Strategic Business Management: The Institute of Chartered Accountants in England and Wales

The Institute of Chartered Accountants in England and Wales
STRATEGIC BUSINESS
MANAGEMENT
For exams in 2019
Study Guide
www.icaew.com
Contents
1 Key resources 1
2 Permitted texts 3
3 Skills in the ACA 4
4 Study guide 8
5 Syllabus and learning outcomes 52
6 Technical knowledge grids 63
The Strategic Business Management module enables students to demonstrate quantitative and
qualitative skills, in order to make realistic business recommendations in complex scenarios.
Business awareness will need to be demonstrated at strategic, operating and transactional
levels.
To achieve this aim, students will be required to use technical knowledge and professional
judgement to apply appropriate models and to analyse quantitative and qualitative data from
multiple sources, including corporate reports, in order to evaluate alternatives and determine
appropriate solutions.
ii ICAEW 2019
1 Key resources
We provide a wide range of resources and services to help you in your studies. Here is some of
what we have to offer.
Take a look at the online resources available to you on icaew.com/examresources:
Syllabus, skills development and technical knowledge grids
This gives you the full breakdown of learning outcomes for each module, see how your skills and
technical knowledge will grow throughout the qualification.
Study guide
This guides you through your learning process, putting each chapter and topic of the Study
Manual into context and showing what learning outcomes are attached to them.
Exam webinars
The pre-recorded webinars focus on how to approach each exam, plus exam and study tips.
Past exams and mark plans
Each exam is available soon after it has been sat, with mark plans available once results have
been released. Remember that if you're accessing an exam from prior years, it may not reflect
exams for 2019. To access exam-standard questions that reflect the current syllabus, go to the
Question Bank.
Errata sheets
These are available on our website if we are made aware of a mistake within a Study Manual or
Question Bank once it has been published.
Exam software
You need to become familiar with the exam software before you take your exam. Access a
variety of resources, including exam guide, practice software, webinars and sample exams at
icaew.com/cbe
Student support team
Our dedicated student support team is here to help and advise you throughout your training,
don't hesitate to get in touch. Email [email protected] or call +44 (0)1908 248 250 to
speak to an adviser.
Vital and Economia
Vital is our quarterly ACA student magazine. Each issue of Vital is packed with interesting articles
to help you with work, study and life. Read the latest copy at icaew.com/vital.
What's more, you'll receive our monthly member magazine, Economia. Read more at
icaew.com/economia.
Online student community
The online student community is the place where you can post your questions and share your
study tips. Join the conversation at icaew.com/studentcommunity.
Tuition
The ICAEW Partner in Learning scheme recognises tuition providers who comply with our core
principles of quality course delivery. If you are receiving tuition with an ICAEW Partner in
Learning, make sure you know how and when you can contact your tutors for extra help. If you
are not receiving structured tuition and are interested in doing so, take a look at our recognised
Partner in Learning tuition providers in your area, on our website icaew.com/dashboard.
ICAEW 2019 Study Guide 1

CABA
Access free, confidential support to help you take care of your wellbeing, at work and at home.
CABA's services are available to you, and your family, face-to-face, over the phone and online.
Find out more at caba.org.uk
ICAEW Business and Finance Professional (BFP)
This exciting new designation has been developed as a form of recognition for professionals
who have gained the essential knowledge, skills and experience necessary for a successful
career in business and finance. Once you have completed the ICAEW CFAB qualification or the
Certificate Level of the ACA, you are eligible to apply towards gaining BFP status. Start your
application at icaew.com/becomeabfp.
2 Strategic Business Management ICAEW 2019

2 Permitted texts
At the Professional and Advanced Levels there are specific texts that you are permitted to take
into your exams with you. All information for these texts, the editions that are recommended for
your examinations and where to order them from, is available on icaew.com/permittedtexts.
Professional Level exams Permitted text
Audit and Assurance 
Financial Accounting and Reporting 
Tax Compliance 
Business Strategy and Technology 
Financial Management 
Business Planning No restrictions
Advanced Level exams
Corporate Reporting No restrictions

Strategic Business Management No restrictions
Case Study No restrictions
The exams which have no restrictions include the following:

 Business Planning: Banking;
 Business Planning: Insurance;
 Business Planning: Taxation;
 Corporate Reporting;
 Strategic Business Management; and
 Case Study.
This means you can take any hard copy materials into these exams that you wish, subject to
practical space restrictions.
Although the examiners use the specific editions listed to set the exam (as listed on our website),
you may use a different edition of the text at your own risk.
This information, as well as what to expect and what is and is not permitted in each exam is
available in the Instructions to Candidates. You will be sent the instructions with your exam
admission details. They can also be viewed on our website at icaew.com/exams.

3 Skills within the ACA
Professional skills are essential to accountancy and your development of them is embedded
throughout the ACA qualification.
The following shows the professional skills that you will develop in this particular module. To see
the full skills development grids, please go to icaew.com/examresources.
Assimilating and using information
Understand the situation and the requirements
 Demonstrate understanding of the business context
 Identify and understand the requirements
 Recognise new and complex ideas within a scenario
 Identify the needs of customers and clients
 Explain different stakeholder perspectives and interests
 Identify risks within a scenario
 Identify elements of uncertainty within a scenario
 Identify ethical issues including public interest and sustainability issues within a scenario
Identify and use relevant information
 Interpret information provided in various formats
 Evaluate the relevance of information provided
 Use multiple information sources
 Filter information provided to identify critical facts
Identify and prioritise key issues and stay on task
 Identify business and financial issues from a scenario
 Prioritise key issues
 Work effectively within time constraints
 Operate to a brief in a given scenario
How skills are assessed: students may be required to:
 draw conclusions in the following ways:
– from data, facts, calculations, judgments and own analysis;
– on complex assurance engagements;
– by identifying weaknesses in financial information systems and their potential
consequences;
– by distinguishing between the qualities of data provided or other evidence generated;
and
– by developing risk management solutions in an audit and corporate reporting
environment.
 present and communicate their recommendations include:
– a report/memorandum in response to a specific technical issue and in accordance with
client requirements.
– reasoned, practicable advice that is clear and concise, supported by calculations or
analysis of technical/business issues identified.
– use judgement to select the most appropriate audit procedures in the context of risks
identified.
– justify a specific recommended action when a variety of options are available.
 explain the limitations of their conclusions or recommendations.

Structuring problems and solutions
Structure data
 Structure information from various sources into suitable formats for analysis
 Identify any information gaps
 Frame questions to clarify information
 Use a range of data types and sources to inform analysis and decision making
 Structure and analyse financial and non-financial data to enhance understanding of
business issues and their underlying causes
 Present analysis in accordance with instructions and criteria
Develop solutions
 Identify and apply relevant technical knowledge and skills to analyse a specific problem
 Use structured information to identify evidence-based solutions
 Identify creative and pragmatic solutions in a business environment
 Identify opportunities to add value
 Identify and anticipate problems that may result from a decision
 Identify a range of possible solutions based on analysis
 Identify ethical dimensions of possible solutions
 Select appropriate courses of action using an ethical framework
 Identify the solution which is the best fit with acceptance criteria and objectives
 Define objectives and acceptance criteria for solutions
 Business management
– Undertake a critical assessment of key business issues.
– Structure market data and industry data from various sources.
– Explain and evaluating the strengths and weaknesses of an organisation or segments
of an organisation.
– Evaluate the impact of decisions on business strategy.
– Evaluate the impact of financial strategy on business strategy.
 Finance
– Undertake valuations, where the information is incomplete, suspect or unsuitable.
– Undertake financial risk analysis and considering the management of financial risks.
– Evaluate the impact of business strategy on financial strategy.
 Corporate reporting
– Consider relevance and reliability of unstructured information.
– Evaluate the impact and legitimacy of a range of financial reporting treatments.
– Deal with complex financial reporting information.
– Impact of future events on financial statements.
– Impact on financial statements of delaying or modifying business and financial decisions.
– Evaluate business position, prospects and risks.
 Assurance
– Understand business and inherent risks in complex scenarios.
– Evaluate the control environment.
– Undertake selective financial analysis.
– Evaluate risk and control evaluation in the context of IT.
– Undertake assurance to support specific transactions (eg, due diligence).
– Apply professional scepticism.
 Ethics
– Identify ethical problems in complex scenarios and structuring appropriate actions.

Applying judgement
Apply professional scepticism and critical thinking
 Recognise bias and varying quality in data and evidence
 Identify assumptions or faults in arguments
 Identify gaps in evidence
 Identify inconsistencies and contradictory information
 Assess interaction of information from different sources
 Exercise ethical judgement
Relate issues to the environment
 Appreciate when more expert help is required
 Identify related issues in scenarios
 Assess different stakeholder perspectives when evaluating options
 Appraise corporate responsibility and sustainability issues
 Appraise the effects of alternative future scenarios
 Appraise ethical, public interest and regulatory issues
 drawing of inferences and conclusions from prior qualitative and quantitative analysis, and
other information, in order to solve problems and developing a solution, or alternative
solutions;
 select between technical choices;
 filter data to identify critical elements;
 prioritise information, issues or tasks;
 identify omissions in the information provided;
 evaluate inconsistencies in information;
 distinguish between the various qualities of the data provided;
 evaluate the impact of business, financial and economic factors;
 evaluate the effects of future events;
 evaluate the appropriateness of accounting policy and estimation selection;
 compare the effects of a range of estimates, outcomes or financial treatments;
 exercise ethical judgement;
 identify key linkages; and
 draw appropriate conclusions from data provided to satisfy specified objectives and
assessing the materiality of errors and omissions.
Concluding, recommending and communicating
Conclusions
 Apply technical knowledge to support reasoning and conclusions
 Apply professional experience and evidence to support reasoning
 Use valid and different technical skills to formulate opinions, advice, plans, solutions,
options and reservations
Recommendations
 Present recommendations in accordance with instructions and defined criteria
 Make recommendations in situations where risks and uncertainty exist
 Formulate opinions, advice, recommendations, plans, solutions, options and reservations
based on valid evidence
 Make evidence-based recommendations which can be justified by reference to supporting
data and other information
 Develop recommendations which combine different technical skills in a practical situation

Communication
 Present a basic or routine memorandum or briefing note in writing in a clear and concise
style
 Present analysis and recommendations in accordance with instructions
 Communicate clearly to a specialist or non-specialist audience in a manner suitable for the
recipient
 Prepare the advice, report, or notes required in a clear and concise style
 draw conclusions from data, facts, calculations, judgements and own analysis;
 draw conclusions on complex assurance engagements;
 draw conclusions by identify weaknesses in financial information systems and their potential
consequences;
 draw conclusions by distinguishing between the qualities of data provided or other
evidence generated;
 draw conclusions by developing risk management solutions;
 draw conclusions by making strategic decisions; and
 draw conclusions by valuing a company or a financial instrument.
 present a report/memorandum in response to a specific technical or business issue and in
accordance with client requirements.
 present reasoned, practicable advice that is clear and concise, supported by calculations or
analysis of technical or business issues identified.
 justify a specific recommended action when a variety of options are available.

