
f the
late
st fa
d be
ing
push
ed b
y co
nsul
tant
s, a
cade
mic
s
Trai
nee
acco
unta
nts
are
not
rout
inel
y in
vite
d to
adv
ise
maj
or c
orp
orat
ions
on
busi
ness
str
ateg
y fo
rmul
atio
n. H
owev
er y
ou
may
stil
l see
the
imp
act
of
stra
tegy
form
ulat
ion
in a
nu
mbe
r of
way
s.
Is
you
r cl
ient
get
ting
invo
lved
in n
ew li
nes
of
busi
ness
and
mar
kets
an
d ha
ve t
hey
cons
ider
ed t
he b
enef
its
and
risks
. Thi
s co
uld
affe
ct y
our
asse
ssm
ent
of t
heir
risk
and
abili
ty
to s
tay
as a
goi
ng
conc
ern.
A
re a
dequ
ate
finan
cial
co
ntro
ls in
pla
ce o
r ar
e th
ings
get
ting
out
of
cont
rol.
A g
ood
stra
tegi
c pl
an w
ill
ensu
re c
ontr
ols
and
risks
are
dea
lt w
ith,
whe
reas
mor
e ad
hoc
st
rate
gies
oft
en le
ad t
o ov
ertr
adin
g an
d po
or
finan
cial
con
trol
. You
m
ay b
e re
qui
red
to g
ive
an in
itial
ass
essm
ent
of
this
in a
n au
dit.
Yo
u m
ay a
dvis
e a
clie
nt
on r
aisi
ng m
oney
. A
smal
l sum
for
a sm
all
clie
nt's
busi
ness
idea
or
Read
thr
ough
Cha
pte
r 2
of t
he S
tudy
Man
ual
to u
nder
stan
d th
e di
ffere
nt a
pp
roac
hes
man
agem
ent
may
tak
e to
the
dev
elop
men
t of
bu
sine
ss s
trat
egy.
The
se, a
nd e
thic
al is
sues
, will
be
rei
nfor
ced
in la
ter
chap
ters
.
Wor
k th
roug
h th
e Se
lf-te
st q
uest
ions
car
eful
ly
to e
nsur
e th
at y
ou h
ave
gras
ped
the
mai
n po
ints
in t
he c
hapt
er.
This
cha
pte
r re
view
s so
me
of t
he le
adin
g th
eorie
s of
str
ateg
y fo
rmul
atio
n an
d p
rovi
des
the
nam
es o
f man
y au
thor
ities
on
stra
tegy
. The
rem
aini
ng c
hap
ters
of t
his
text
als
o p
rovi
de c
over
age
of n
ames
and
th
eorie
s.
Whi
lst
an a
ppre
ciat
ion
of t
he u
nder
lyin
g m
odel
s is
imp
orta
nt, t
he fo
cus
of y
our
exam
inat
ion
is a
pra
ctic
al o
ne. Y
ou w
ill b
e re
qui
red
to in
terp
ret
busi
ness
sce
nario
s an
d to
pro
vide
pro
fess
iona
l adv
ice
to
clie
nts
and
man
agem
ent
on w
hat
to d
o.
You
will
not
be
req
uire
d to
rep
rodu
ce
nam
es a
nd m
odel
s fo
r th
e sa
ke o
f it
- th
e kn
owle
dge
from
thi
s ch
apte
r w
ill n
eed
to
be a
ppl
ied.
The
stra
tegi
c m
odel
s yo
u w
ill c
over
are
to
be u
sed
in t
hree
way
s in
the
exa
min
atio
n:
1 To
an
alys
e an
d in
terp
ret:
Ap
ply
ing
the
app
rop
riate
mod
els
and
per
spec
tives
to
the
situ
atio
n an
d is
sues
in t
he s
cena
rio w
ill h
elp
you
se
e un
derly
ing
caus
es b
ette
r.
2 To
gen
erat
e so
luti
on
s: M
any
of t
he
mod
els
incl
ude
reco
mm
enda
tions
or
app
roac
hes
to r
esol
ving
pro
blem
s.
You
may
wis
h to
pas
s th
is a
dvic
e on
to
man
agem
ent.
3 To
sub
stan
tiat
e yo
ur c
om
men
ts:
The
mod
els
and
thei
r au
thor
s ar
e re
cogn
ised
by
man
agem
ent
who
m
ay h
ave
stud
ied
them
too
. You
w
ould
be
exp
ecte
d to
ref
er t
o th
em
as a
fram
ewor
k in
a r
eal b
usin
ess
repo
rt. Y
ou w
ill g
et s
ome
mar
ks fo
r
-
Bus
ines
s St
rate
gy
8 Stud
y Pe
riod
Prac
tical
sig
nific
ance
W
orki
ng c
onte
xt
Ap
pro
ach
Sy
llabu
s re
fere
nces
and
exa
m c
onte
xt
Due
D
ate
and
jour
nalis
ts. T
his
chap
ter
will
sh
ow y
ou t
hat
stra
tegy
mat
ters
. It
will
als
o sh
ow y
ou t
hat
it is
an
art
and
not
a sc
ienc
e an
d th
at, e
ven
as
art,
man
agem
ent
need
s to
be
awar
e of
just
wha
t it
is b
uyin
g in
to.
Sto
p a
nd
th
ink
Wha
t bu
sine
sses
can
you
thi
nk o
f tha
t ha
ve d
one
wel
l? D
o yo
u th
ink
it w
as
pla
in lu
ck o
r w
as it
goo
d m
anag
emen
t?
How
abo
ut t
he fi
rm t
hat
emp
loys
you
? D
oes
it ha
ve a
cle
ar id
ea o
f wha
t it
will
be
doi
ng in
five
or
ten
year
s tim
e th
at
is m
ore
than
just
'we'
ll st
ill b
e he
re
doin
g th
e sa
me
old
thin
g'?
asse
t. A
larg
e su
m fo
r a
larg
e cl
ient
to
buy
a riv
al. B
oth
are
risky
. H
ave
they
tho
ught
th
roug
h th
eir
plan
? W
here
is t
he e
vide
nce
to ju
stify
thi
s in
vest
men
t?
