ICAB PL Business Strategy flashcards
ICAB PL Business Strategy · Build recall with a focused review session.
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 framework covering political, economic, social, technological, legal and environmental factors that shape opportunities and threats outside the firm's direct control.
- Porter's Five Forces
- An industry attractiveness model measuring rivalry, buyer power, supplier power, threat of entrants and threat of substitutes; intense forces depress industry profitability.
- Value chain
- A model dividing firm activities into primary activities that create and deliver value and support activities that enable them, used to locate cost or differentiation advantage.
- Strategic group mapping
- Plotting firms in an industry on two competitive dimensions; firms occupying the same group face closer rivalry because they compete on similar bases.
- Core competence
- A bundle of skills that is valuable, rare, difficult to imitate and non-substitutable, allowing the firm to deliver distinctive customer value across markets.
- Ansoff matrix
- A growth-option grid combining existing or new products with existing or new markets, producing penetration, product development, market development and diversification.
- Generic strategies
- Porter's three routes to competitive advantage: cost leadership across a broad market, differentiation across a broad market, and focus on a narrow segment.
- BCG matrix
- A portfolio tool plotting business units by market growth and relative market share, yielding stars, cash cows, question marks and dogs.
- SAFe criteria
- An option-evaluation test asking whether a strategy is suitable for the environment, acceptable to stakeholders on return and risk, and feasible in resources.
- Emergent strategy
- A pattern of decisions that arises without prior intent and becomes part of realised strategy alongside the deliberate plan.
- Related diversification
- Entry into a new business that shares capabilities, value-chain activities or technology with existing operations, creating synergy beyond financial resource pooling.
- McKinsey 7S
- An alignment model of strategy, structure, systems, staff, skills, style and shared values; implementation fails where the seven elements are inconsistent.
- Critical success factors
- The small number of activities a firm must perform well for its strategy to succeed; they are measured through key performance indicators.
- Balanced scorecard
- A performance framework measuring financial, customer, internal process, and learning and growth perspectives to link daily activity to strategy.
- Net present value
- The sum of a project's future cash flows discounted at the cost of capital, less initial outlay; a positive value adds shareholder wealth.
- Internal rate of return
- The discount rate at which a project's net present value equals zero; the project is acceptable when this rate exceeds the cost of capital.
- Lewin's change model
- A three-stage process of unfreezing existing behaviour, moving to the new state, and refreezing so the change becomes embedded in systems and culture.
- Mechanistic structure
- A highly specialised, hierarchical form with vertical communication and formal rules, suited to stable environments and routine, repeatable work.
- Organic structure
- A flexible, loosely defined form with lateral communication and few rules, suited to turbulent environments requiring rapid adaptation and innovation.
- Span of control
- The number of subordinates directly reporting to one manager; a wide span flattens hierarchy while a narrow span deepens it.
- Handy's culture types
- Four organisational cultures: power, centred on a dominant figure; role, on rules; task, on project teams; person, on individual members.
- Kotter's eight steps
- A change sequence starting with urgency and a guiding coalition and ending with consolidating gains and anchoring new approaches in culture.
- Resistance to change
- Opposition arising from self-interest, uncertainty, differing information or habit; participation and communication are established ways to reduce it.
- Sensitivity analysis
- A technique testing how far one variable can move before a decision changes; narrow tolerance indicates the decision is fragile and risky.
- Gap analysis
- A comparison of the strategic target with the outcome forecast from current plans, identifying the shortfall that new strategies must close.
- Stakeholder power-interest grid
- A mapping of stakeholders by power and interest, guiding engagement: manage closely, keep satisfied, keep informed, or monitor with minimal effort.
- Return on capital employed
- Operating profit divided by capital employed, expressed as a percentage; it is judged against the cost of capital to test value creation.
- Strategic drift
- The gradual divergence between a firm's strategy and a changing environment, often unrecognised until a performance crisis forces reactive adjustment.
- Agency problem
- A conflict where managers acting as agents pursue their own interests rather than owners' interests; governance and incentives are the corrective mechanisms.
- Risk treatment options
- Four responses to assessed risk: avoid the activity, reduce likelihood or impact, transfer through insurance or contracts, or accept and retain it.
- Segregation of duties
- An internal control splitting authorisation, recording and custody of assets among different people so no single person controls a transaction end to end.
- Risk appetite
- The amount of risk a board is willing to accept in pursuing objectives; it differs from risk capacity, the maximum risk the firm can bear.