4 Study guide
4.1 Help yourself study for your ACA exams

The right approach
1 Develop the right attitude
Believe in yourself Yes, there is a lot to learn. But thousands have

succeeded before and you can too.
Remember why you're doing it You are studying for a good reason: to advance your
career.
2 Focus on the exam
Read through the Syllabus in this This tells you what you are expected to know.
guide
3 The right method
See the whole picture Keeping in mind how all the detail you need to know
fits into the whole picture will help you understand it
better.
 The Practical significance and Working context to
each chapter in the study guide put the material
in context.
 The Learning objectives and Section overviews in
the study manual show you what you need to grasp.
Use your own words To absorb the information (and to practise your written
communication skills), you need to put it into your own
words.
 Take notes.
 Answer the questions in each chapter.
 Draw mind maps.
 Try 'teaching' a subject to a colleague or friend.
Give yourself cues to jog your The Study Manual uses bold to highlight key points.
memory
 Try colour coding with a highlighter pen.
 Write key points on cards.
4 The right recap
Review, review, review Regularly reviewing a topic in summary form can fix it in
your memory. The Study Manual helps you review in
many ways.
 Each Chapter Summary will help you to recall that
study session.
 The Self-test actively tests your grasp of the
essentials.
 Go through the Examples in each chapter a
second or third time.

4.2 Study cycle
The best way to approach the Study Manual is to tackle the chapters in order. We will look in
detail at how to approach each chapter below but as a general guide, taking into account your
individual learning style, you could follow this sequence for each chapter.
Key study steps Activity
Step 1 This topic list is shown in the contents for each chapter and helps you
Topic list navigate each part of the book; each numbered topic is a numbered
section in the chapter.
Step 2 The practical significance and working context sections for each chapter,
Introduction set out in this study guide give you the big picture in terms of the context
of the chapter. The Examination context guidance shows what the
examiners are looking for and tells you why the topics covered in the
chapter need to be studied.
Step 3 Section overviews give you a quick summary of the content of each of the
Section overviews main chapter sections. They can also be used at the end of each chapter
to help you review each chapter quickly.
Step 4 Proceed methodically through each chapter, particularly focusing on areas
Explanations highlighted as significant in the chapter introduction or study guide.
Step 5 Take brief notes, if you wish. Don't copy out too much. Remember that
Note taking being able to record something yourself is a sign of being able to
understand it. Your notes can be in whatever format you find most
helpful; lists, diagrams, mind maps.
Step 6 Work through the examples very carefully as they illustrate key
Examples knowledge and techniques.
Step 7 Check yours against the suggested solutions, and make sure you
Answers understand any discrepancies.
Step 8 Review it carefully, to make sure you have grasped the significance of all
Chapter summary the important points in the chapter.
Step 9 Use the Self-test to check how much you have remembered of the topics
Self-test covered.
Step 10 Ensure you have ticked off the Learning outcomes.
Learning
outcomes
Moving on...
When you are ready to start revising, you should still refer back to the Study Manual.
 As a source of reference (you should find the index particularly helpful for this).
 As a way to review (the Section overviews, Examination context, Chapter summaries and
Self-test questions help you here).
Remember to keep careful hold of the Study Manual – you will find it invaluable in your work.
4.3 Detailed study guide

Use this schedule and your exam timetable to plan the dates on which you will complete each
study period as follows.
Revision phase – your revision should be centred around using the questions in the ICAEW
Question Bank.

Study Syllabus references and exam Due
Period Practical significance Working context Approach context Date
1 Strategic analysis An ICAEW Chartered The sequence of the first three In the examination, students may
Entities develop strategies to help Accountant working in chapters in the Strategic Business be required to:
them achieve their aims and business may be asked to Management (SBM) Study Manual  assess an entity's strategic
objectives, and to fulfil stakeholders' help operational managers reflects the three broad stages of the objectives in the light of key
expectations. These strategies are analyse the implications of rational planning model: strategic stakeholders' interests
shaped by the environmental context different strategic decisions: position; strategic choice; and
how do proposed strategies strategic action (implementation).  evaluate the impact of the
in which an entity operates, as well as
help an entity achieve its external environment on an
its own resources and competences. In Chapter 1 our focus is on an
objectives, and what impact entity's strategic position and
Before any decisions are made – be entity's strategic objectives and
could those strategies have performance
they strategic, financial or marketing analysing its strategic position; both
– the impact those decisions may on different stakeholder  evaluate the significance which
in terms of its relationship with the
have on other parts of the groups? internal factors and
external environment (opportunities
organisation must be assessed, to It is important to remember and threats) and in terms of its capabilities may have on an
ensure new initiatives are aligned that objectives can be both internal resources and capabilities entity's ability to achieve its
with existing strategies. financial and non-financial, (strengths and weaknesses). strategic objectives
Dealing with complex scenarios is a and that they can be long-  use information provided in
This chapter reviews a number of key
fact of business life. It is vital that you term as well as short-term. the scenario to analyse an
strategic analysis tools which have
become familiar with how different Equally, it is vital to appreciate already been covered at Professional entity's current position and
strategic analysis tools can be used, the relationship between Level. As such, much of the technical performance, from both a
and also that you understand the business strategies and content in this chapter should largely financial and non-financial
significance of financial strategy on financial strategies. For be revision. However, it is important perspective
business decisions. example, does an entity have that you appreciate that you will be  apply appropriate strategic
As a general point to note throughout access to sufficient funds to required to apply the tools to more analysis tools to analyse the
your SBM studies, although you are support a proposed business complex scenarios in the SBM exam scenario described in a case
not expected to be an IT specialist, expansion? than in the Business Strategy and study
you are expected to be aware of the Technology exam.
You may also have to  demonstrate the relationship
main technological developments in
consider the impact of any Section 1 provides an overview of between business strategy and
the business environment (eg, big
proposed business decisions strategic management, before financial strategic in a case
data, AI and machine learning) and
on the wider strategies of the section 2 discusses goals and study scenario
the impact these could have on a
organisation. For example, objectives. Note, however, that
business, or how a business might be  evaluate current technology
how might a decision to cut section 2 doesn't talk only strategic
able to make use of them. developments and their
production costs and staff objectives and business strategy, but

Stop and think costs affect product quality also about financial objectives and potential impact on an entity
and the product's position in financial strategy. It is important to or its strategy
How far should the external the market place? remember that business strategy Syllabus references
environment, compared to an entity's decisions should be taken in
own resources and competences, An ICAEW Chartered Specific syllabus references for
conjunction with financial ones – try
shape the entity's strategy? Accountant working in this chapter are: 1a – 1i
to keep this in mind throughout your
business may also be
How much are shareholders studies for the SBM exam.
expected to assess what the
interested in a company's historic potential financial reporting Sections 3 and 4 deal, respectively,
performance compared to its future implications of a strategic with the external environment and an
prospects? decision could be. entity's internal resources and
capabilities. These sections include a
Finally, the issue of providing
number of key strategic models, so
assurance over non-financial
make you are familiar with them, and
information is becoming
also work through the related
increasingly important. In
Interactive Questions.
order for the increasing
amounts of non-financial Section 5 again contains a number of
narrative information in key models, culminating with 'SWOT
annual reports to be valuable analysis' which helps to summarise an
to readers of those reports, entity's strategic position by drawing
they need to know it is together the results of internal and
reliable. Therefore, in external analysis. Make sure you
addition to the statutory audit understand the models and how they
of a company's financial can be applied to scenarios and case
statements, accountants may studies.
also be asked by a company
Also, note, towards the end of
to provide assurance reports
section 5 (in 'Corporate reporting
to add creditability to the
and Management Commentary') we
non-financial information in its
highlight the links between an entity's
annual report.
strategy and performance, and the
financial information published in its
financial statements.

This is another important point to

keep in mind during your SBM
studies: strategic decisions will
ultimately have an impact on an
entity's financial results as presented
in its financial statements.
The chapter finishes by discussing a
range of current technology
developments. However, it is
important to remember that SBM is a
business exam, not an IT exam, so a
key point here is thinking about the
potential impact or application of
these developments in a business
context, rather than focusing too
much on the 'technology' for its own
sake.
Self-test questions
The Self-test questions at the end of
each chapter test your application of
some of the key models and
techniques covered in that chapter.
These questions provide a stepping
stone to the complex scenario
questions which you will face in the
SBM exam, so it is important that you
work through the Self-test questions
at the end of each chapter.