In
vest
men
t ad
vice
is
abou
t pi
ckin
g w
inni
ng
com
pani
es. T
he
win
ners
are
the
one
s w
ho h
ave
succ
essf
ul
stra
tegi
es. H
ow c
an y
ou
tell
in a
dvan
ce if
it is
a
good
str
ateg
y?
doin
g th
e sa
me
in y
our
Busi
ness
St
rate
gy e
xam
.
The
inte
ract
ive
que
stio
ns a
re u
sefu
l in
dem
onst
ratin
g ho
w t
his
may
form
the
su
bjec
t of
one
par
t of
the
req
uire
men
t of
a
que
stio
n.
The
dist
inct
ions
bet
wee
n:
Ra
tiona
l and
em
erge
nt a
ppro
ache
s to
str
ateg
y fo
rmul
atio
n; a
nd b
etw
een
Po
sitio
ning
and
res
ourc
e-ba
sed
app
roac
hes
to g
aini
ng c
omp
etiti
ve
adva
ntag
e.
Spec
ific
syl
lab
us r
efer
ence
fo
r th
is
chap
ter
is: 1
a.
-
Stud
y G
uide
9
Stud
y Pe
riod
Prac
tical
sig
nific
ance
W
orki
ng c
onte
xt
Ap
pro
ach
Sy
llabu
s re
fere
nces
and
exa
m c
onte
xt
Due
D
ate
3 Th
e p
urp
ose
of
an o
rgan
isat
ion
The
prac
tice
of a
ccou
ntan
cy g
rew
fr
om t
he n
eed
for
the
user
s of
ca
pita
l to
be a
ccou
ntab
le t
o th
e ow
ners
of t
he c
apita
l. Th
eref
ore
the
goal
s an
d in
tere
sts
of t
he o
wne
rs
had
to b
e as
sess
ed b
efor
e ap
pro
pria
te r
epor
ting
syst
ems
coul
d be
dev
elop
ed.
Toda
y's
orga
nisa
tions
nee
d to
be
acco
unta
ble,
in v
aryi
ng d
egre
es, t
o st
akeh
olde
rs. T
he in
tere
sts
of t
hese
st
akeh
olde
rs s
et t
he g
oals
and
p
aram
eter
s of
bus
ines
s st
rate
gy.
Sto
p a
nd
th
ink
Ass
umin
g th
at b
usin
esse
s ar
e in
bu
sine
ss t
o m
ake
mon
ey, i
s th
at a
cl
ear
enou
gh a
im o
n w
hich
to
base
a
stra
tegy
?
Wha
t so
rt o
f goa
ls d
o no
t-fo
r-p
rofit
or
gani
satio
ns h
ave?
As
indi
cate
d ab
ove,
ac
coun
tant
s re
port
to
stak
ehol
ders
on
the
mat
ters
th
at c
once
rn t
hem
. In
crea
sing
ly a
ccou
ntan
ts a
re
requ
ired
to a
ssis
t in
pr
epar
ing
or a
uditi
ng r
epor
ts
that
go
beyo
nd t
he n
arro
w
finan
cial
inte
rest
s of
sh
areh
olde
rs.
Cha
pte
r 3
cons
ider
s th
e go
als
of b
usin
esse
s.
Ensu
re y
ou u
nder
stan
d w
hy s
impl
istic
not
ions
of
pro
fit m
axim
isat
ion
are
inad
equa
te
exp
lana
tions
of t
he e
cono
mic
goa
ls o
f co
mm
erci
al o
rgan
isat
ions
. Not
e th
e po
wer
of
stak
ehol
ders
and
the
par
ticul
ar is
sues
faci
ng
not-
for-
pro
fit o
rgan
isat
ions
.
Que
stio
n pr
actic
e is
vita
l for
to
rein
forc
e ch
apte
r, s
o at
tem
pt t
he In
tera
ctiv
e qu
estio
ns a
s yo
u go
alo
ng a
nd t
he S
elf-
test
at
the
end.
In t
he e
xam
you
may
be
req
uire
d to
cre
ate
a m
issi
on s
tate
men
t fo
r a
give
n or
gani
satio
n or
to
iden
tify
the
inco
nsis
tenc
ies
and
omis
sion
s in
an
exis
ting
one.
You
may
als
o be
ask
ed t
o su
gges
t ap
pro
pria
te g
oals
and
obj
ectiv
es.
This
will
invo
lve
bala
ncin
g th
e ne
eds
of
diffe
rent
sta
keho
lder
gro
ups,
iden
tifyi
ng
pos
sibl
e co
nflic
ts o
f int
eres
t an
d re
cogn
isin
g th
e p
riorit
ies
for
the
orga
nisa
tion.
One
of t
he s
cena
rios
in t
he
exam
may
be
a no
t-fo
r-p
rofit
org
anis
atio
n so
you
mus
t un
ders
tand
the
par
ticul
ar
issu
es s
uch
orga
nisa
tions
face
whe
n de
term
inin
g ob
ject
ives
and
str
ateg
y.
Role
and
nat
ure
of m
issi
on.
Dis
tinct
ion
betw
een
pro
fit a
nd s
hare
hold
er
wea
lth a
s ob
ject
ives
for
a fir
m a
nd t
he
need
for
wid
er o
bjec
tives
.
Stak
ehol
der
map
pin
g.
Not
-for
-pro
fit o
rgan
isat
ions
.
Spec
ific
syl
lab
us r
efer
ence
s fo
r th
is
chap
ter
are:
1a,
1b
an
d 2
c.
-
Bus
ines
s St
rate
gy
10
Stud
y Pe
riod
Prac
tical
sig
nific
ance
W
orki
ng c
onte
xt
Ap
pro
ach
Sy
llabu
s re
fere
nces
and
exa
m c
onte
xt
Due
D
ate
4 Th
e m
acro
-en
viro
nm
ent
The
wea
lth o
f man
y Eu
rope
an
coun
trie
s, a
nd o
f the
bus
ines
ses
with
in t
hem
, can
be
attr
ibut
ed t
o th
eir
early
indu
stria
lisat
ion
and
impe
rialis
m c
omm
enci
ng in
the
17
th c
entu
ry. T
he U
SA c
augh
t up
an
d ov
erto
ok E
urop
e du
ring
the
early
20t
h ce
ntur
y. F
rom
the
mid
20
th c
entu
ry t
hose
gai
ns h
ave
been
gr
adua
lly s
uper
sede
d by
the
de
velo
pm
ent
of e
mer
ging
ec
onom
ies
in A
sia
and
Latin
A
mer
ica.
