CIMA E3 flashcards

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

Porter's five forces

Framework analysing industry attractiveness through threat of new entrants, bargaining power of buyers and suppliers, threat of substitutes, and rivalry among existing competitors.

PESTEL analysis

Scanning of Political, Economic, Social, Technological, Environmental and Legal macro-environment factors that shape opportunities and threats outside the firm's control.

Value chain

Model separating primary activities (logistics, operations, marketing, service) from support activities (infrastructure, HR, technology, procurement) to locate cost and differentiation advantage.

VRIN criteria

Test for sustained competitive advantage: a resource must be valuable, rare, inimitable and non-substitutable. Failing any criterion limits advantage to temporary.

Ansoff matrix

Growth options grid of market penetration, product development, market development and diversification, ranked by increasing risk from unfamiliar products or markets.

BCG matrix

Portfolio tool plotting business units by market growth and relative share into stars, cash cows, question marks and dogs to guide investment and divestment.

Generic strategies

Porter's three routes to advantage: cost leadership, differentiation, and focus on a narrow segment. Pursuing none clearly leaves a firm stuck in the middle.

Core competence

Collective organisational skill that provides access to many markets, contributes significantly to customer value and is difficult for competitors to imitate.

Mendelow matrix

Stakeholder mapping by power and interest: key players, keep satisfied, keep informed, minimal effort. Engagement approach follows the quadrant.

Strategic drift

Gradual divergence between strategy and a changing environment when incremental adaptation lags reality, eventually forcing transformational change.

Suitability, acceptability, feasibility

Three evaluation criteria for strategic options: fit with environment and capabilities, risk and return to stakeholders, and availability of resources and competences.

Balanced scorecard

Performance framework linking financial, customer, internal process, and learning and growth perspectives so leading measures explain lagging financial results.

Blue ocean strategy

Creating uncontested market space through value innovation, raising buyer value while lowering cost instead of competing on an existing value curve.

Scenario planning

Building several plausible futures to test whether a strategy is robust across them, supported by early warning indicators of which future is unfolding.

Cultural web

Diagnostic of organisational culture through rituals, stories, symbols, power structures, structures, control systems and the paradigm that underpins them.

Kotter's eight steps

Change sequence from urgency and guiding coalition through vision, communication, empowerment, short-term wins and consolidation to embedding change in culture.

Strategic business unit

Distinct part of an organisation with its own external market, competitors and profit responsibility, allowing a separate competitive strategy.

Experience curve

Unit value-added cost falls by a constant percentage each time cumulative output doubles, driven by learning, scale and process improvement.

Diamond model

Porter's explanation of national competitive advantage via factor conditions, demand conditions, related industries, and firm strategy, structure and rivalry.

Strategic control

Monitoring whether the strategy itself remains valid using premise control, implementation control, strategic surveillance and special alert control.

Dynamic capabilities

Capacity to sense opportunities, seize them and reconfigure resources; most valuable where technology and customer needs change quickly.

Strategic groups

Sets of firms in an industry following similar strategies on key dimensions; mobility barriers between groups explain persistent differences in profitability.

Better-off test

Diversification criterion asking whether the business gains more from its parent than it would standalone, and more than an alternative owner would add.

Parenting advantage

Test that the corporate centre adds value to each business and adds more value than any alternative parent could, justifying the portfolio.

Related diversification

Entry into a new industry that shares value-chain activities or capabilities with existing business, creating economies of scope and competence transfer.

Market development

Ansoff option of selling existing products in new segments or geographies; lower risk than diversification because product capability is retained.

Cost leadership

Generic strategy achieving the lowest cost position in an industry through scale, process efficiency and tight cost control while maintaining acceptable differentiation.

Differentiation strategy

Generic strategy offering unique buyer value that commands a price premium exceeding the extra cost of delivering the difference.

Focus strategy

Generic strategy serving a narrow segment with either low cost or differentiation, viable where segment needs differ from the broad market.

Turnaround sequence

Retrenchment to stabilise cash and cut costs, then recovery of the value proposition, then growth once the business is viable.

Real options

Valuing flexibility to defer, expand, contract or abandon investment; staged commitment preserves the option to stop and is worth more than irreversible outlay.

Value innovation

Simultaneously raising buyer value and lowering cost by eliminating and reducing cost-driving factors while raising and creating value-driving factors.

Key success factors

The few capabilities a firm must excel at to win in its market, derived from customer needs and the basis of competition.