2 Strategic choice In a working environment, In Chapter 1 of the Study Manual, we In the examination, students may
you may be faced with focused primarily on analysing an be required to:
An entity's ability to achieve its goals
evaluating business cases to entity's objectives and strategic  assess the appropriateness of
and objectives will be influenced by
develop new products or position. In Chapter 2 we now look at different business strategies
the strategic choices it makes – what
enter new markets. As you the strategic choices entities have to for achieving strategic
products or services to sell; where to make in order to achieve their
progress in your career, you objectives, and recommend
sell them; how to achieve objectives.
may also be involved in appropriate strategies
competitive advantage against rivals;
proposals relating to an Again, the technical content of key
or how to achieve growth.  evaluate the extent to which
acquisition, or establishing a models such as Porter's generic
strategies, including digital
Growth and expansion can often strategic alliance. strategies and Ansoff's
strategies, can help an entity
involve an international element, and product/market matrix should
You could be asked to achieve sustainable
such expansion also involves a already be familiar to you from your
analyse the quantitative competitive advantage
number of key decisions: should a studies of Business Strategy and
elements of investment Technology. However, at Advanced  explain the possible strategies
business export to customers in
decisions; for example their Level you should be prepared to for international growth or
foreign countries, or should it
potential returns and the apply them to more complex expansion an entity could
establish operations in a foreign
feasibility of undertaking scenarios, in order to evaluate the choose
country? If so, which country? And
them. appropriateness of different
should it look to expand alone or  appraise an entity's plans for
strategies for an entity.
through some kind of alliance with a Alternatively, you could be international expansion, and
local partner? involved with the due Chapter 2 starts with a summary of consider the potential impact
diligence work relating to an three key aspects of strategic of those plans on the entity's
As with any business decision, the decisions: how to compete, where to
acquisition or joint venture value chain and its financial
potential rewards from international compete, and how to achieve
deal. statements
expansion also need to be growth. The answers to these
considered alongside the risks As we noted in Study Period questions underpin many of the  identify key factors that a
involved in it. 1, an ICAEW Chartered strategic decisions entities make. business needs to consider
Accountant should also be when choosing between
Another increasingly important Section 2 looks at each of these three
aware of the potential impact potential strategies
consideration for modern businesses key aspects in more detail. As you
that an entity's strategic work through the section, try to think  analyse financial and non-
is how digital strategies could help
choices and decisions could of real life examples of the way financial data, including big
them grow. It is important that
have on its financial companies have addressed the data, in order to select an
organisations can identify the
statements. For example, questions of how to compete, where optimal business strategy
potential opportunities that 'digital'
what impact might a decision to compete and how to achieve
affords them, but also to be aware
to compete as a cost leader growth.

that digital disruption could lead to be expected to have on costs The different methods of growth (eg, Syllabus references
new competitors emerging, and the and margins within the entity? organic, acquisition, joint venture,
resulting impact this could have on Or what will be the franchise) should already be familiar Specific syllabus references for
industry structures. implications for an entity's to you from Business Strategy and this chapter are: 2a – 2f
financial reporting if it Technology, but note that in SBM you
Stop and think decides to expand by making may be required to consider the
What factors determine whether a an acquisition as opposed to financial reporting and assurance
strategy is appropriate for an entity? entering into a joint venture implications of different methods of
agreement. expansion alongside the strategic
What are the potential benefits and choices themselves.
risks from entering new Similarly, an ICAEW
(international) markets? Chartered Accountant Sections 3 and 4 highlight the criteria
working for an entity which is and techniques which can be used
To what extent does 'digitisation' looking to expand for evaluating strategic decisions.
present an opportunity or a threat to internationally might be Attempt the Interactive Question at
companies? expected to consider the the end of section 3. Also, note the
potential impact of the potential importance of assurance
difference in the accounting (section 4.3). If a company doesn't
treatment of foreign have reliable information about a
exchange rates, depending potential acquisition target, how can
on whether the organisation it make an informed decision about
exports its goods and services whether or not to make the
or whether it establishes an acquisition?
operation in a foreign The amount of data available to
country. businesses is much greater now than
Assurance could be ever before – particularly in relation
particularly important when to big data (section 4.4). It is
an entity is considering a joint important to think about the business
venture or strategic alliance. implications of big data though: how
Otherwise, how can the entity can organisations use this data to
be confident about its help shape their strategies or – at a
potential partners' ability to lower level – how can they use it to
provide the services they are inform tactical and operational
decisions?
responsible for?

Section 5 considers the issues

relating to international expansion
and globalisation: the reasons for
expanding internationally; the ways
of doing so; the potential risks
involved; and the financial reporting
implications. (Also note the potential
links to issues around global vs local
marketing, which are covered in
Chapter 5.)
Section 6 looks at another potential
way for organisations to develop new
capabilities – through the application
of digital strategies. However,
remember that as well as providing
opportunities to interact with
customers in new ways, or to offer
new products, 'digitisation' can also
present a threat to the existing
companies and industries – for
example, by enabling new entrants to
disrupt existing markets.
As with the 'technological
developments' in Chapter 1, when
thinking about digitisation, and
applications such as AI and machine
learning, your focus for the SBM
exam shouldn’t be primarily on the
detail of the technologies
themselves, but the impact
technology and digitisation could
have on organisations and their
business strategies.

Make sure you complete all the

Interactive Questions as you are
working through the chapter, and
then try the Self-test questions at the
end.
Although the Self-test questions
focus only on topics covered in
Chapter 2, they are an important
stepping stone in preparing you for
the complex scenario-based
questions you will face in the SBM
exam.

3 Strategic implementation Whilst acquisitions and Following on from Chapter 2 (which In the examination, students may
mergers can often seem looked at the issues involved in be required to:
Although it is vital that entities
desirable (particularly to the choosing a strategy), Chapter 3 looks  assess the impact of an
choose strategies which are
entity making the acquisition), at the issues involved in acquisition or strategic
appropriate for them, those
in practice around 70% of implementing that chosen strategy. alliance in helping an entity
strategies will ultimately only benefit
the entities if they are implemented acquisitions prove Section 1 addresses the issues implement its corporate
successfully. In this respect, the unsuccessful. involved with acquisitions and strategy
success of a strategy can be affected strategic alliances. It is important that
Companies need to select  demonstrate the importance
by its 'fit' with the structure and you appreciate the advantages and
their acquisitions carefully. of assurance procedures in an
culture of an entity, and the entity's disadvantages of acquisitions or
You may be asked to assist acquisition or strategic
ability to manage change. (Issues of strategic alliances as methods of
with the valuation of a alliance
culture and 'fit' are often seen as growth, compared to organic growth.
potential acquisition, or with
reasons why acquisitions prove Section 2 looks at the relationship  evaluate the relationship
elements of the due diligence
unsuccessful.) between business strategy and between business strategy
work related to that
organisational structure. A key point and organisational structure in
Overall, strategic (corporate) success acquisition.
for any organisation will be the extent an entity
also depends on the success of the
In a working environment you to which its structure helps it achieve
functional strategies of business units  explain possible methods of
may also be faced with its strategy, or to which its strategy is
within an entity: marketing; managing change and advise
making decisions about how suitable for its structure.
production; research and on appropriate ways for
to help an organisation For many entities, strategy
development; HRM, IT/IS, and managing change, and
reduce costs, or improve its implementation also involves change
finance. overcoming barriers to
working capital management. management, which is the focus of
Although not all strategies are driven change, in a given scenario
Analysis of issues relating to section 3. You should already be
by cost reduction, cost reduction has supply chain management familiar with some of the key change  explain techniques which
become an increasingly important and operations management management models from your could be used to help an
issue for many entities. However, could be important here. Business Strategy and Technology entity reduce costs, and
entities have to balance their desire studies; but you will expected to be demonstrate how they could
to reduce costs with the need to Equally, decisions about
able to apply them to more complex be applied in the context of
sustain product and service quality. whether to retain certain
scenarios in the SBM exam. Note the the case study scenario
The relationship between cost services 'in-house' or whether link from section 3.7 back to Chapter
reduction and sustaining the value- to outsource them could also  evaluate the functional
2 – the potential issues which may
adding activities which contribute to be relevant. However, strategies which are necessary
need to be addressed in order to
long term corporate value is crucial decisions should not successfully implement a digital in a given scenario to achieve
to longer-term strategic success. necessarily be made purely strategy. a business's overall strategy

Stop and think on grounds of cost. For Section 4 discusses cost reduction  develop a business plan or
example, what impact might strategies. However, as the focus on proposal, or advise on the
To what extent can resistance to the decision to outsource supply chain management highlights, issues an entity might face
change affect the successful certain services have on the satisfying customers' requirements is when developing business or
implementation of a strategy? quality of service which an a critical element of strategic success, organisational plans
entity's customers receive? and so organisations need to reduce
How should a business decide which  assess potential cyber security
costs in a way which does not
activities to outsource and which to Once again, assurance could issues arising in the supply
compromise the value they provide
retain in house? also be of importance here, chain and from sharing data
to their customers.
with professional accountants between organisations
Although section 4 is long, it is
being asked to report on the
important, so make sure you read it Syllabus references
suitability and effectiveness of
fully. Supply chain management,
the controls in place at a business process re-engineering, and Specific syllabus references for
potential supplier. outsourcing are all important topic this chapter are 3a – 3h
areas.
Also, do not overlook the sections on
assurance in 4.17. If an entity is
concerned about control weaknesses
at a potential supplier or an
outsource partner, this could
persuade the entity not to use that
supplier/partner, even if it might
appear suitable in other respects.
This is particularly important in
relation to cyber security (section
4.18). The increasing importance of
digital infrastructure in modern
businesses means that cyber security
needs to be upheld throughout the
supply chain. Security weaknesses in
one company in a supply chain could
potentially be a threat to the security
of all the entities in that chain.

Section 5 – Operations strategy and

management – is another important
section, and these topics are covered
in much greater detail here than they
were in Business Strategy and
Technology. An entity's operations,
and the way they are managed, are
crucial in enabling it to implement its
strategies successfully to achieve a
competitive advantage. The
weighting given to this section
reflects this importance.
An entity's ability to implement a
strategy successfully also depends on
how realistic and feasible the strategy
is to start with. Section 7 highlights
this point in relation to critiquing
business plans; particularly in relation
to assurance over prospective
financial information. This could also
be an issue in the context of your
SBM exam. If an organisation has
presented a business plan (or some
other kind of forecast) how realistic
are the assumptions underlying the
plan?
As with the previous chapters, the
Self-test questions at the end of
Chapter 3 are an important part of
the chapter, so make sure you
attempt them before moving on to
Chapter 4.