The
se h
ave
brou
ght
new
m
arke
ts a
nd n
ew c
halle
nges
whi
ch
mus
t be
add
ress
ed b
y bu
sine
sses
fr
om t
he d
evel
oped
eco
nom
ies
if th
ey a
re t
o su
rviv
e.
Sto
p a
nd
th
ink
You
are
early
in y
our
care
er a
s a
pro
fess
iona
l acc
ount
ant.
Whe
re in
the
w
orld
sho
uld
you
be w
orki
ng in
ord
er
to m
ake
the
best
of t
he o
pp
ortu
nitie
s ov
er t
he n
ext
40 y
ears
? W
hich
in
dust
ries
arou
nd y
ou a
re li
kely
to
thriv
e an
d w
hich
to
die?
Exac
tly t
he s
ame
que
stio
ns a
re fa
cing
bu
sine
ss s
trat
egis
ts, a
lbei
t on
a
gran
der
scal
e.
Man
y of
you
r cl
ient
s w
ill b
e gl
obal
bus
ines
ses,
or
at le
ast
have
som
e fo
rm o
f buy
ing
and
selli
ng r
elat
ions
hip
with
ov
erse
as fi
rms.
You
r fir
m m
ay
be r
equi
red
to:
A
ssis
t in
tra
nsna
tiona
l au
dits
alo
ngsi
de
pro
fess
iona
l col
leag
ues
from
out
side
of y
our
hom
e co
untr
y.
A
sses
s th
e ex
tra
risks
th
e cl
ient
run
s as
a
cons
eque
nce
of
oper
atin
g in
tern
atio
nally
.
A
dvis
e on
tak
ing-
on
inte
rnat
iona
l con
trac
ts.
Cha
pter
4 in
trod
uces
the
wid
er b
usin
ess
envi
ronm
ent.
The
re is
no
need
to
mem
oris
e al
l th
e ex
amp
les
but
rath
er t
ry t
o ap
pre
ciat
e th
e ra
nge
of is
sues
con
tain
ed in
the
fram
ewor
ks o
f PE
STEL
, Por
ter
s D
iam
ond
and
so o
n. P
ay
atte
ntio
n to
fact
ors
enco
urag
ing
and
limiti
ng
glob
alis
atio
n of
bus
ines
s as
the
ris
ks fr
om t
hese
ar
e re
turn
ed t
o in
sev
eral
late
r ch
apte
rs.
Wor
k th
roug
h th
e In
tera
ctiv
e qu
estio
ns a
nd t
he
Self-
test
que
stio
ns t
o pr
actis
e ap
plyi
ng y
our
know
ledg
e.
The
scen
ario
s in
the
maj
ority
of e
xam
q
uest
ions
will
req
uire
you
to
abso
rb a
nd
unde
rsta
nd in
form
atio
n ab
out
the
exte
rnal
en
viro
nmen
t in
whi
ch a
n or
gani
satio
n op
erat
es b
ased
on
a sc
enar
io.
You
will
al
so n
eed
to a
sses
s th
e im
plic
atio
ns o
f the
en
viro
nmen
t an
d ch
ange
s in
the
en
viro
nmen
t fo
r th
e st
rate
gic
pos
ition
ing
and
stra
tegi
c de
cisi
ons
of a
n or
gani
satio
n.
To d
o th
is y
ou w
ill n
eed
to a
pp
ly y
our
know
ledg
e us
ing
the
tool
s an
d id
eas
cove
red
in t
his
chap
ter.
PEST
EL a
naly
sis.
Ohm
aes
5 C
s.
Port
ers
Dia
mon
d.
Spec
ific
syl
lab
us r
efer
ence
s fo
r th
is
chap
ter
are:
1b
, 1f,
3d
, 3g
, an
d 3
h.
-
Stud
y G
uide
11
Stud
y Pe
riod
Prac
tical
sig
nific
ance
W
orki
ng c
onte
xt
Ap
pro
ach
Sy
llabu
s re
fere
nces
and
exa
m c
onte
xt
Due
D
ate
5 Th
e in
dus
try
and
th
e m
arke
t en
viro
nm
ent
The
com
pet
itive
pre
ssur
es o
f the
in
dust
ry a
ffect
the
leve
l of
pro
fitab
ility
of t
he b
usin
ess
as a
w
hole
. The
sta
ge o
f the
indu
stry
in
its li
fecy
cle
affe
cts
cash
flow
s an
d th
e co
mp
etiti
ve c
halle
nges
the
in
dust
ry m
embe
rs fa
ce.
Und
erst
andi
ng h
ow t
hese
sta
nd a
nd
how
the
y m
ay d
evel
op w
ithin
the
st
rate
gic
horiz
on is
ess
entia
l to
a m
anag
emen
t te
am t
hat
wis
hes
to
deliv
er c
ompe
titiv
e su
cces
s.
Sto
p a
nd
th
ink
Shar
e p
rices
are
influ
ence
d by
the
lo
ng-t
erm
ear
ning
s av
aila
ble
in t
he
indu
stry
as
a w
hole
and
the
per
ceiv
ed
abili
ty o
f the
par
ticul
ar fi
rm's
man
agem
ent
team
to
succ
eed
bett
er
than
riv
als
in t
he in
dust
ry.
W
hich
indu
strie
s do
you
thi
nk
have
the
ir be
st y
ears
stil
l to
com
e?
W
hich
indu
strie
s do
you
thi
nk
have
the
ir be
st y
ears
beh
ind
them
?
This
cha
pter
cov
ers
som
e of
th
e sa
me
obje
ctiv
es a
s C
hap
ter
4 th
roug
h th
e us
e of
ad
ditio
nal m
odel
s. S
ome
of
the
mod
els
cove
red
here
will
be
fam
iliar
to
you
from
the
Bu
sine
ss a
nd F
inan
ce
sylla
bus.
