ACCA P5 flashcards – set 1

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See also ACCA P5 Flashcards: Set 1 | Set 2 | Set 3 | Set 4


What are the S’s in McKinsey’s 7S model?

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* Structure
* Systems
* Strategy
* Style
* Staff
* Skills
* Shared values

What are Porter’s three generic strategies?

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* Cost leadership
* Differentiation
* Focus.

What are the support activities of the value chain?

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Firm infrastructure,
Human resource management,
Technology development,
Procurement

What are the primary activities of the value chain?

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Inbound logistics,
Operations,
Outbound logistics,
Sales and marketing,
Service.

In BCG terms, what is meant by a balanced portfolio of products?

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Some cash cows to generate lots of cash (but cash cows are heading towards market decline), and some problem children needing investment. The cash generated by the cash cows can be used to build the problem children into star products that will become the cash cows of the future.

What is the problem with a problem child product or division?

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BCG suggests that only companies with large market shares can survive in the long term so the company has to decide whether to withdraw or to invest to achieve a large market share.
Note that niche or focus companies can survive with what looks like a small market share.

What are the four quadrants of a BCG matrix and what market share and growth rates do they have?

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Problem child (or question mark): high market growth rate, low market share.
Star: high market growth rate, high market share.
Cash cow: low market growth rate, high market share.
Dog: low market growth rate, low market share.

What are four types of benchmarking?

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Internal: for example, to previous periods or between different branches.
External: to similar businesses or organisations. Can be competitive or non-competitive.
Functional: to specific functions in other businesses such as cost per help-line call
Generic: to different businesses and organisations.

What are the two axes on a Boston Consulting Grid?

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Market growth rate and relative market share (market share/share of market leader)

What are the characteristics of the market that you would expect to see at the mature stage of a product life cycle?

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Fierce competition because the market is not growing. This leads to price pressure and the need to improve specifications to sell to an experienced set of customers. Weaker competitors often drop out and many combine (consolidation) to achieve the economies of scale needed. High profits should be possible for efficient producers (great scale, efficiency and well down the learning curve).

What are the four stages of a typical product life cycle?

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* Development,
* Growth,
* Maturity,
* Decline.

Why is stakeholder analysis important in strategic planning and performance management?

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Key player stakeholders can prevent strategies of which they do not approve. The hope is that any strategic plan keeps most of the people happy most of the time (and the key players happy all the time!)

Draw and annotate Mendelow’s Matrix

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What is a mission statement and what are its main elements?

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The prime purpose of a mission statement is to set out the reason for the organisation’s existence.
The main sections are often taken to be: purpose, position (in the market), culture, ethics and values.

Should Porter’s five forces theory be applied to all companies in the country, an industry, an individual company?

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Porter’s five forces should be applied to an industry to judge industry attractiveness

What are Porter’s five forces?

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* Rivalry/competition,
* Threat of new entrants,
* Supplier pressure,
* Buyer pressure,
* Threat of substitutes

What is a PESTEL analysis?

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An environmental analysis considering the influences of:
* Politics,
* Economics,
* Social trends,
* Technological changes,
* Ecological (environmental) concerns,
* Laws.

What are two potential advantages of freewheeling opportunism?

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Any two of:
* fast decisions;
* no time or money spent on planning;
* not committed to one course of action (flexibility).

With regards to performance management, what are the special features of multinational companies?

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Process specialisation: eg concentrate labour in countries with low wage rates
Product specialisation: eg different national requirements and ‘tastes’
International trade issues: eg exchange rate fluctuations
Political sensitivities: eg particular countries may have particular political risks
Administrative issues: the transfer of profits

What is gap analysis?

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Gap analysis is the difference between what the organisation’s current plans will achieve and what the organisation is required to achieve.

What is usually meant by SMART objectives?

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S = specific/stated
M = measurable
A = achievable, agreed, accepted
R = relevant (or realistic)
T = time-limited

What are monitoring and building critical success factors?

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Monitoring: used to monitor current performance
Building: concentrate on what must be achieved in the future

What are four classifications of critical success factors?

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* Internal
* External
* Monitoring
* Building

What are critical success factors?

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Critical success factors (CSFs):
Johnson, Scholes & Whittington:
‘Those product features that are particularly valued by a group of customers, and, therefore, where the organisation must excel to outperform the competition‘
or:
Where an organisation must perform well if it is to succeed.

What is freewheeling opportunism?

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The idea that planning can be inhibiting and that you are better grabbing opportunities as they arise.

Why do advocates of logical incrementalism think that is a better approach than more radical planning?

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Bounded rationality: we do not know (and cannot know) everything that is important to future plans so what is the point in making ambitious plans that rest on guesswork?
Additionally, managers do not have time to carefully evaluate all possible combinations of events.

What are the differences between strategic control and operational control?

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Strategic control: monitors the implementation of the organisation’s strategic plans
Operational control: monitors the use of existing resources and progress towards existing plans. Will not alter strategic direction

What is the performance hierarchy?

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The performance hierarchy:
* The organisation’s mission
* Strategic plans and objectives
* Tactical plans and objectives
* Operational plans and objectives

What is meant by logical incrementalism?

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The idea that planning is best done as a series of relatively small adjustments to past strategies rather than trying to plan radical leaps forward.

What are the three main steps in the rational planning model?

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Strategic position
Strategic choice
Implementation (or strategy into action)


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