4 Strategic performance management In a working environment, If the first three Study Periods reflect In the examination, students may
In order for an entity to assess how management accountants will the 'Position – Choice – Action' be required to:
well it is performing, and whether it is play a key role in measuring sequence of the rational planning  develop appropriate ways to
achieving its goals or not, some kind and analysing how well their model, then this fourth period measure the performance of
of measurement is required. organisations are performing. reflects the 'Review and Control' businesses or business units,
element of the model. including data analytics, and
Traditionally, performance Accountants are likely to be
involved with preparing Once an entity has chosen and advise how an entity’s
measurement has had a strongly
budgets, and then analysing implemented its strategies, it still performance could be
financial focus (for example,
actual performance needs to monitor the impact those improved
comparing actual performance vs.
budget) but organisations have compared to budget. strategies are having on its  analyse quantitative and
increasingly recognised the performance, and how well it is qualitative data from multiple
By contrast to 'traditional'
importance of non-financial factors performing overall. That is the focus sources to provide strategic
management accounting
(such as product/service quality, of this Study period – performance management accounting
(which has a historical,
and customer satisfaction). Similarly, measurement and performance information which could be
internal, financial focus),
stakeholders are interested in management. used to help an entity create
strategic management
non-financial aspects of performance accounting is forward-looking It is important that you appreciate competitive advantage
(for example, in relation to and also includes an external that performance management  use financial and non-financial
sustainability and social responsibility) and non-financial focus. For doesn't relate solely to short-term, data from the case study
as well as financial aspects. example, an accountant could financial performance. The contrast scenario to measure multiple
When designing measurement be asked to analyse between traditional budgeting and aspects of performance at
systems it is important to remember competitor performance or 'Beyond Budgeting' in section 1 different organisational levels
the impact that the choice of market growth and market highlights the change in approach in
 evaluate performance-based
performance measures themselves share, and how this could this respect.
remuneration and reward
can have on performance. For affect a firm's own Section 2 highlights two key points:
packages for staff and
example, performance measures performance. (1) performance information is vital executives
based around short-term profit may for decision-making and control;
You may be asked to analyse
encourage strategies and behaviour and  consider the impact of
performance data from a
which are not sustainable in the proposed remuneration and
range of different sources (for (2) performance information is
longer term. reward packages on an
example, to benchmark an required at different levels
Performance measurement and entity's corporate reports
organisation's performance across an organisation.
performance management are not against competitors).  evaluate an organisation's
the same thing, however. Once performance in the context of

performance has been measured Equally, however, you may be As section 2.7 highlights, social responsibility,
(measurement), and any areas of asked to advise on the organisations now have access to sustainability, environmental
underperformance have been performance measures or more data than ever more, and can matters and natural capital, as
identified, improvement strategies indicators an organisation analyse it in more detail. This is well as traditional short-term
need to be developed could use to help it manage important because it should help financial matters
(management). its own performance. managers make better decisions.
The reference to strategic Syllabus references
Stop and think In this context, it could also be
important to consider the management accounting in section 2 Specific syllabus references for
How should an entity decide which assurance over the is also important. External this chapter are: 4a – 4e
aspects of its performance to performance indicators. Can information, and non-financial
measure? readers of an annual report information – which are key aspects
be confident that non-financial of strategic management accounting
Why is 'sustainability' an important – are likely to be valuable in making
issue when evaluating performance? KPIs are calculated reliably,
and consistently, across strategic business decisions.
different periods, and provide Section 3 looks at performance
a fair reflection of an entity's measures, and reiterates the
performance? An accountant importance of using non-financial
could also be asked to measures as well as financial ones in
provide assurance over the order to understand an entity's
KPI figures being used in an performance. In this respect, the
organisation, or over other Balanced Scorecard can be a useful
measures of performance model to use when selecting
included within published performance measures. Section 5
reports. also highlights the importance of
non-financial aspects of performance
in relation to social responsibility and
environmental matters.
The need to look at long-term (as
well as short-term) performance, and
non-financial (as well as financial)
performance is one of the main
drivers behind integrated reporting,
which we also look at in section 5.

Social responsibility and

sustainability, more generally, are
both important themes in the SBM
syllabus, for example in relation to
the UN’s Sustainable Development
Goals, and we look at them again in
Chapter 11 of the Study Manual.
Section 4 of Chapter 4 highlights the
importance of managing staff
performance, and looks at the impact
which reward and remuneration
structures could have on
performance. In this context, it is
important to think not only about the
behavioural impact of reward
structures, but also the potential
corporate reporting implications
which might arise from them.
Question practice
Work though all the interactive and
self-test questions in the chapter, and
be prepared to apply the topics
covered in this chapter to complex
scenarios in an exam question.

5 Strategic marketing and brand Price is one of the key Although marketing is an important In the examination, students may
management elements of the marketing function in its own right, section 1 of be required to:
The two key orientations of mix, and an ICAEW Chartered this chapter highlights the close links  assess the strategic marketing
marketing (products and consumers) Accountant working in between marketing strategy and issues highlighted in a case
are also the sources of revenue for an business may be asked for corporate strategy. study scenario or apply
entity. As such, effective marketing advice in relation to pricing a marketing techniques to the
Sections 2 and 3 continue this idea:
can have a significant impact on product or service, or in scenario
highlighting the parallels between
strategic and financial success. relation to the potential
developing marketing strategies and  analyse an entity's markets
Equally, an entity's revenue can be consequences of changes in
choosing a corporate strategy. The and marketing environment,
seen as the overall return from all the price.
concepts of segmentation, targeting and develop a marketing
different elements of its marketing As well as boosting revenues, and positioning are particularly strategy which is consistent
mix. marketing techniques (such important in a marketing context. You with its overall business
as discounts and promotions) should already be familiar with these strategy
To be successful, entities must satisfy
can also have an impact on concepts from your Business Strategy
their customers better than their  explain how to position
how those revenues are and Technology studies, although
rivals do, and must respond to products or services in the
recognised in the financial you should expect to have to apply
market opportunities more effectively market place to maximise
statements, and you should them to more complex scenarios in
than their rivals. The aim of marketing competitive advantage levels
be prepared to explain this SBM.
strategy, like business strategy, is to
impact.  demonstrate how elements of
generate competitive advantage for The issues covered in section 3.3 and
an entity over its rivals. Whilst the task of valuing a section 3.4 (around pricing, revenue the marketing mix can be used
brand is a specialist task and revenue recognition) are not to promote competitive
In an increasingly competitive advantage
(which should be undertaken ones which were covered in Business
marketplace, brands play an
by an expert) you might Strategy and Technology so make
important part in an entity's strategy –  explain the importance of
nevertheless be expected to sure you read these sections
for example, by helping to information technology
advise on the treatment and carefully. Moreover, these sections
differentiate a product from its applications (including
reporting of brands and other also highlight the importance of
competitors. However, brand issues databases, big data, social
intangible assets in relation to thinking what the impact of different
could also be relevant when media and other internet
an acquisition. Alternatively, strategic or tactical decisions might
considering an acquisition – both in sources) for marketing
you could be involved in be from a financial reporting
terms of the value of any brands strategies
commercial due diligence perspective.
being acquired, and also how well work relating to the  explain strategies for
those brands fit with a company's acquisition of brands and managing and sustaining
existing brands. intangible assets. brands, and show how

Stop and think The marketing mix (section 4) is marketing strategies can be
another key marketing model, which used to develop brands
To what extent does the marketing
you should be familiar with from  demonstrate how brands and
department determine a product or
Business Strategy and Technology, other intangible assets can be
service's position in the marketplace,
and in SBM you should be prepared valued, and evaluate the way
and to what extent is that position
to analyse how organisations can use they are measured and
determined by the full range of
the different elements of the mix to reported in an entity's financial
operations in an organisation (eg,
help generate or sustain competitive statements
production, supply chain, IT, finance,
advantage. Note also, the issues
HRM)?
related to service marketing (section Syllabus references
How have the internet and social 4.2), marketing in international
Specific syllabus references for
media affected companies' marketing (section 4.4), and the
this chapter are: 5a – 5h
marketing strategies? considerable impact that the internet
What are the benefits of having a has had on the marketing mix
strong brand? (section 4.5).
As with a number of the concepts in
this chapter, you should already be
familiar with the concept of
relationship marketing from the
Business Strategy and Technology
syllabus. Section 5 builds on this
assumed knowledge and examines
how databases, digital marketing,
Web 2.0 technologies and social
media can play a key role in
relationship marketing and customer
relationship management. Big data
(and big data analytics) could also be
an important source of information
about customers and customer
behaviour, which an organisation
could make use of in its marketing
activities. Interactive question 3 looks
specifically at this point.

Sections 6–8 focus primarily on

brands. Make sure you understand
the strategic importance of brands
and how entities can develop brands,
as well as issues relating to the
valuation of brands and other
intangible assets. Once again, this is
another area where the financial
reporting implications of a strategic
decision could be important: for
example, if an entity has decided to
make an acquisition, what brands or
intangible assets might be acquired
as part of the deal, how should they
be valued, and how should they be
reporting in the financial statements
of the company acquiring them?
(Self-test question 4 covers this
point.)

6 Corporate governance As you develop your career, Section 1 sets the scene for this In the examination, students may
Prompted by concerns and scandals you will see the impact of chapter and shows what has be required to:
in the early 1990s, corporate corporate governance influenced the development of best  analyse the responsibilities
governance guidance has developed decisions and structures at practice. Note the various and performance of board
considerably over the last two first hand. Being involved as a mechanisms that make up an members and board
decades. However, many corporate senior manager, or dealing organisation's corporate governance committees
governance debates remain with senior management at structure.
clients, will give you  assess the strengths and
ongoing, particularly as to whether Section 2 deals with all those who weaknesses of corporate
guidance should take the form of a understanding of how best
have a stake in corporate governance governance arrangements in
rules-based or principles-based practice translates into real
and whose views must be taken into an organisation
approach. Some areas, for example world arrangements.
account. The 'comply or explain'
board diversity, have been seen as If you have any involvement in requirement is an important one that  advise management on steps
increasingly important in the last few a managing committee, some has been adopted widely. it can take to ensure
years. aspects of governance compliance with corporate
Spend most time on section 3, as the governance best practice
The auditor's role in corporate guidance on boards will
role of the board is central to how
governance was an important aspect certainly be relevant.  discuss how corporate
well the organisation is governed.
of the Cadbury report in the 1990s. Undertaking a management Section 4 can be covered more governance arrangements
Other reports have emphasised the role also gives you briefly – try to link it in with what you impact upon shareholders and
need for auditor independence or responsibility for have studied in business strategy. other stakeholders and may
focused on areas of concern to the understanding the laws that You need the general awareness of be affected by shareholder
auditors, for example the Smith affect the organisation and UK legislation that section 5 provides. and stakeholder concerns
report on audit committees. accountability for ensuring
Attempt the Self-test and Interactive Syllabus references
Corporate governance needs to be compliance.
questions to test your ability to
seen in wider contexts, both analyse how corporate governance is
this chapter are: 7a – 7e,
internally in its relation with how operating and make appropriate
7g – 7i
organisations are structured, and recommendations.
externally, as operating in an
environment where the legal
demands on business are weighty.
The UK Corporate Governance Code
2016 sets standards of good practice
in relation to board leadership and

effectiveness, remuneration,
accountability, and relations with
shareholders. A new version of the
Code was released in 2018, which
puts the relationships between
companies, shareholders and
stakeholders at the heart of
long-term sustainable growth.
Stop and think
How many of the provisions in

corporate governance guidance such
as the UK Corporate Governance
Code apply mainly to large listed
companies, and how many apply to
all companies?
What aspects of diversity are most
important for a board?