Cha
pte
r 5
is a
sho
rt c
hap
ter
with
thr
ee k
ey
mod
els
in it
. Ens
ure
you
mem
oris
e th
e el
emen
ts
of t
he m
odel
s an
d al
so t
heir
sign
ifica
nce
for
the
finan
cial
out
look
of a
n in
dust
ry o
r bu
sine
ss.
Att
emp
ting
the
Inte
ract
ive
and
Self-
test
q
uest
ions
is o
f par
ticul
ar im
por
tanc
e to
en
surin
g yo
u un
ders
tand
how
to
use
thes
e m
odel
s in
the
exa
m.
This
cha
pte
r lo
oks
at t
echn
ique
s su
ch a
s Po
rter
s F
ive
Forc
es a
nd li
fe c
ycle
ana
lysi
s.
Ap
ply
ing
the
app
rop
riate
mod
els
to t
he
scen
ario
in t
he e
xam
will
hel
p y
ou
unde
rsta
nd a
nd a
naly
se t
he w
ider
con
text
in
whi
ch t
he o
rgan
isat
ion
is o
per
atin
g an
d th
e fa
ctor
s th
at a
re li
kely
to
imp
act
on
busi
ness
per
form
ance
.
Port
ers
5 fo
rces
.
Indu
stry
and
pro
duct
life
cyc
le.
Inte
rnat
iona
l pro
duct
life
cyc
le.
Spec
ific
syl
lab
us r
efer
ence
s fo
r th
is
chap
ter
are:
1b
, 1c
and
2h
.
-
Bus
ines
s St
rate
gy
12
Stud
y Pe
riod
Prac
tical
sig
nific
ance
W
orki
ng c
onte
xt
Ap
pro
ach
Sy
llabu
s re
fere
nces
and
exa
m c
onte
xt
Due
D
ate
6 St
rate
gic
cap
abili
ty
It is
con
vent
iona
l for
acc
ount
ants
to
cons
ider
'res
ourc
es' a
nd 'a
sset
s' pu
rely
in fi
nanc
ial r
epor
ting
term
s.
We
know
tha
t no
n-cu
rren
t as
sets
(t
angi
ble
and
inta
ngib
le in
som
e ca
ses)
sit
on t
he b
alan
ce s
heet
and
th
ere
are
finan
cial
rep
ortin
g st
anda
rds
as t
o ho
w t
hey
shou
ld b
e ac
coun
ted
for.
How
ever
, wha
t m
akes
a b
usin
ess
succ
essf
ul m
ight
oft
en b
e th
ings
th
at a
re n
ot s
o re
adily
acc
essi
ble
for
finan
cial
rep
ortin
g: t
he le
gacy
of
'ear
ly m
over
adv
anta
ges'
in b
uild
ing
up a
str
ateg
ic p
ositi
on; t
he
com
pan
y's
rep
utat
ion;
the
qua
lity
of
a co
mp
any'
s re
latio
nshi
ps
and
its
abili
ty t
o ex
plo
it th
em; t
he a
bilit
y of
its
man
agem
ent
to in
nova
te; t
he
abili
ty o
f the
com
pan
y to
cop
e w
ith
the
unex
pec
ted;
the
abi
lity
of t
he
com
pan
y to
lear
n. In
tang
ible
ass
ets,
su
ch a
s tr
ade
mar
ks, m
ight
als
o si
t on
the
bal
ance
she
et. A
com
pan
y's
bran
ds, h
owev
er, w
hich
for
busi
ness
de
cisi
on m
akin
g p
urp
oses
, if n
ot
alw
ays
for
finan
cial
rep
ortin
g,
cert
ainl
y ha
ve a
val
ue.
The
inte
rnal
cap
abili
ties
of
the
busi
ness
mig
ht b
e re
leva
nt t
o an
aud
it op
inio
n on
goi
ng c
once
rn, p
art
of a
du
e di
ligen
ce in
vest
igat
ion,
va
lue
audi
ts a
nd s
o on
. It
mig
ht a
lso
aler
t yo
u to
cr
itica
l bus
ines
s ris
ks.
Cha
pter
6 r
etur
ns t
o th
e di
scus
sion
, sta
rted
in
Cha
pter
2, o
f the
sou
rces
of c
ompe
titiv
e ad
vant
age.
Thi
s ch
apte
r co
vers
a n
umbe
r of
key
m
odel
s. T
heir
app
licat
ion
mus
t be
pra
ctis
ed b
y w
orki
ng t
hrou
gh t
he In
tera
ctiv
e q
uest
ions
and
ex
amp
les
in t
he c
hap
ter
and
com
ple
ting
the
Self-
test
que
stio
ns a
t th
e en
d of
the
cha
pte
r.
This
cha
pte
r in
clud
es k
ey p
rinci
ple
s of
st
rate
gic
cap
abili
ty, c
ore
com
pet
ence
s an
d re
sour
ce b
ased
str
ateg
y. Q
uest
ions
are
lik
ely
to fo
cus
on t
he li
nkag
es b
etw
een
elem
ents
and
the
man
ner
in w
hich
, whe
n us
ed t
oget
her,
the
y ca
n fa
cilit
ate
stra
tegy
an
d le
vera
ge c
omp
etiti
ve a
dvan
tage
.
Crit
ical
suc
cess
fact
ors.
Kay
s co
re c
ompe
tenc
es.
Reso
urce
aud
it
9Ms.
Benc
hmar
king
.
Valu
e ch
ain
anal
ysis
.
Out
sour
cing
.
Supp
ly c
hain
man
agem
ent.
Net
wor
k or
gani
satio
ns.
BCG
mat
rix.
Spec
ific
syl
lab
us r
efer
ence
s fo
r th
is
chap
ter
are
1a, 1
d, 2
h a
nd
3d
.
-
Stud
y G
uide
13
Stud
y Pe
riod
Prac
tical
sig
nific
ance
W
orki
ng c
onte
xt
Ap
pro
ach
Sy
llabu
s re
fere
nces
and
exa
m c
onte
xt
Due
D
ate
The
pra
ctic
al s
igni
fican
ce t
here
fore
lie
s in
you
r ab
ility
to
see
beyo
nd t
he
num
bers
to
the
unde
rlyin
g re
aliti
es.
