ICMAP Strategic Level key terms

A planning tool that sets out an organisation's internal strengths and weaknesses alongside external opportunities and threats, so strategy can build on capabilities while defending against risks in the environment.

A framework for scanning the wider environment along political, economic, social, technological, legal and environmental lines, helping managers anticipate changes that lie outside the organisation's control.

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

A bundle of skills and technologies that rivals find hard to copy, that customers value, and that can be applied across several products or markets, forming the root of lasting advantage.

A position that lets a firm give customers more value than rivals do, reached either by operating at lower cost or by offering a difference for which buyers will pay a premium.

The sequence of primary and support activities through which an organisation turns inputs into outputs; studying it shows where cost is incurred and where customer value is created or lost.

A grid of four growth options produced by crossing existing or new products with existing or new markets: market penetration, product development, market development and diversification.

A portfolio chart that plots business units by market growth and relative market share into stars, cash cows, question marks and dogs, guiding where to invest cash and where to withdraw.

A distinct part of a larger group that serves its own market, meets its own competitors, and is led by a manager with authority over the resources needed to set and pursue strategy.

The gathering and analysis of financial and non-financial information about the organisation, its competitors and its customers in order to support long-term strategic decisions rather than routine reporting.

A costing method that charges overhead to products or services according to the activities they consume, using several cost drivers instead of one volume-based recovery rate.

Any factor whose level causes the cost of an activity to change, such as the number of set-ups, orders or machine hours, and which therefore serves as the basis for allocating overhead.

A performance measurement system that reports financial, customer, internal process and learning-and-growth perspectives together, tying everyday measures to the organisation's chosen strategy.

A method that fixes the allowable cost of a product by subtracting the desired profit margin from the price customers will pay, then designs the product to be made within that cost.

A continuous improvement technique used during production that pursues small, repeated reductions in cost period after period, rather than one large saving at the design stage.

The practice of accumulating all costs of a product across its whole life, from design and development through production and distribution to disposal, so decisions reflect total cost.

A constraint-focused approach that treats only direct materials as truly variable and judges performance by the throughput generated per unit of the bottleneck resource.

The comparison of actual results with budgeted or standard figures, splitting each difference into price and quantity elements so that causes can be found and responsibility assigned.

The price at which one division of a group supplies goods or services to another; it shapes divisional profit, performance evaluation and the willingness of managers to trade internally.

The measurement of revenue and of the costs of serving each customer or segment, which often reveals that some apparently valuable customers earn less than the cost of keeping them.

The average return a company must earn on its investments, found by weighting the after-tax cost of debt and the cost of equity by their shares in the capital structure.

The sum of a project's expected cash flows discounted at the required rate of return; a positive result means the investment is expected to add value for shareholders.

The discount rate at which a project's net present value falls to zero; it is compared with the company's hurdle rate to decide whether the investment is acceptable.

The mix of debt and equity a company uses to finance its assets, which affects its cost of capital, the risk borne by shareholders and ultimately the value of the firm.

The extent to which a company's capital is provided by borrowings rather than owners' funds, often expressed as debt to equity or interest cover; high gearing magnifies both returns and risk.

A company's standing decision on how much of its profit to distribute to shareholders and how much to retain for reinvestment, which shapes investor expectations and future financing needs.

The return shareholders demand for holding the shares, commonly estimated as the risk-free rate plus a premium for systematic risk measured by the share's beta.

The control of inventories, receivables, payables and cash so that the operating cycle stays short and the business holds enough liquidity without tying up excessive funds.

The system of board structures, rules and reporting practices by which companies are directed and held to account, intended to align managers' behaviour with the interests of shareholders and other stakeholders.

The conflict that arises when managers, who run a company day to day, pursue their own goals rather than the goals of the shareholders who own it.

A board member with no employment, commercial or family tie to the company, expected to bring objective judgement to monitoring management and to major board decisions.

A board sub-committee made up mainly of independent directors, responsible for overseeing financial reporting, internal control and the relationship with the external auditors.

The view that a company should be run for all parties affected by it, including employees, customers, suppliers and communities as well as shareholders, rather than for owners alone.

A company's voluntary commitment to behave ethically and to contribute to economic, social and environmental wellbeing beyond the minimum required by law and regulation.

A written set of principles and rules of conduct that guides how employees behave and makes clear what the organisation expects of them and what it forbids.

A situation in which a person's private interest, whether financial or personal, could improperly sway a decision they make in their role for the organisation.

The disclosure by an employee or member of an organisation of illegal, unethical or dangerous practices to a responsible authority or the public, usually protected where internal channels have failed.

A model that explains fraud as arising where pressure or incentive, opportunity, and rationalisation or attitude occur together, giving control systems three points to target.

The legal obligation of loyalty and good faith owed by directors and agents, requiring them to act in the best interests of the company rather than in their own.

The principle that shareholders of a company risk only the capital they have invested, because the company is a separate legal person answerable for its own debts.