7 Business risk management Most working environments Chapter 7 starts with a review of the In the examination, students may
Risk is one of the penalties entities now have some form of risk main risks organisations face. Pay be required to:
pay for being in business. Every management system. You close attention to case studies in the  evaluate specific risks that
organisation – be it a multinational may be required to carry out chapter as they show how risk organisations face
company or a small sole trader – tests of such systems or to management has been applied (or
advise on how these systems not applied) in practice.  discuss the impact on risks
faces risk every day. In a world where faced as a result of major
risk and its effects on corporate could be improved. You may
Section 2 looks at the important area changes in the business
objectives are viewed with increasing even be involved in the
of enterprise risk management. This environment
concern, entities need to have an design of a risk management
provides a template that you can use
effective risk management system from scratch within  discuss the risks arising from
to discuss the effectiveness of an
programme in place to alleviate your own organisation. major strategic decisions
organisation's overall risk
some of the more serious effects. You will also have management framework.  discuss threats to reputation
Although millions of pounds can be responsibilities as an arising from adverse events in
Sections 3 and 4 cover important
spent on such programmes, this employee to contribute to the organisation, or from poor
people issues. You should focus
money may be wasted if the proper effective risk management in attitude to ethics or corporate
particularly on the responsibilities of
groundwork is not done. It is the workplace. Examples social responsibility
senior managers and risk specialists,
essential to understand the include fulfilling health and
who have most influence on how  analyse the strengths and
processes that make up a risk safety requirements and
effectively an organisation manages weaknesses of the framework
management system for such a undertaking anti-bribery
its risks. an organisation has in place to
system to assist in the fulfilment of training.
corporate objectives. Sections 5 and 6 explore the different manage risks
stages of the risk analysis and  recommend ways in which
Stop and think
management process. specific risks can be managed
How difficult is it for directors to Once you have completed all the  discuss the responsibilities of
assess their risk appetite? Interactive questions, try the Self-test directors and staff for
On what bases should a business questions at the end of the chapter. managing risks
decide which risks to avoid and
which risks to reduce? Syllabus references

8 Data analysis Extracting and analysing data Make sure you read the 'Examination In the examination, students may
Analysing data is vital for from management context and syllabus links' section at be required to:
understanding how well an entity is information systems could be the start of the chapter, before  undertake appropriate
performing. An entity's financial a key part of an accountant in moving on to any of the individual quantitative and qualitative
statements offer a vital source of business's role. sections. You should already be data analysis, business analysis
information about its performance. familiar with the data analysis skills and financial statement
Accountants assist the
covered here. The challenge at analysis
Internal information (such as management team in
Advanced Level will be applying
management accounts) is equally controlling a business by  analyse financial and
them to a complex scenario in order
important; particularly if it includes a analysing performance data; operational data and other
to generate meaningful analysis. management information as a
balance of non-financial performance for example, through variance
indicators as well as financial ones. analysis, ratio analysis, cost Section 1 starts by looking at the data basis for evaluating a
analysis or process efficiency analysis skills you could be expected business's current position
In any organisation, managers need
analysis. to demonstrate in the SBM exam. and future prospects
information for control and decision-
making purposes. However, in order Note in particular the need to  communicate an explanation
However, as well as analysing
to get that information, the underlying question the quality and reliability of of a business's current
internally-focused, historical
data has to be analysed in order to any data you are given (sections 1.2 position and future prospects
data, you could be involved in
identify key patterns and trends. Data and 1.3). The issues of additional based on the analysis of
more strategic management
analytics can be a valuable tool for information requirements and financial and operational data
accountancy. For example,
identifying trends in data. gaining assurance over information and other information
assessing market growth or
are addressed in more detail in available, including 'big data',
Equally, the underlying data has to market share; and working on
section 7. artificial intelligence and
be complete and accurate, in order forecasts.
machine learning
for it to be valuable as a basis for Section 2 highlights the different
Accountants should also  assess the completeness,
decision-making and control. types of data and reports (strategic,
expect to assist the accuracy and credibility of the
financial and operational) you could
management team by data and management
Stop and think be expected to analyse, and sections
providing analysis for information available
3–5 then look at ways of analysing
The capacity of organisations to investment decisions and
each type of data in turn.  communicate any reservations
gather, store and analyse data has other strategic decisions.
they have about the
increased significantly in recent Allow yourself time to work through
transparency and objectivity of
years, and many organisations now all of the examples and Interactive
data and information
spend considerable sums of money questions in sections 3–5.
managing the information they  Assess the extent to which
gather from suppliers and customers. assurance engagements can

But how valuable is this data unless it The volume and detail of data identify and mitigate
is incorporated into an organisation's available to organisations is information risks
decision-making? increasing ever more rapidly, and the Syllabus references
concept of 'big data' (section 6)
Does good data guarantee good Specific syllabus references for
reflects this, in conjunction with AI
decisions? this chapter are: 8a – 8d
and machine learning. The ability to
An article in the Harvard Business analyse increasingly large data sets,
Review (2012) provided a stark and to uncover previously hidden
warning: "At this very moment, trends could enable organisations to
there's an odds-on chance that make decisions which are better
someone in your organisation is informed, and could also be a source
making a poor decision on the basis of competitive advantage (for
of information that was enormously example, through having a superior
expensive to collect." understanding of customer needs
and behaviours).
However, make sure you appreciate
the challenges which big data could
present for organisations, as well as
the value and opportunities it could
provide.
The syllabus specification grid
suggests that assurance could be
worth up to 10% the marks in the
SBM exam. Although we cover
assurance in other chapters in
relation to specific issues, section 7 of
this chapter covers the core material
about assurance engagements, so
make sure you read this section
carefully.
Section 8 is also a very important
section, so take time to work through

it carefully as well. Although you
should be familiar with the 'What –
How – Why – When – So what'
approach from your previous studies,
evidence from past exams suggests
that students do not apply the model
effectively when analysing data, and
as a result there is a lack of
meaningful analysis in their answers.
In this respect, answering the
Interactive questions and Self-test
questions in this chapter is
particularly important.

9 Information strategy Many accountants working in Although Chapter 9 refers to a In the examination, students may
business will be responsible number of different information be required to:
As we highlighted in the previous
for producing management systems, it is important to remember  advise management about the
study period, managers need
information in order to make accounts for their entity. To that SBM is a business management use of information technology
decisions and to evaluate do this, they are likely to be paper, not primarily an IT paper. You applications (including
performance. However, the reliant on the entity's do not need to know the details of a artificial intelligence, digital
availability and quality of this information systems to range of different information assets and cloud computing)
information depends, at least in part, provide them with the systems; but rather you need to to support an organisation's
on an entity's information systems. information they need (for appreciate how systems and business strategy
example, by recording and information could be used to  use a variety of management
The scope of information contained
collating the detailed sales measure and manage performance in accounting information and
in information systems extends far
transactions recorded by the an entity, and how they could management accounting tools
beyond internal, financial
tills in a supermarket). support a business strategy. Equally, to evaluate aspects of an
information. For example, businesses
you need to appreciate the organisation's strategy or its
are holding increasing amounts of Equally, however, an
importance of information systems in performance
data about their customers, which accountant needs to be able
modern businesses (and, for
can be used in customer relationship to rely on the information  assess how management
example, the impact which system information systems can be
management. Equally, businesses are produced by operating
problems can have on a business’s used to analyse market and
increasingly making use of external systems as being complete
operations). industry performance,
information. (For example, and accurate. For example, a
supermarkets use information from management accountant in a Managers need information in order including 'big data', as well as
weather forecasts to predict order multi-site retail business to make effective decisions; and an entity's own internal
quantities for seasonal goods.) cannot produce an accurate managers at different levels within an performance
More generally, the information an monthly summary if the organisation need different  assess the quality of the data
entity holds (particularly about results from some of the information (for example, strategic vs and information produced by
customer requirements and about its shops are missing. operational level). As such, the an organisation's
supply chain) could play an important information systems and information management information
In relation to information
role in helping that entity develop technology which provides that systems, and the possible risks
systems, accountants may associated with using it
competitive advantage over its rivals. information are crucial to the
need to work with IT staff and
Information technology has also had decision-making and control  assess the threats to an
developers to ensure that the
a more strategic impact on entity's framework within organisations. organisation's information
systems produce the
business strategies – in particular, system (including cyber
information and reports which Section 1 looks at IS and IT from a
through the development of threats) and the organisation's
are required in order to strategic perspective; for example,
e-business and e-commerce. response to them

Stop and think report on performance and how could they shape corporate  assess the value which an
manage the business strategy or deliver competitive organisation could gain from
In your own job, how dependent are effectively. advantage, and – more generally – having better information and
you on information systems in order how the emergence of digital information systems
for you to be able to work effectively? technologies (digital transformation)
(What are the potential risks or  explain how capturing,
is re-shaping business models. In this analysing and using
dangers of being reliant on systems respect, it is also important to information could help an
in order to do your work effectively?) recognise the importance of organisation develop
What is the relative importance of developments in IT systems and competitive advantage
'information' compared to 'systems' infrastructure – such as the growth of
and 'technology' in IS and IT? cloud computing (section 1.6) – in Syllabus references
enabling strategic changes. How
might cloud computing be useful to
an organisation? How might cloud
computing fit with an organisation’s
strategy (for example, to expand
internationally?) But also, what are
the potential risks of cloud
computing, and what assurance can
be obtained in relation to them?
Section 2 looks at the importance of
information for planning and control.
Much of the material about costs,
prices, variances etc in this section
should be revision, in which case you
can skim through it relatively quickly.
But remember you may need to
apply management accounting tools
and techniques when analysing the
data in a case study scenario.
Section 3 looks at the different types
of management information systems
which could be used in an entity.