For
exam
ple
, if y
ou a
re a
sked
to
com
men
t on
a fo
reca
st, o
r be
par
t of
a t
eam
tha
t do
es a
'due
dili
genc
e'
audi
t, t
hese
are
bus
ines
s re
aliti
es
that
you
mus
t be
att
uned
do.
Mor
eove
r, if
you
asp
ire t
o be
, say
, a
Fina
nce
Dire
ctor
(av
oidi
ng a
lot
of
the
num
ber
crun
chin
g) y
ou n
eed
to
unde
rsta
nd b
eyon
d th
e nu
mbe
rs.
Sto
p a
nd
th
ink
Rese
arch
rev
eals
tha
t m
uch
of t
he
colle
ctiv
e m
arke
t ca
pita
lisat
ion
of t
he
top
100
firm
s ca
nnot
be
rela
ted
to t
he
sum
of t
heir
net
asse
t va
lues
. In
the
case
of a
n ac
qui
sitio
n th
is w
ould
be
calle
d 'g
oodw
ill',
but
wha
t do
es it
co
nsis
t of
?
Add
ing
up t
he a
sset
s va
lues
of a
firm
is
only
one
ste
p in
und
erst
andi
ng t
he
valu
e of
a b
usin
ess.
Wha
t el
se s
houl
d w
e be
con
side
ring?
-
Bus
ines
s St
rate
gy
14
Stud
y Pe
riod
Prac
tical
sig
nific
ance
W
orki
ng c
onte
xt
Ap
pro
ach
Sy
llabu
s re
fere
nces
and
exa
m c
onte
xt
Due
D
ate
7 St
rate
gic
op
tio
ns
Man
agem
ent
cann
ot e
xpec
t to
de
liver
com
mer
cial
suc
cess
by
carr
ying
on
doin
g th
e sa
me
thin
gs
year
aft
er y
ear.
The
bus
ines
s en
viro
nmen
t ch
ange
s, c
ompe
titiv
e pr
essu
res
inte
nsify
and
cus
tom
ers'
need
s ch
ange
.
Stra
tegi
c op
tions
, eve
n si
mpl
y co
st-
cutt
ing,
mus
t be
gen
erat
ed a
nd
deci
sion
s ta
ken.
Sto
p a
nd
th
ink
Con
side
r tw
o fir
ms
with
whi
ch y
ou a
re
fam
iliar
. One
can
be
the
one
you
wor
k fo
r.
W
hat
have
the
y do
ne in
the
pas
t th
at h
as m
ade
a di
ffere
nce
to
thei
r co
mp
etiti
ve p
ositi
on t
oday
?
W
hat
are
they
inte
ndin
g to
do
in
the
futu
re?
W
hat
thin
gs d
id t
hey
cons
ider
do
ing
and
then
not
car
ry o
n w
ith?
Thos
e ar
e th
e st
rate
gic
optio
ns.
Clie
nt's
futu
re p
rosp
ects
will
de
pen
d on
the
str
ateg
ic
optio
ns t
hey
deve
lop
. The
ris
ks t
hey
run
will
als
o be
in
fluen
ced
by t
hese
.
Cha
pte
r 7
is p
ossi
bly
the
piv
otal
cha
pte
r in
the
te
xt b
ecau
se t
he g
ener
atio
n of
op
tions
form
s a
wat
ersh
ed b
etw
een
anal
ysis
of t
he p
rese
nt
situ
atio
n of
the
bus
ines
s an
d th
e de
velo
pmen
t of
str
ateg
ies
to im
pro
ve it
. Th
ere
are
only
thr
ee
maj
or m
odel
s to
lear
n bu
t al
l are
ver
y im
por
tant
inde
ed t
o yo
ur e
xam
.
It is
ess
entia
l tha
t yo
u at
tem
pt t
he S
elf-
test
q
uest
ions
to
unde
rsta
nd h
ow t
hese
mod
els
may
be
use
d in
exa
m.
This
cha
pte
r lo
oks
at t
he v
ario
us m
odel
s w
hich
can
ass
ist
an o
rgan
isat
ion
in
deve
lopi
ng it
s pr
oduc
ts a
nd m
arke
ts a
nd
in c
hoos
ing
stra
tegi
es fo
r co
mpe
titiv
e ad
vant
age.
In
the
exam
the
se m
odel
s ca
n be
use
d to
ass
ess
the
stra
tegi
es a
lread
y id
entif
ied
in t
he q
uest
ion
or a
s a
way
of
gene
ratin
g st
rate
gic
optio
ns fo
r th
e bu
sine
ss.
Eith
er w
ay, t
he c
once
pts
of
SWO
T an
alys
is, P
orte
rs
gene
ric s
trat
egy
mod
el a
nd A
nsof
fs g
row
th m
atrix
are
fu
ndam
enta
l kno
wle
dge
for
the
Busi
ness
St
rate
gy e
xam
.
Con
duct
ing
a SW
OT
anal
ysis
.
Port
er's
3 ge
neric
str
ateg
ies
(mod
ified
by
Bow
man
s C
lock
).
Ans
off m
atrix
.
Spec
ific
syl
lab
us r
efer
ence
s fo
r th
is
chap
ter
are:
1c,
2a,
an
d 2
i.
-
Stud
y G
uide
15
Stud
y Pe
riod
Prac
tical
sig
nific
ance
W
orki
ng c
onte
xt
Ap
pro
ach
Sy
llabu
s re
fere
nces
and
exa
m c
onte
xt
Due
D
ate
8 St
rate
gie
s fo
r p
rod
ucts
an
d
mar
kets
Mar
ketin
g is
res
pons
ible
for
the
reve
nues
of t
he b
usin
ess
or, f
or n
ot-
for-
pro
fit o
rgan
isat
ions
, ens
urin
g th
at t
he o
rgan
isat
ion
is g
iven
be
nefit
s to
tho
se u
sing
it.
Mar
ketin
g al
so a
bsor
bs a
lot
of t
he
orga
nisa
tion'
s re
sour
ces
that
, unl
ess
it sh
ows
bene
fits,
cou
ld h
ave
been
us
ed t
o m
ake
pro
duct
s or
ret
urne
d as
pro
fits.
