ICAB AL Strategic Business Management flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

PESTLE analysis

A macro-environment scanning tool covering Political, Economic, Social, Technological, Legal and Environmental factors that shape opportunities and threats for all organisations.

Porter's Five Forces

A framework assessing industry attractiveness through new entrants, buyer power, supplier power, substitutes and rivalry; stronger combined forces imply lower profitability potential.

Strategic group

A set of firms in an industry pursuing similar strategies on key dimensions such as price, quality or geography; mobility barriers hinder movement between groups.

Key success factors

The limited set of competitive capabilities and resources that determine success in a particular industry, derived from customer needs and the basis of competition.

VRIO framework

A resource test requiring a resource to be Valuable, Rare, Inimitable and supported by Organisation; failing any criterion limits the competitive advantage obtainable.

Core competence

A bundle of skills that provides access to many markets, contributes significantly to perceived customer value and is difficult for competitors to imitate.

Value chain

A model separating primary activities such as logistics, operations, marketing and service from support activities such as procurement, technology, HR and infrastructure.

Dynamic capabilities

An organisation's capacity to integrate, build and reconfigure internal and external competences to respond to rapidly changing environments and sustain advantage.

Ansoff matrix

A growth framework combining existing and new products with existing and new markets to yield penetration, product development, market development and diversification options.

Porter's generic strategies

Cost leadership, differentiation and focus (cost or differentiation) are the three broad routes to competitive advantage; being stuck in the middle erodes returns.

SAF evaluation criteria

Suitability asks whether an option addresses the strategic position, Acceptability covers risk and stakeholder reactions, and Feasibility concerns resources and competences.

BCG matrix

A portfolio tool classifying business units as stars, cash cows, question marks or dogs using market growth and relative market share to guide investment decisions.

McKinsey 7S framework

Strategy, Structure, Systems, Style, Staff, Skills and Shared values must be mutually aligned for strategy implementation to succeed.

Balanced scorecard

A performance tool translating strategy into measures across financial, customer, internal process, and learning and growth perspectives linked by cause and effect.

Kotter's eight-step model

A sequenced change process from creating urgency and a coalition through vision, communication, empowerment, short-term wins and consolidation to anchoring in culture.

Lewin's change model

Change is managed by unfreezing existing behaviour, moving to a new state and refreezing to embed it; omitting refreezing often causes reversion.

Mechanistic versus organic

Mechanistic structures are formalised and centralised and suit stable conditions; organic structures are flexible and decentralised and suit dynamic environments.

Business process reengineering

Radical redesign of end-to-end processes to achieve dramatic improvements in cost, quality, speed and service, distinct from incremental continuous improvement.

Agency theory

A perspective on conflicts between principals such as shareholders and agents such as managers, addressed through monitoring, incentives and disclosure.

Stakeholder theory

The view that a firm should account for all parties affected by its actions, not only shareholders, balancing their interests in strategic decisions.

Mendelow's power-interest matrix

A stakeholder classification into minimal effort, keep informed, keep satisfied and key players based on ability to influence and concern about outcomes.

COSO ERM framework

An enterprise risk framework with five components: governance and culture, strategy and objective-setting, performance, review and revision, and information and communication.

Risk appetite versus tolerance

Risk appetite is the amount and type of risk an organisation is willing to accept; risk tolerance is the acceptable variation around that appetite.

Three lines model

Management owns and manages risk, a risk and compliance function monitors it, and internal audit provides independent assurance to the board.

Residual risk

The risk that remains after existing controls and risk responses have been applied; it is compared with tolerance to decide whether further action is needed.

Economic value added

Net operating profit after tax minus invested capital multiplied by weighted average cost of capital; a positive result indicates value creation.

DuPont analysis

Decomposes return on equity into net profit margin, asset turnover and financial leverage to reveal the drivers of financial performance.

Performance prism

A measurement framework covering stakeholder satisfaction, strategies, processes, capabilities and stakeholder contribution, broadening measurement beyond shareholder value.

Business Model Canvas

A one-page model describing value creation and capture through customer segments, value propositions, channels, relationships, revenue streams, resources, activities, partnerships and costs.

Disruptive innovation

An offering that begins in overlooked or low-end segments with simpler, cheaper features and then improves to displace established competitors.

Open innovation

The practice of drawing on external ideas and external routes to market alongside internal research and development, rather than relying solely on internal capability.

Network effects

A condition where the value of a product or platform to each user increases as the number of other users on the same network grows.