However, remember your focus
should be on the information which
the systems can provide for
management, rather than on the
technical details of the systems
themselves.
Section 4 (about the value of
information) is relatively short and self-
contained, but section 5 is much more
extensive. The SBM syllabus refers
specifically to issues surrounding the
completeness, accuracy and
credibility of data and information, so
section 5 which deals with these issues
is important. Assurance over
information and information systems
(section 5.5) is another important area,
and one which is becoming
increasingly important in the context
of cyber security (section 6). As digital
technology becomes more important
to an entity's operations, so the need
to ensure the security of an entity's
systems, networks and data also
becomes more important.
We have already discussed cyber
security in the context of supply chains
in Chapter 3, but in this section we
look in more detail at the measures
organisations can take to protect
themselves against cyber risks. When
thinking about cyber security, a useful
approach might be to consider three

broad aspects: What are the causes of
cyber risks? What are the
consequences of cyber attack? What
can organisations do to protect
themselves against the risks (and how
effectively are they doing this)?
Section 7 returns to a similar
perspective to that of section 1, and
examines the ways information can
be used to develop competitive
advantage. This is another important
section, not least because of the ways
'information' links to other elements
of the syllabus we have already
covered; for example, CRM, supply
chain management, and big data.
Work through all of the Interactive
Questions and Self-Test Questions to
ensure that you have grasped the
main points in the chapter.

10 Human resource management Accountants in business can The opening paragraphs of Chapter In the examination, students may
expect to work closely with 10 highlight the importance of HRM be required to:
Successful strategy implementation
HR managers when in strategy implementation, and by  assess the role which human
requires the effective recruitment,
producing budgets and doing so they also provide the resource management could
training and organisation of people,
strategic plans – for example, context for this chapter of the Study play in enabling an
coupled with effective leadership
employee numbers, skills mix, Manual: an entity's staff, and the way organisation to implement a
and performance management.
and budgeted salaries. There they are organised and managed, strategy successfully, and
The strategic importance of staff are also likely to be can play an important role key role in advise the organisation about
should be clear from the number of subsequent meetings enabling it to implement its strategy this
entities who refer to their staff as their between accountants and HR successfully.
key assets. As with any other assets  demonstrate how human
managers to discuss actual Sections 1 and 2 of the chapter are
or resources, an entity needs to resource management can
performance compared to closely linked and so should be read
ensure the quality and quantity of its contribute to an organisation's
budget. together if possible.
staff are appropriate to the strategies corporate strategy, including
Management accountants Section 1 looks at what HRM is and in relation to flexible
it is pursuing. For example, if an
could also expect to liaise what its aims are; then section 2 looks workforce management
entity wants to differentiate itself
with HR managers in relation at the impact HRM has on business
from its competitors on the basis of  assess the impact which
to performance-related bonus strategy. A key point to note here is
quality, then it is likely to need highly remuneration structures are
schemes; for example, that an entity's HRM strategy needs
skilled and highly trained staff, and its having on organisational
discussing financial and to be aligned with, and to support,
reward and remuneration packages behaviour
non-financial performance the entity's overall corporate
need to be attractive to those staff.  identify the potential
measures with the HR strategy. Equally, it is important to
Equally, if an entity is looking to manager, and then think how the structure of an corporate reporting
reduce costs, it might look to interpreting results from the organisation’s workforce could consequences of the
outsource certain functions, or bonus scheme (ie, the level of influence its performance – and this is remuneration structures in an
relocate them (possibly bonuses payable). one of the key considerations in organisation
internationally). Such changes could relation to workforce flexibility  explain the importance of
Disclosures about
have significant HRM implications. (section 2.8). human resource management
remuneration (particularly
HRM issues are also an important You can go through the material in the context of change
executive remuneration) are
factor to consider in relation to about appraisals in section 3.1 management
becoming increasingly
potential acquisition or merger. important in a company's relatively quickly. However, the issues
Syllabus references
Neglecting the HRM aspects of financial statements, and a around performance targets and
mergers is often a major reason why company's accountant will behaviour (section 3.4) are important. Specific syllabus references for
this chapter are: 10a – 10d

they fail. Equally, if an acquisition need to ensure that this They also link into section 4, where
target has a significant deficit on its information is reported one of the key themes is the impact
pension scheme, this could affect the correctly in the financial which remuneration structures have
value of the target company, and statements. on organisational behaviour. The
possibly even its desirability as an idea that behaviour and performance
acquisition. are influenced by the targets set and
the aspects of performance which are
Stop and think measured is an important one in
performance management.
To what extent does HRM contribute
to an entity's strategic competitive We have already looked at the
advantage? relationship between employees'
remuneration/reward and
How might technology performance in Chapter 4, but
developments (eg, robotic process remuneration and reward are key
automation) change employees’ issues in HRM, hence they are
roles within organisations? revisited here.
Decisions about remuneration
structures (in particular, pensions
policies, and share-based payments)
can also have a direct impact on an
entity's financial statements, as
highlighted in sections 4.5 – 4.8.
The final section in the chapter
(section 5) also links to material from
an earlier chapter – change
management, from Chapter 3. HRM
plays a key role in change
management because strategic
change will almost inevitably affect
the people in an organisation, and
therefore the way they respond to the
change could have a significant
impact on the success of the change
programme itself.

Make sure you attempt the Self-test

questions at the end of the chapter,
before moving on to the next
chapter.

11 Finance awareness As an accountant, you will be Go quite slowly through the first few In the examination, students may
This chapter covers many of the expected to synthesise the paragraphs of section 1 as a lot of the be required to:
major influences on financial different areas of knowledge themes about financial strategy and  advise organisations on the
strategy. They include recent you have, linking business financial objectives summarised here financial strategy decisions
developments, particularly the and financial strategy will be developed later in the manual. they have to make, taking into
economic problems encountered in decisions with their impact on Also remember that the SBM syllabus account the most significant
recent years. corporate reporting. specification indicates that around influences on those decisions
It is now also very difficult to avoid 15–20% of the marks in the exam will
You will also need to be  discuss how organisations can
businesses facing up to their relate to the corporate reporting
aware of the business respond to the current
responsibilities as corporate citizens, implications of an entity's strategic
environment and how economic environment and
particularly in regard to carrying on decisions. This makes the sections on
changes are affecting (or will the difficulties it places upon
business in a sustainable way. The corporate reporting in the later part
UN Sustainable Development Goals affect) the businesses with them
of section 1 particularly important, as
are a notable example of how which you deal. they highlight the links between  demonstrate the
business activities will be closely corporate reporting and strategic consequences for corporate
scrutinised. Issues around accounting decision-making. Being up to date
reporting of the financial
for ‘natural capital’ are also a highly with current developments in
strategy decisions that
topical area. reporting standards is important.
organisations take
The financial decisions businesses You can go through sections 2–4
make will have often very significant  discuss the impacts on
more quickly, focusing on the
impacts on the content of their impacts that the economic financial stakeholders of the
corporate reports. This includes corporate social responsibility
environment has on business.
effects on the information disclosed stances that organisations take
in the accounts, as well as the Corporate social responsibility is a
additional reports that businesses significant theme of this syllabus, so  evaluate organisations'
publish. section 5 is particularly important. corporate social responsibility
You need a good awareness of how policies
Stop and think
stakeholder pressures may influence
How much can businesses do to business decisions and the impact of Syllabus references
mitigate the consequences of a sustainability on management control
long-term economic slowdown? Specific syllabus references for
systems and corporate reporting. this chapter are: 7f, 11a – 11d
To what extent are the decisions of This was also examined in Chapter 4.
finance providers influenced by a The examples of what companies are
business's corporate social doing and how they are reporting
responsibility stance? CSR issues should aid your

Are you up to date with recent events? understanding in this area. Make sure
Make sure that you review the business that you note the developments in
press and other suitable sources to relation to natural capital.
ensure that you are aware of topical Also, note the links between this
developments in the global economic section and Chapter 4: the increased
environment.
attention being given to
environmental and social
responsibility means that entities are
also placing increased emphasis on
their performance in these areas.
Attempt all the Interactive and
Self-test questions in this chapter.

12 Business and securities valuation Whether you work in financial Chapter 12 covers some quite In the examination, students may
accounting, treasury or tax complex techniques, although you be required to:
There are many reasons for valuing
you may become involved in should be familiar with the basic  advise directors on the
companies, or components of
the valuation of an entire valuation methods from your possible value(s) of businesses
companies. Acquisitions, mergers,
company or some of its Financial Management studies. A key
probate and tax purposes are just  recommend the due diligence
components (debt, equity or skill is to choose the most
some of the reasons for doing so. work that should be carried
financial instruments). You appropriate techniques to use in
Although valuations are essentially out on an acquisition
should therefore be aware of different circumstances.
subjective and affected by many
when different techniques  recommend the most
factors, understanding the various Read through all the sections
should be used and what to appropriate method for a
available techniques and how to carefully to make sure you
look out for when choosing business to finance an
apply them to different situations is understand the techniques and
between available valuation acquisition
an important skill. where their use may be appropriate.
measures.
Make sure you understand which  discuss the strengths and
Stop and think
corporate reporting requirements are weaknesses of post-
Which method(s) of valuation are relevant to valuation and acquisition acquisition arrangements
more appropriate for valuing a small decisions. Fair value measurement,
and the effect of acquisitions on  discuss the significance of
holding of shares; and which
group reporting, are important here. differences between
method(s) are more appropriate for
Note also the due diligence work that companies that are merging,
valuing the entire share capital of a
would be carried out, tying it in with for example their approaches
company?
what you've covered in Chapter 2. to corporate social
How do you value a company that responsibility
has made losses recently? The Worked examples, Interactive
and Self-test questions are all  calculate the value of debt
How do you value a company that valuable questions that will test your
has never made any profits? Syllabus references
knowledge and understanding.
Interactive question 6 and Self-test Specific syllabus references for
questions 1 and 2 cover a number of this chapter are: 12a – 12c, 12e
important areas.

13 Financial instruments and financial Depending on where you In Chapter 1, we highlighted the In the examination, students may
markets work, you may become linkage between business and be required to:
involved in research for the financial strategy in relation to the  discuss the strengths and
Without finance, businesses would
best method of financing for a questions of whether an entity has weaknesses of different
not exist. Therefore a finance
particular project or whether sufficient funds to support a sources of finance and the
professional must have detailed
it is worthwhile for your proposed business strategy, or how risks relating to them
knowledge of the various ways in
organisation to use can it raise the additional funds
which different methods of financing  advise businesses of the
derivatives. needed to support that strategy?
can help individual organisations. features of different financial
In Chapter 13 we now look at the
Stop and think markets and which markets
different sources of finance available
they should use
If a business has surplus cash, should to entities.
 examine the impact on
this cash always be its first choice You should focus on the advantages
and disadvantages of the different investment and financing
source of finance for a new project?
financing methods and go decisions of developments in
What factors are most significant in capital markets
reasonably quickly through the
determining in which markets a
sections on markets, aiming to gain  value options using the Black-
multinational company seeks a
awareness of the key features of Scholes pricing model
listing?
each.
 discuss the financial reporting
It is worth taking time to make sure implications of proposed
you are comfortable with the financing methods
calculations in this chapter.
 describe the assurance work
When going through section 11,
that may be required to
remember that between 15–20% of
support an application for new
the marks available in SBM could
finance
relate to financial reporting issues, so
make sure that you are comfortable Syllabus references
with the key elements of the financial
reporting treatment of financial Specific syllabus references for
instruments. this chapter are: 16a – 16c, 17a –
17e, 17g, 18a – 18c
Attempt the Self-test and Interactive
questions, as they will test your
knowledge and understanding.