Con
sequ
ently
in a
sses
sing
the
q
ualit
y of
man
agem
ent
and
the
cont
rol i
t ex
erci
ses
over
its
oper
atio
ns, i
t is
nec
essa
ry t
o un
ders
tand
and
eva
luat
e th
e m
arke
ting
effo
rt.
Sto
p a
nd
th
ink
An
esta
blis
hed
UK
reta
iler
used
to
set
an e
ssay
que
stio
n to
be
answ
ered
by
man
agem
ent
cand
idat
es a
skin
g th
em
to e
xpla
in w
hy t
he fi
rm d
id n
ot n
eed
a m
arke
ting
depa
rtm
ent
or t
o ha
ve
adve
rtis
emen
ts (
it fa
mou
sly
had
neith
er).
The
acc
epte
d an
swer
was
th
at it
was
an
unne
cess
ary
cost
be
caus
e it
was
kno
wn
in e
very
ho
useh
old
anyw
ay a
nd t
he q
ualit
y of
its
pro
duct
s sp
oke
for
them
selv
es.
Its
fort
unes
dec
lined
sha
rply
in t
he
1990
s an
d w
ere
rest
ored
aft
er 2
005
by w
hich
tim
e it
had
tele
visi
on a
nd
pos
ter
adve
rtis
ing
and
a m
arke
ting
dep
artm
ent.
Why
did
it fi
nd it
nee
ded
m
arke
ting
afte
r al
l?
Like
the
ret
ail s
tore
abo
ve,
pro
fess
iona
l pra
ctic
es h
ave
com
e to
rea
lise
they
mus
t ad
opt
a m
arke
ting
orie
ntat
ion
to s
urvi
ve.
Man
y as
pect
s of
mar
ketin
g to
uch
on t
he w
ork
of
acco
unta
nts,
suc
h as
pric
ing
and
fore
cast
ing
sale
s bu
t m
arke
ters
tak
e a
diffe
ring
view
on
the
valu
e of
the
se
whi
ch y
ou n
eed
to
reco
gnis
e.
Cha
pter
8 p
rovi
des
com
preh
ensi
ve c
over
age
of
mar
ketin
g st
rate
gy. M
arke
ting
is o
ne e
lem
ent
of s
trat
egy
imp
lem
enta
tion.
The
exa
mp
les
and
illus
trat
ions
are
the
re t
o he
lp y
ou u
nder
stan
d th
e pr
inci
ples
. Don
t m
emor
ise
them
.
App
licat
ion
of k
now
ledg
e to
the
Inte
ract
ive
exam
ples
and
Sel
f-te
st q
uest
ions
is e
ssen
tial.
This
cha
pte
r is
imp
orta
nt fo
r th
e ex
am.
Que
stio
ns m
ay t
est
unde
rsta
ndin
g of
m
arke
ting
conc
epts
in a
var
iety
of d
iffer
ent
typ
es o
f sce
nario
s. A
n un
ders
tand
ing
of
pro
duct
and
mar
ketin
g st
rate
gy m
ay
invo
lve
a p
artic
ular
issu
e, s
uch
as p
ricin
g,
but
also
a c
oher
ent
app
roac
h sh
ould
be
put
forw
ard
whe
re t
he p
ricin
g de
cisi
on is
ba
sed
upon
ap
pro
pria
te m
arke
t re
sear
ch
and
is s
upp
orte
d in
a c
oher
ent
man
ner
by
othe
r as
pec
ts o
f the
pric
ing
stra
tegy
set
ou
t in
oth
er c
hapt
ers.
The
pur
pos
e an
d ba
ses
of s
egm
enta
tion.
Mar
ketin
g re
sear
ch.
The
elem
ents
of t
he m
arke
ting
mix
.
Pric
ing
app
roac
hes
excl
uded
from
the
sy
llabu
s.
Spec
ific
syl
lab
us r
efer
ence
s fo
r th
is
chap
ter
are:
2b
, 2h
an
d 2
i.
-
Bus
ines
s St
rate
gy
16
Stud
y Pe
riod
Prac
tical
sig
nific
ance
W
orki
ng c
onte
xt
Ap
pro
ach
Sy
llabu
s re
fere
nces
and
exa
m c
onte
xt
Due
D
ate
9 St
rate
gy
and
str
uctu
re
In t
he t
radi
tiona
l ap
pro
ach
stra
tegy
is
dec
ided
firs
t, t
hen
the
orga
nisa
tion
stru
ctur
e (a
lloca
tion
of
wor
k to
the
func
tions
suc
h as
pr
oduc
tion,
mar
ketin
g et
c, d
ivis
ions
, m
atric
es e
tc).
Str
uctu
re d
eals
with
th
e im
ple
men
tatio
n of
the
str
ateg
y an
d ha
s no
influ
ence
on
stra
tegy
ch
oice
.
In t
he e
mer
gent
ap
pro
ach,
the
re
latio
nshi
p b
etw
een
stra
tegy
and
st
ruct
ure
is m
uch
mor
e co
mpl
ex.
The
exis
ting
stru
ctur
e m
ay a
id o
r ha
mpe
r st
rate
gic
choi
ce. T
hus
in t
his
view
str
uctu
re n
eeds
to
be
cons
ider
ed a
long
side
str
ateg
y ch
oice
.
Stru
ctur
e lo
oks
at h
ow t
he v
ario
us
func
tions
(eg
pro
duct
ion,
m
arke
ting,
fina
nce
etc)
mig
ht b
e fo
rmal
ly a
rran
ged.
Sto
p a
nd
th
ink
In t
he o
rgan
isat
ion
you
wor
k fo
r,
does
eve
ryth
ing
run
smoo
thly
? O
r ar
e th
ere
inad
equa
te s
taff,
or
a di
visi
on o
f sta
ff in
to d
epar
tmen
ts t
hat
ofte
n m
eans
the
wor
k do
esn'
t ge
t do
ne a
s it
shou
ld. I
n ot
her
wor
ds, i
s yo
ur o
rgan
isat
ion'
s st
ruct
ure
func
tiona
l or
dysf
unct
iona
l?
