ICAG L3 Strategic Case Study flashcards

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

PESTLE analysis

Framework analysing Political, Economic, Social, Technological, Legal and Environmental macro factors that shape an organisation's strategic position and future options.

Porter's Five Forces

Model assessing industry attractiveness through new entrants, buyer power, supplier power, substitutes and rivalry; strong forces compress industry profitability.

Value chain

Porter's model separating primary activities from support activities to identify where value is created and where cost or differentiation advantage can be built.

Ansoff matrix

Grid of growth options by product and market: penetration, product development, market development and diversification; risk increases with unfamiliarity.

Stakeholder power-interest matrix

Mendelow's grid classifying stakeholders by power and interest to guide engagement strategy from manage closely to minimal monitoring.

Scenario analysis

Construction of several plausible, internally consistent futures with signposts, used to test strategy robustness rather than to forecast a single outcome.

Core competence

Capability that provides access to markets, adds perceived customer value and is difficult for competitors to imitate, underpinning sustainable advantage.

SAF criteria

Suitability, acceptability and feasibility: tests applied to strategic options covering strategic fit, stakeholder and return acceptability, and resource capability.

Bowman's strategy clock

Model of competitive positioning combining price and perceived value, from low-price positions through differentiation to failure positions.

Balanced scorecard

Performance framework with financial, customer, internal process and learning perspectives, each with objectives, measures, targets and initiatives.

Kotter's eight steps

Change model from creating urgency and a coalition through vision, communication, short-term wins and consolidation to anchoring change in culture.

Merger integration risk

Risk that acquisition value is destroyed by overpayment, culture clash, loss of key staff and failure to realise expected synergies.

ROCE

Return on capital employed equals operating profit divided by total assets less current liabilities; decomposable into margin multiplied by asset turnover.

Residual risk

Risk remaining after controls have been applied; assessed against appetite and either accepted, reduced further, transferred or avoided.

Agency problem

Conflict arising where managers, who control the company, pursue self-interest rather than shareholder value; mitigated by incentives and independent oversight.

NED independence

Non-executive independence is questioned by prior employment, material fees, family ties, long tenure or cross-directorships that compromise objective judgement.

Residual income

Divisional profit less a charge for capital employed at an imputed interest rate; unlike ROI it encourages accepting projects earning above the cost of capital.

COSO ERM framework

Enterprise risk framework covering governance and culture, strategy and objective-setting, performance, review and revision, and information and communication.

NPV rule

Accept projects with positive net present value when cash flows are discounted at the weighted average cost of capital; the method directly measures value added.

WACC formula

Weighted average cost of capital equals equity weight times cost of equity plus debt weight times after-tax cost of debt, using market values.

CAPM

Cost of equity equals risk-free rate plus beta multiplied by the equity risk premium, where the premium is market return less risk-free rate.

Gordon growth model

Share value equals next year's dividend divided by the cost of equity less the constant dividend growth rate.

Free cash flow to firm

Operating profit after tax plus depreciation less capital expenditure and working capital increase; discounted at WACC it gives enterprise value.

Interest cover

Operating profit divided by interest payable; a key gearing covenant measure indicating how comfortably interest obligations are met.

Modified duration

Measures bond price sensitivity to yield changes; approximate percentage price change equals minus duration times the change in yield.

Fundamental ethical principles

Integrity, objectivity, professional competence and due care, confidentiality and professional behaviour, applied to all professional and business judgements.

Ethical threats

Self-interest, self-review, advocacy, familiarity and intimidation, each requiring safeguards such as disclosure, rotation or independent review.

Professional scepticism

Questioning attitude towards evidence and management assertions, particularly forecasts, valuations and related-party transactions, before relying on them.

Board reporting structure

Report format: purpose and scope, assumptions, analysis, conclusions, prioritised recommendations with risks, and appendices containing workings.

Strategic control

Monitoring whether strategy remains valid and on track at milestones, distinct from operational control of day-to-day activities and budgets.

Variance analysis

Decomposition of actual versus budget differences into price and volume components, used to identify and investigate material deviations.

Transfer pricing

Price charged for internal transfers between divisions, set at market, cost-plus or negotiated levels, affecting divisional profit and motivation.

ISSB sustainability standards

IFRS S1 and S2 require disclosure of sustainability-related risks and opportunities across governance, strategy, risk management and metrics.