14 Financial structure and financial You may be asked to assist in The first section of Chapter 14 follows In the examination, students may
reconstruction a financial reconstruction. on from the last chapter, discussing be required to:
Decisions on sources of finance the factors determining overall  advise businesses on their
Many accountancy roles will
should always be made in the context capital structure. Note the Suitability, optimal capital structure
involve giving advice to small
of an overall policy for obtaining Acceptability, Feasibility framework is
businesses about finance,  examine the consequences of
finance. This links in with the helpful here. The section also revises
also taking into account tax the dividend policies that
decisions about dividend policy and cost of capital, as you may well be
considerations. organisations adopt
how the business wishes to reward its asked to assess the impact of finance
You may one day set up your choice on WACC.  assess the feasibility of
shareholders.
own business and so need to proposals for corporate
Businesses that are in difficulty or wish Section 2 discusses dividend policy,
be aware of the best sources reconstruction
to make fundamental changes to their particularly in the context of relations
of finance that can help your
operations can use a variety of with investors.  discuss the impact on business
enterprise develop.
techniques to restructure themselves. It's worth spending time in section 3 of different forms of
They may require new sources of seeing how a scheme of restructuring and refinancing
finance, or in extreme circumstances, a reconstruction can be built up.  explain the financial reporting
reorganisation of existing finance, if the Focus in section 4 on management consequences of
alternative is liquidation. buy-outs, as they are a common form reconstruction, restructuring
Not everyone works in a large of disposal, where the advice of and refinancing
multinational corporation. Small- and accountants is particularly important.
 advise participants in a
medium-sized enterprises face their In section 5 concentrate on the management buyout of the
own challenges when seeking problems associated with obtaining main issues they will face
finance. Accountants involved in such different sources of finance and the
organisations require in-depth assurance work that may be required.  advise businesses on the
knowledge of the various methods of assurance work that needs to
The Interactive and Self-test be carried out to assess
financing available.
questions should all be attempted. reconstruction proposals
Make a good attempt at Interactive
question 10, as this covers a number Syllabus references
of areas associated with
reconstructions.
this chapter are: 12d, 13a – 13e,
14a – 14f, 15a – 15c, 16c

Stop and think

If a changed dividend policy results
in significant changes to the
shareholder base, does this really
matter to a company?
What conditions placed by investors
on the directors of a management
buy-out are likely to be the most
onerous?

15 Financial risk management If you are working in treasury Chapter 15 covers financial In the examination, students may
or corporate finance you may engineering – the use of different be required to:
Financial instruments are not used in
be required to evaluate financial products to protect against  evaluate the major financial
isolation. It would be very rare for a
different combinations of such risks as interest rate and foreign risks faced by organisations
company to make use of one type of
financial instruments and their currency movements. Section 1
financial instrument without  evaluate alternative
effects on strategy. You discusses the framework within which
considering the wider effects of its approaches to hedging
should be able to identify the decisions are made and should be
use on the overall financial strategy financial risks
various instruments that are read carefully.
of the organisation. In reality,
available for risk management  recommend strategies for
companies use a number of When reading through the sections,
purposes and determine hedging interest rate and
instruments for different purposes, pay particular attention to the
which instruments are most currency risks
including risk management and situations where different instruments
appropriate in different
speculation. What is important is might be used, and how they might  explain the financial reporting
circumstances.
being able to evaluate the effects be used collectively as part of overall consequences of the financial
that the financial instruments are financial strategy. risk management policies that
likely to have on financial strategy. businesses adopt
How much time you spend on section
Stop and think 4 may be determined by whether you  advise on whether hedge
have already studied Corporate accounting can be used for
When are businesses better off not Reporting – you can go through this particular transactions
hedging? section much quicker if you have
How much of an influence do the covered these topics already. Make Syllabus references
accounting requirements relating to sure that you understand the core
financial instruments and hedging principles of hedge accounting.
this chapter are: 17f, 19a – 19e
have on financial risk management Attempt the interactive and self-test
decisions? questions. Most provide further
practice in calculations relating to
various financial instruments, as well
as giving practice in the corporate
reporting implications and the
strategic aspects of managing
financial risks.

16 International financial management In a working environment you Chapter 16 covers international In the examination, students may
may have to assess the financial management issues. Ensure be required to:
Many companies have to consider
suitability of various methods you understand how financial  advise on whether to transfer
the international aspects of the
of finance to particular management techniques can be business activities to foreign
business, whether selling to
international involvement applied to international scenarios countries
customers in foreign countries, or
such as exporting or setting and make sure you appreciate the
setting up operations in other  discuss the implications of
up a subsidiary. Remember to issues that are unique to international
countries. different forms of foreign
treat each case on its own trade, running international
With international involvement merits. operations and obtaining finance to investment
comes problems such as dealing with invest internationally.  evaluate the suitability of a
You may also need to
exchange rate movements or proposed foreign investment
consider political issues – Sections 5 and 6 deal with internal
deciding how to finance an operation
both those relating to the issues that may be significant and  evaluate the risks that may
in a foreign country. As with most
countries where your relate to wider issues, funding affect the success of an foreign
areas of finance, making mistakes
organisation operates, and (dividend) and incentives within the investment
can be very costly, both in monetary
internal political issues organisation (transfer pricing).
terms and in terms of reputation. It is  evaluate possible sources of
relating to the system of
therefore essential to understand the Attempt the interactive and Self-test funding for an foreign
transfer pricing used.
various issues surrounding questions. Interactive question 1 is a investment
international operations and trade good test of the factors to consider
and the numerous options available when investing in foreign countries,  explain the consequences of
to finance them. and Interactive question 2 and Self- exchange controls and
test question 2 provide practice in recommend methods for
Stop and think dealing with them
appraising foreign investments.
What are the most important  analyse the impacts of transfer
additional risks facing a business that pricing arrangements on an
is investing in a foreign country as organisation's operations
opposed to investing in its home
market? Syllabus references
How does a business decide what Specific syllabus references for

form its foreign investment should this chapter are: 20a, 20c – 20i
take?

17 Investment appraisal In a working environment you Chapter 17 is quite a practical In the examination, students may
Investment is the lifeblood of any are likely to have to assess the chapter. Make sure you review be required to:
organisation's growth. With so many feasibility of domestic and investment appraisal techniques in  evaluate proposals for
opportunities available – and limited international projects. Real section 1 and attempt the interactive investments that organisations
resources to spend on them – options are closely linked to questions to test your knowledge. are considering
organisations must know how to this task and you may be
Later sections are more complex –  advise organisations on
evaluate projects to decide which required to value options to
read and review them to ensure you investment decisions, having
ones will increase shareholders' expand, abandon, delay or
understand the topics. Work through regard for the strategies they
wealth and also complement overall redeploy.
the Interactive and Self-test questions are adopting as well as the
business strategy. In advising widely on and be prepared to apply all the financial analysis
With increased globalisation, investments, you may also techniques covered in this chapter to
need to consider their social complex scenarios in the exam.  analyse the impact of real
companies need to evaluate
and environmental options upon investment
international investment
consequences and how your decisions
opportunities. International
investment appraisal involves not just organisation should respond  analyse the possible
the evaluation of revenues and to these. externalities that may result
operating costs, but also from investment decisions
consideration of the various risks
involved in undertaking foreign Syllabus references
investments. Without analysing Specific syllabus references for
these, multi-million pound this chapter are: 21a – 21g
investments can quickly go wrong,
resulting in major losses, both
monetary and of reputation.
Stop and think
How can you value an option to delay

if delay may give competitors the
chance to exploit a business
opportunity first?
Is an expected value calculation ever
a useful measure?

18 Treasury and working capital You may work in a treasury or For the treasury function, focus on In the examination, students may
management corporate finance function or the key decisions that the be required to:
Treasury activities encompass all your work in other organisation has to make (degree of  discuss the advantages and
aspects of financing, so inevitably an departments may involve centralisation, cost or profit centre). disadvantages of different
accountant will have involvement in some aspect of treasury Remember also that the treasury treasury management
treasury activities. Economies of scale activities. It is important if you policies applied internationally need arrangements
and complexities involved in, for are not a treasury specialist to to be congruent with the ways in
know your limits and realise which the organisation is operating in  explain the risks associated
example, extensive currency risk with treasury management
management activities, mean that when you have to seek more foreign countries.
specialist help. policies
larger companies will operate a Section 3 looks at working capital
separate treasury function. The Very many accountancy roles management, where the aim is to  evaluate the working capital
degree of control exercised over this involve some contribution to achieve a balance between requirements of businesses
function can have important working capital management. minimising the risk of insolvency  analyse the working capital
implications for the business. In You may be involved in (liquidity) and maximising the return management policies
practice board members may not analysing how well your on assets (profitability). Different adopted by businesses
understand all the activities that the business is managing business sectors will have different
treasury function carries out, which different aspects of working working capital requirements, and  recommend improvements to
can result in a dangerous lack of capital or be involved in therefore working capital working capital management
effective scrutiny. business decisions that have management policies can vary. The  evaluate the impact of
Working capital management is significant impacts on section also considers how different methods of
something that you have studied working capital, for example businesses are dealing with the managing working capital on
extensively before. In recent difficult relationships with customers, effects of economic slowdown and short- and long-term financing
economic circumstances businesses or implementing new adopting their working capital
have been reappraising their business processes to reduce policies to cope, and how the cash Syllabus references
policies, partly in the light of a inventory levels. operating cycle can be made shorter Specific syllabus references for
shortage of finance from other or more efficient. this chapter are: 20b, 22a – 22g
sources. Improving liquidity by Attempt all the Self-test and
shortening the operating cycle Interactive questions to test your
through improved operations understanding of the main issues in
management is an important theme these areas.
here.

Stop and think

In what circumstances should
businesses not aim to minimise
working capital?
At what stage does a business need
to establish a treasury function
staffed by treasury specialists?