The
job
you
do a
nd t
o w
hom
yo
u re
port
is t
he m
ost
obvi
ous
cont
ext
in w
hich
to
unde
rsta
nd t
his
chap
ter.
If au
ditin
g a
clie
nt, t
he
orga
nisa
tiona
l str
uctu
re a
nd
its c
orp
orat
e go
vern
ance
ar
rang
emen
ts a
re m
atte
rs
whi
ch y
our
audi
t w
ork
shou
ld c
onsi
der.
Cha
pter
9 d
eals
with
the
tra
ditio
nally
dry
su
bjec
t of
str
ateg
y an
d st
ruct
ure.
Not
e in
p
artic
ular
the
typ
es o
f div
isio
nalis
atio
n an
d th
e m
etho
ds a
nd p
robl
ems
of m
anag
ing
and
cont
rolli
ng d
ivis
iona
lised
org
anis
atio
ns. T
he
top
ics
in t
he s
ectio
n on
cor
por
ate
gove
rnan
ce
will
be
fam
iliar
but
mak
e cl
ose
note
s on
co
rpor
ate
gove
rnan
ce in
not
for
pro
fit
orga
nisa
tions
.
Wor
k th
roug
h th
e Se
lf-te
st q
uest
ions
car
eful
ly
to e
nsur
e th
at y
ou h
ave
gras
ped
the
mai
n po
ints
in t
he c
hapt
er.
The
key
elem
ent
in t
his
chap
ter
is h
ow
stru
ctur
e lin
ks w
ith s
trat
egy.
Kno
wle
dge
of
orga
nisa
tiona
l str
uctu
res
isol
atio
n fr
om
stra
tegy
wou
ld n
ot n
orm
ally
be
exam
ined
. Th
e id
ea t
hat
ther
e is
no
one
idea
l st
ruct
ure
is im
por
tant
, as
it m
eans
tha
t is
sues
of s
truc
ture
will
nee
d to
inte
ract
with
th
e st
rate
gy a
ccor
ding
to
the
par
ticul
ar
circ
umst
ance
s of
the
sce
nario
.
This
cha
pte
r co
ntai
ns r
efer
ence
s to
a
num
ber
of n
amed
stu
dies
. It
is d
esira
ble
to a
ttrib
ute
the
sour
ce o
f the
se s
tudi
es in
de
scrib
ing
them
. H
owev
er, f
or
exam
inat
ion
pur
pos
es it
is n
ot t
he
inte
ntio
n th
at t
he n
ames
sho
uld
be
quo
ted
or r
epro
duce
d w
ithou
t ap
plic
atio
n.
Rath
er it
is in
tend
ed t
hat
the
imp
licat
ions
an
d re
sults
of t
hese
stu
dies
can
be
app
lied
Org
anis
atio
nal s
truc
ture
s.
Issu
es fo
r di
visi
onal
ised
org
anis
atio
ns.
Net
wor
k or
gani
satio
ns.
Stru
ctur
es fo
r in
tern
atio
nal b
usin
esse
s.
Cor
por
ate
gove
rnan
ce.
Spec
ific
syl
lab
us r
efer
ence
s fo
r th
is
chap
ter
are:
1e,
3b
an
d 3
c.
-
Stud
y G
uide
17
Stud
y Pe
riod
Prac
tical
sig
nific
ance
W
orki
ng c
onte
xt
Ap
pro
ach
Sy
llabu
s re
fere
nces
and
exa
m c
onte
xt
Due
D
ate
10
R
isk
man
agem
ent
The
belie
f tha
t ad
vers
e ci
rcum
stan
ces
aris
e fr
om c
ause
s th
at
can
be id
entif
ied,
qua
ntifi
ed a
nd
guar
ded
agai
nst
is o
ne o
f the
mai
n re
ason
s th
at m
anki
nd t
oday
def
ers
less
to
fate
and
rat
her
relie
s m
ore
on
its o
wn
pow
er t
o sh
ape
its fu
ture
.
The
sam
e ca
n be
sai
d fo
r m
anag
emen
t w
ho a
re n
ow le
ss a
ble
to b
lam
e po
or r
esul
ts o
n ba
d lu
ck,
but
inst
ead
may
find
the
mse
lves
ca
lled
to a
ccou
nt b
y sh
areh
olde
rs
for
not
havi
ng t
aken
ade
quat
e st
rate
gies
to
man
age
the
risks
of t
he
busi
ness
.
The
stra
tegi
es y
ou h
ave
cove
red
so
far
have
an
imp
act
on t
he o
vera
ll ris
ks fa
ced
by a
bus
ines
s. F
or
exam
ple
ente
ring
an u
nkno
wn
fore
ign
mar
ket
impo
ses
cost
s w
ith
no g
uara
ntee
of r
ewar
ds. T
he r
isks
sh
ould
be
eith
er m
anag
ed o
r th
e st
rate
gy a
band
oned
. But
bef
ore
this
an
d m
ore
fund
amen
tally
, a
man
agem
ent
team
tha
t do
esn'
t m
anag
e its
firm
's ris
ks fr
om it
s ex
istin
g bu
sine
ss h
as a
n un
cert
ain
stra
tegi
c fu
ture
.
Risk
man
agem
ent
is b
ecom
ing
an
imp
erat
ive
that
ran
ks a
long
side
the
qu
est
for
prof
its a
nd b
usin
ess
grow
th a
s st
rate
gic
impe
rativ
es.
Man
y bu
sine
ss s
trat
egie
s, s
uch
as
outs
ourc
ing,
div
ersi
ficat
ion
and
As
a tr
aine
e ac
coun
tant
you
r em
plo
yer
will
exp
ect
you
to
pla
y yo
ur p
art
in m
anag
ing
the
risks
of t
he b
usin
ess.
As
an a
udito
r yo
u w
ill
incr
easi
ngly
be
calle
d up
on
to m
ake
asse
ssm
ents
of t
he
adeq
uacy
of t
he r
isk
man
agem
ent
pol
icie
s of
the
cl
ient
, in
orde
r th
at t
he
finan
cial
sta
tem
ents
can
be
give
n a
true
and
fair
opin
ion
with
res
pect
to
the
finan
cial
p
ositi
on (
and
ther
efor
e by
im
plic
atio
n p
rosp
ects
) of
the
cl
ient
's bu
sine
ss.
