IFoA CB1 study materials
IFoA CB1 study resources

IFoA CB1: Business Strategy, Planning and Control

IFoA CB1 · Work through your exam, one topic at a time.

All guide sections

Business Strategy, Planning and Control

What CB1 tests in business strategy, planning and control

This domain tests how organisations set direction, allocate resources and monitor performance. Expect strategic analysis, budgeting, variance analysis and performance-measurement systems that link plans to control.

Core rules and concepts

  • Strategic analysis uses external tools such as PESTLE and Porter’s five forces, and internal tools such as value-chain analysis and resource-based views. SWOT summarises but does not by itself justify a strategy.
  • Budgets translate plans into financial targets; they coordinate, motivate and control, but can encourage gaming and short-termism.
  • Variance analysis decomposes differences between budget and actual into price and volume effects. Flexed budgets compare actual activity with the budget allowed for that activity.
  • The balanced scorecard uses financial, customer, internal-process and learning perspectives. KPIs should be specific, measurable and aligned with strategy.
  • Control systems need feedback, accountability and adaptation; rigid controls can stifle innovation.

Worked example

Budget sales are 1,000 units at £20, so budget revenue is £20,000. Actual sales are 900 units at £21, giving £18,900. Revenue variance is £1,100 adverse. Price variance = (21 − 20) × 900 = £900 favourable. Volume variance = (900 − 1,000) × 20 = £2,000 adverse. The two sum to £1,100 adverse, reconciling the total.

Traps that cost marks

Do not compare actual revenue with a fixed budget when activity has changed; flex first. Do not mix price and volume effects. Do not treat a favourable variance as automatically good-cutting quality may boost short-term price variance but damage strategy. Remember qualitative factors.