CIMA E3 key terms

An assessment of how an organisation currently stands relative to its environment, covering its resources and capabilities, the external forces acting on it, and the expectations of stakeholders who influence it.

The degree of alignment between an organisation's resources and capabilities and the opportunities and threats in its environment, so that its chosen strategy remains viable as conditions change.

The gap between an organisation's existing resources and the ambitions it sets for itself, deliberately used to force capability development and innovation rather than accepting current constraints.

A short aspirational description of the future state an organisation wants to create, intended to inspire and orient people rather than to specify measurable targets or operational detail.

A declaration of why an organisation exists, whom it serves and what it offers, giving a stable sense of purpose that guides decisions without listing detailed objectives.

An ambitious long-term goal that stretches an organisation beyond its current means, used to focus effort and mobilise resources over an extended period.

A technique for plotting stakeholders by their power to affect outcomes and their interest in them, so that engagement effort is directed where it most matters.

The priority an organisation gives to a stakeholder, judged by the combination of that party's power, legitimacy of claim and urgency of the issue it raises.

The planned process of communicating with and involving stakeholder groups in strategy formation and delivery, ranging from informing and consulting through to genuine participation in decisions.

The system of rules, structures and processes by which an organisation is directed and controlled, defining accountability between directors, shareholders and other stakeholders.

A conflict of interest that arises when managers acting for owners pursue their own goals, such as personal reward or risk avoidance, rather than maximising owner value.

A voluntary commitment by an organisation to behave ethically and contribute to economic, social and environmental wellbeing beyond its minimum legal obligations.

A way of reporting performance against three dimensions at once: financial profit, social impact and environmental impact, often summarised as profit, people and planet.

Meeting present needs without undermining the ability of future generations to meet theirs, applied in strategy to resource use, environmental limits and long-term viability of the business model.

A structured scan of political, economic, social, technological, legal and environmental influences on an organisation, used to identify how far external change may help or hinder strategy.

A framework for judging the attractiveness of an industry by examining rivalry among existing competitors, threat of new entrants, threat of substitutes, and bargaining power of buyers and suppliers.

A set of firms within an industry that follow similar strategies on comparable dimensions, such as price, quality or distribution, and therefore compete most directly with each other.

A summary tool that matches an organisation's internal strengths and weaknesses against external opportunities and threats, often used to test whether a proposed strategy fits the situation.

The perspective that sustained superior performance comes from resources and capabilities that are valuable, rare, hard to imitate and not easily substituted by competitors.

A bundle of skills and technologies that a firm performs particularly well, contributes significantly to customer value and is difficult for rivals to copy.

A capability that competitors find hard to replicate and that underpins an organisation's advantage in a market, often resting on accumulated learning and organisational routines.

An organisation's ability to sense change, seize opportunities and reconfigure its resource base, enabling it to adapt when markets and technologies shift.

A model that breaks an organisation into the sequence of activities it performs, from inbound logistics to after-sales service, to show where value is added and cost incurred.

The wider network of upstream suppliers, the organisation itself, distributors and customers, whose combined activities deliver value to the end consumer.

One of a small number of broad routes to competitive advantage, typically cost leadership, differentiation or focus on a narrow segment, each requiring different resources and organisation.

A condition that lets an organisation outperform rivals by offering greater value to customers or delivering comparable value at lower cost, ideally in a way that is durable.

A position where a firm pursues neither clear cost leadership nor clear differentiation, leaving it without a defensible advantage and vulnerable to competitors that choose one route decisively.

A grid for classifying growth options by whether products and markets are existing or new, producing market penetration, product development, market development and diversification.

Entry into products or markets that are new to the organisation, which may spread risk and use spare capabilities but raises complexity and demands new competences.

Expansion achieved by building capacity, customers and capability from within the existing organisation, rather than by acquiring or merging with other businesses.

Combining with or buying another organisation to gain scale, markets or capabilities quickly, which carries integration risk and often a premium over fair value.

The investigation a buyer carries out before completing a deal, checking financial, legal, operational and commercial facts to test assumptions and expose hidden liabilities.

The extra value expected when two organisations combine, because combined resources or activities perform better than the sum of the separate parts.

The value a corporate centre adds to its business units, for example through better capital allocation, shared services or superior talent, exceeding the cost of central overhead.

A tool that positions business units or products on dimensions such as market growth and relative share, guiding decisions on investment, holding or divestment.

Transferring an activity previously done internally to an external provider under contract, usually to cut cost or access specialist skills, while retaining management control of the relationship.

The gradual divergence between an organisation's strategy and a changing environment, because incremental adjustments lag behind shifts and shared assumptions go unchallenged.

The shared values, beliefs and behavioural norms that shape how members of an organisation interpret issues and act, often resisting strategic change that conflicts with them.

The structured process of planning, communicating and supporting a transition from a current to a desired state, addressing resistance and embedding new ways of working.

A sequence for leading large-scale change, from creating urgency and a guiding coalition through vision, communication, empowerment, short-term wins and consolidation to anchoring change in culture.