ICAP Strategic Case Study key terms

A structured review of an organisation's internal strengths and weaknesses alongside the external opportunities and threats it faces, used to summarise its strategic position before options are selected.

A framework for scanning the wider environment by grouping influences as political, economic, social, technological, legal and environmental, helping a business anticipate change outside its own industry.

A model of industry attractiveness covering the threat of new entrants, bargaining power of buyers and suppliers, threat of substitutes and intensity of rivalry among existing competitors.

The sequence of primary and support activities through which an organisation turns inputs into outputs, examined to show where cost advantage or differentiation is actually created.

A bundle of skills and technologies that rivals find hard to copy, adds value for customers and can be deployed across several products or markets.

The gradual failure of strategy to keep pace with a changing environment, often because small incremental adjustments preserve old assumptions until performance falls sharply.

A technique that positions stakeholders according to their power to influence and their interest in the organisation, indicating whether to inform, consult, satisfy or manage them closely.

A grid of growth options built on whether products and markets are existing or new, giving market penetration, product development, market development and diversification.

A portfolio tool plotting business units on market growth and relative market share, labelling them stars, cash cows, question marks or dogs to guide resource allocation.

The extra value created when two businesses or activities are combined and achieve more together than separately, for example through cost savings or shared capability.

A performance measurement system tracking financial results alongside customer, internal process and learning perspectives, so that strategy is translated into linked, monitorable measures.

The construction of several plausible, internally consistent futures to test how robust a chosen strategy is and to prepare contingency responses before events unfold.

Testing how the outcome of a decision, such as a project appraisal, changes when a single input assumption is varied while all other assumptions are held constant.

The sum of a project's expected future cash flows discounted at the appropriate required return, less the initial outlay; a positive result indicates value is created.

The discount rate at which a project's net present value falls to zero, normally compared with the cost of capital when deciding whether the investment is acceptable.

The blended after-tax cost of a company's debt and equity, weighted by their proportions in the capital structure, used as the hurdle rate for investment appraisal.

The time taken for a project's cumulative cash inflows to recover the original investment, a simple liquidity-focused measure that ignores cash flows arising after that point.

Managing the balance of inventory, receivables, payables and short-term cash so that obligations can be met without tying up unnecessary funds in day-to-day operations.

Estimating the worth of a company or shareholding, typically by discounting forecast cash flows, applying market multiples or assessing net asset values.

An intangible asset recognised on acquisition, being the excess of consideration transferred and any non-controlling interest over the fair value of the identifiable net assets acquired.

A write-down of an asset's carrying amount to its recoverable amount, recognised when value in use or fair value less costs of disposal falls below the amount in the books.

Statements presenting a parent and its subsidiaries as one economic entity, combining their assets, liabilities, income and expenses after eliminating intra-group balances and transactions.

A transfer of resources or obligations between an entity and a party that controls it, is controlled by it or significantly influences it, disclosed because terms may not be at arm's length.

Disclosure of revenue, profit and assets by operating segment so that users can understand the differing risks, returns and performance within a diversified group.

A tax balance arising from timing differences between accounting and taxable profit, or from unused tax losses, recognised as an asset or liability in the statement of financial position.

The price charged for goods, services or finance between related companies in different tax jurisdictions, which tax rules normally require to be set on an arm's length basis.

Arranging affairs within the letter of the law to reduce tax is avoidance, whereas concealing income or misrepresenting facts to reduce tax is evasion and is a criminal offence.

The risk that the auditor gives an inappropriate opinion when the financial statements are materially misstated, made up of inherent, control and detection risk.

The threshold above which an omission or misstatement could reasonably influence the economic decisions of users, often set using benchmarks such as profit, revenue or total assets.

The policies, procedures and tone set by those charged with governance to safeguard assets, produce reliable reporting and support compliance with applicable laws and regulations.

The assumption that an entity will continue trading for the foreseeable future, requiring directors to assess viability and auditors to challenge whether the assumption remains appropriate.

The amount and type of risk an organisation is willing to accept in pursuing its objectives, set by the board and translated into limits and tolerances for managers.

A set of principles and provisions on board leadership, independence, accountability, remuneration and shareholder relations that listed companies must apply or explain departure from.

The conflict that arises when managers running a company pursue their own interests rather than those of shareholders, addressed through incentives, monitoring and transparent disclosure.

An attitude of questioning doubt and critical assessment of evidence rather than accepting information at face value, maintained throughout an assurance or advisory engagement.

A situation where a personal, financial or other interest could improperly influence professional judgement or advice, requiring disclosure or withdrawal from the engagement.

The view that a company should weigh the interests of employees, customers, suppliers, communities and others, not only shareholders, when setting and implementing strategy.