As
we
will
see
bel
ow,
stat
emen
ts o
f ris
ks a
re n
ow
app
earin
g in
pub
lishe
d st
atem
ents
and
are
bei
ng
calle
d fo
r by
inve
stor
s.
Cha
pte
r 10
cov
ers
risk.
You
will
hav
e co
vere
d as
pect
s of
thi
s in
you
r ea
rlier
stu
dies
of a
uditi
ng
and
of fi
nanc
e, b
ut t
his
chap
ter
goes
furt
her
and
will
nee
d cl
ose
atte
ntio
n. R
isk
has
rap
idly
be
com
e a
maj
or c
once
rn o
f str
ateg
ic
man
agem
ent
and
is t
here
fore
a k
ey t
opic
for
the
exam
.
Not
e th
e el
emen
ts o
f a r
isk
man
agem
ent
stra
tegy
, in
part
icul
ar in
an
exam
sce
nario
you
m
ay b
e as
ked
to id
entif
y so
urce
s of
ris
k an
d th
e po
licie
s m
anag
emen
t ca
n ad
opt
to t
reat
ris
k.
It is
ess
entia
l tha
t yo
u at
tem
pt t
he S
elf-
test
q
uest
ions
to
unde
rsta
nd h
ow r
isk
may
ap
pea
r in
the
exa
m.
The
issu
es in
volv
ed in
ana
lysi
ng r
isk,
for
exam
ple
in t
he c
onte
xt o
f the
ext
erna
l en
viro
nmen
t, h
ave
alre
ady
been
dis
cuss
ed
in p
revi
ous
chap
ters
. Th
is c
hapt
er
disc
usse
s at
titud
es t
o th
ose
risks
and
how
an
org
anis
atio
n ca
n m
anag
e su
ch r
isks
.
As
with
oth
er t
opic
s, t
he im
port
ant
thin
g
in e
xam
que
stio
ns is
to
appl
y yo
ur
know
ledg
e to
the
giv
en s
cena
rio.
Risk
and
unc
erta
inty
.
Risk
man
agem
ent
fram
ewor
k.
Risk
ap
pet
ite.
Risk
iden
tific
atio
n an
d a
naly
sis.
Risk
res
pons
e.
Risk
mon
itorin
g an
d re
por
ting.
Inco
rpor
atin
g ris
k in
to d
ecis
ion
mak
ing.
Spec
ific
syl
lab
us r
efer
ence
s fo
r th
is
chap
ter
are:
1f,
2d
, 2j a
nd
3d
.
-
Bus
ines
s St
rate
gy
18
Stud
y Pe
riod
Prac
tical
sig
nific
ance
W
orki
ng c
onte
xt
Ap
pro
ach
Sy
llabu
s re
fere
nces
and
exa
m c
onte
xt
Due
D
ate
busi
ness
sim
plifi
catio
n by
de-
mer
ging
bac
k to
cor
e bu
sine
sses
are
ai
med
as
muc
h at
ris
k re
duct
ion
as
they
are
at
cost
red
uctio
n or
re
venu
e en
hanc
emen
t.
Sto
p a
nd
th
ink
We
are
surr
ound
ed a
t w
ork
by
wor
kpla
ce r
isk
asse
ssm
ents
, hea
lth a
nd
safe
ty p
olic
ies
and
corp
orat
e co
des
and
pro
cedu
res
aim
ed a
t p
reve
ntin
g m
isus
e of
ass
ets,
dat
a lo
ss o
r lit
igat
ion
for
negl
igen
ce. A
cup
of c
offe
e fr
om
the
caf
will
car
ry a
sig
n re
adin
g 'D
ange
r, c
onte
nts
may
be
hot'
as if
ot
herw
ise
it m
ight
tak
e us
by
surp
rise
and
caus
e us
to
scal
d ou
rsel
ves.
Is r
isk
man
agem
ent
brin
ging
abo
ut a
ne
w e
ra w
ith le
vels
of s
ecur
ity w
e ha
ve n
ot e
njoy
ed b
efor
e? Is
it ju
st
that
litig
atio
n ha
s be
com
e so
co
mm
on t
hat
man
agem
ent
is
dete
rmin
ed t
o co
ver
itsel
f by
goin
g th
roug
h th
e m
otio
ns?
Is it
just
a n
ew
man
agem
ent
fad
whi
ch is
ena
blin
g co
nsul
tant
s an
d ot
hers
to
talk
th
emse
lves
into
jobs
? Is
it a
n ex
cuse
fo
r fu
rthe
r tig
hten
ing
of c
ontr
ols
by
man
agem
ent
or t
he a
utho
ritie
s ov
er
wha
t w
e do
? Is
ris
k m
anag
emen
t ju
st
rep
laci
ng fo
rtun
e te
lling
and
pay
ing
trib
utes
to
the
gods
as
som
ethi
ng t
o hi
de b
ehin
d, r
athe
r th
an a
ccep
t th
at
stuf
f hap
pen
s an
d th
ere'
s no
thin
g m
uch
we
can
do a
bout
it?
-
Stud
y G
uide
19
Stud
y Pe
riod
Prac
tical
sig
nific
ance
W
orki
ng c
onte
xt
Ap
pro
ach
Sy
llabu
s re
fere
nces
and
exa
m c
onte
xt
Due
D
ate
11
Met
ho
ds
of
dev
elo
pm
ent
The
man
agem
ent
of fi
rms
are
unde
r pr
essu
re t
o gr
ow t
heir
busi
ness
es.
Shar
e p
rices
dep
end
on t
he a
bilit
y to
del
iver
bet
ter
earn
ings
nex
t ye
ar
than
last
yea
r
so d
o m
anag
emen
t ca
reer
s.
Gro
wth
has
impl
icat
ions
for
jobs
at
all l
evel
s of
the
org
anis
atio
n.
Mer
gers
and
acq
uisi
tions
are
one
fo
rm o
f gro
wth
and
sup
por
t a
huge
co
rpor
ate
finan