19 Ethics As an ICAEW Chartered This chapter addresses ethical issues In the examination, students may
The quest for competitive advantage Accountant, you have a in two different contexts. At one level, be required to:
means that businesses are frequently responsibility to abide by the we look at the importance of ethical  identify and explain the ethical
fundamental principles of issues in relation to an entity's issues or dilemmas facing an
under pressure to find ways of out-
ICAEW's Code of Ethics, and strategy and its operations as a entity or individual, and
performing their competitors.
you should also seek to whole. At the other level, we look at potential significance and
However, they must do so without
encourage an ethics-based the ethical issues which could be consequences of those issues
acting unethically (or illegally), because
culture in your employing faced by an accountant in business. or dilemmas
such actions can very quickly damage
an entity's brand and reputation, and organisation. Section 1 looks at the importance of
 recommend appropriate
with them its competitive position. Accountants must appreciate ethics to business; and highlights the
actions to address ethical
that a range of stakeholders need to consider the ethical
Ethical issues can also be important dilemmas
may rely on their work: for consequences of business decisions
in the context of business (and – equally importantly – the potential  evaluate ethical safeguards
sustainability. Managers are often example, through the
consequences of not acting ethically). which are in place, or which
under pressure to consistently preparation and reporting of
financial information and Section 2 then turns to look are being proposed
improve results. However, if an entity
other management specifically at ethical issues in relation  evaluate the impact which
sacrifices its ethical standards in
information, or when to an ICAEW Chartered Accountant. ethics has on an entity's
order to cut costs in the short term,
providing advice on business- Whilst it is important that you know strategy and operations, and
the outcomes of these actions may
related matters. the fundamental principles of its dealings with different
not be sustainable (for example, if
ICAEW's Code of Ethics, and the
customers lose their trust in the You must seek to apply the stakeholders
potential threats to those principles in
entity). fundamental principles of the their own right, it is equally important Syllabus references
Professional accountants must ensure Code of Ethics to all your that you can apply them to a scenario
work, and not be subject to context; in order, for example, to Specific syllabus references for
that not only do they behave ethically
threats such as self-interest or identify that one of the principles is this chapter are: 23a - 23e
themselves, but also they do not
support any unethical behaviour in intimidation. being threatened by a proposed
their organisations. course of action.
Having looked at potential threats in
section 2, section 3 then looks at the
safeguards which can help to counter
threats to ethical behaviour, and the
actions required to address ethical
conflicts.

Stop and think Section 4 returns to ethics in a

strategic context, encouraging you to
How should an entity respond when consider what impact ethics can have
it faces a conflict between acting on an entity's strategy, and, in
ethically and pursuing its business particular, its business sustainability.
interests? Sustainability and corporate
What particular complications might responsibility are becoming
a multinational company face in increasingly important issues for
relation to acting ethically? businesses, meaning it is also
important that you consider them
when evaluating potential business
strategies.
The chapter closes with an overview
of the sorts of ethical issues which
could be included in a scenario in the
SBM exam, and a suggestion for how
to deal with ethical issues in the
exam. Remember, however, that the
detail of the ethical issues in any
exam will vary according to the case
study scenarios provided.
Attempt all the Interactive questions
as you are working through the
chapter, and then the Self-test
question at the end, to test your
understanding of ethical issues.

5 Syllabus and learning outcomes
Business Strategy and Management

Students will be able to analyse and identify the external environment and internal strategic
capability of an entity; evaluate the consequences of strategic choices; recommend strategies to
achieve stakeholder objectives, recommend appropriate methods of implementing strategies
and monitoring strategic performance; measure and manage business risks; and advise on
corporate governance. Students will also be able to apply corporate reporting and assurance
principles and practices in the context of key business decisions and events.
In the assessment, students may be required to:
Covered
in chapter
1 Strategic analysis
(a) Describe and explain the strategic objectives of an entity considering the
interests of stakeholders 1
(b) Analyse and evaluate, for a given scenario, the external economic, market
and industry environment which may impact upon a business's
performance and position 1
(c) Identify and evaluate the significance of the internal organisational and
operational capabilities in a given scenario which may influence an
entity’s ability to achieve its chosen strategic objectives (including core
competencies, existing business processes, human capital and workforce
flexibility) 1
(d) Analyse and evaluate an entity's current position and performance, from
both a financial perspective and a non-financial perspective, using a
variety of internal and external information sources 1
(e) Demonstrate how strategic analysis tools can be used in a complex
scenario 1
(f) Demonstrate how business strategy and financial strategy can interrelate
in a complex scenario 1
(g) Evaluate and advise upon the strategic capability of an entity 1
(h) Evaluate strategy at corporate, business unit and operational levels 1
(i) Analyse and evaluate current technology developments including those
relating to big data, internet of things, digital assets, automation,
intelligent systems and cryptocurrencies 1
2 Strategic choice
(a) Assess, advise on and propose appropriate business strategies to meet
stated objectives 2
(b) Identify and evaluate business unit strategies to achieve sustainable
competitive advantage 2
(c) Explain and demonstrate how financial and non-financial data can be
analysed in order to select an optimal business strategy, including the
impact of big data on business models 2

Covered
in chapter
(d) Explain and demonstrate how strategic business models can be used in a
given scenario, to identify factors that a business can consider in
choosing between competing strategies 2
(e) Explain international strategies; appraise international value chains and
markets; including the concepts of globalisation and the borderless
business; and show the impact on individual and group financial
statements of changes in foreign exchange rates 2
(f) Evaluate digital strategies, including the use of digital assets, automation,
artificial intelligence, cloud accounting and machine learning 2
3 Strategic implementation
(a) Demonstrate and explain the impact of acquisitions and strategic
alliances in implementing corporate strategy and evaluate the nature and
role of assurance procedures in selecting and monitoring such strategies 3
(b) Evaluate and explain the relationship between business strategy and
organisational structure 3
(c) Explain and evaluate the nature and methods of change management
and advise on the implementation of change in complex scenarios 3
(d) Demonstrate and explain the techniques that may be used in
implementing a strategy to reduce costs, for example supply chain
management, business process re-engineering and outsourcing 3
(e) Evaluate, in a given scenario, the functional strategies necessary to
achieve a business's overall strategy 3
(f) Develop business plans and proposals and advise on technical issues
relating to business and organisational plans, assessing the impact on
historical and projected corporate reporting information 3
(g) Demonstrate an understanding of, and provide advice on, data security
issues, including cyber security issues, arising from communications,
shared systems and data sharing throughout the supply chain and with
strategy partners 3
(h) Identify and explain barriers to implementation of digital strategy and make
recommendations as to how they may be overcome 3
4 Strategic performance management

(a) Advise on, and develop, appropriate performance management
approaches for businesses and business units, including the use of data
analytics 4
(b) Explain and demonstrate how a business can analyse complex,
quantitative and qualitative data from multiple sources to provide
strategic management accounting information to implement, monitor
and modify a strategy at an appropriate organisational level in order to
create competitive advantage 4
(c) Use financial and non-financial performance data from a variety of
sources, including integrated reporting disclosures, to measure multiple
aspects of performance at a variety of organisational levels 4

Covered
in chapter
(d) Advise on, and develop, appropriate remuneration and reward packages
for staff and executives linked to performance, considering agency
relationship issues; and evaluate the impact on corporate reports arising
from employee remuneration, including pensions and share-based
payment 4
(e) Develop measures to evaluate performance in the context of social
responsibility, sustainability, environmental matters and natural capital 4
5 Strategic marketing and brand management

(a) Assess strategic marketing issues and demonstrate the application of
quantitative and qualitative marketing techniques in complex scenarios 5
(b) Evaluate and analyse markets and the marketing environment and
develop a marketing strategy consistent with the overall business strategy 5
(c) Explain, using information provided, how to position particular products
and services in the market place (domestic or international) to maximise
competitive advantage, and assess the corporate reporting impact
arising from revenue and profit recognition 5
(d) Demonstrate, across a range of industries, how elements of the
marketing mix can be used to promote competitive advantage 5
(e) Develop and explain marketing strategies using databases, big data and
information technology applications such as social media and other
internet sources 5
(f) Develop and explain the strategies for managing and sustaining existing
brands 5
(g) Prepare marketing strategies and show how they can be used to develop
brands 5
(h) Demonstrate how appraisal techniques can be used for valuing brands,
patents, R&D projects and intellectual property and evaluate relevant
corporate reporting recognition and measurement for intangible assets 5
6 Business risk management

(a) Analyse and evaluate the key types of business risks using relevant
quantitative and qualitative data and assess their implications within a
given scenario, for business strategy and corporate reporting disclosures 7
(b) Advise on the risks involved in business and organisational plans and
show how these risks can be managed by assurance procedures and
other forms of risk mitigation 7
(c) Explain the responsibility of those charged with governance for
managing risk and assess the role of assurance in risk mitigation 6, 7
(d) Assess the impact of risk on a variety of stakeholders 7
(e) Explain and assess the various steps involved in constructing a business
risk management plan, by establishing context, identifying risks and the
assessment and quantification of risk 7
(f) Evaluate and explain the limitations of business risk management 7

Covered
in chapter
(g) Assess and explain enterprise risk management, evaluating its framework
and its benefits 7
(h) Using data provided, analyse quantitatively and qualitatively, business
risks under a range of complex scenarios 7
7 Corporate governance
(a) Assess the nature of governance and explain the characteristics and
principles of good governance in a variety of scenarios 6
(b) Assess the interests and impact of organisational stakeholders in
determining strategy and the consequences for stakeholders of strategic
choices 6
(c) Evaluate the impact of governance mechanisms on a range of
stakeholders 6
(d) Assess and advise on appropriate corporate governance mechanisms,
and evaluate stakeholder management 6
(e) Analyse and evaluate the strengths and weaknesses of corporate
governance mechanisms and processes 6
(f) Explain the role of boards in determining and evaluating an entity's policy
for social responsibility, sustainability and environmental matters and
advise on corporate reporting disclosures relating to these policies 11
(g) Evaluate the suitability of corporate governance and organisational
structures for implementing strategy 6
(h) Explain the role of boards in monitoring corporate performance and risk,
and assess the role of assurance procedures in this context 6
(i) Explain the nature, and assess the consequences, of the legal framework
within which businesses, assurance and governance systems operate
(with particular reference to company law, fraud, money laundering, civil
liabilities, social security law, employment law, contract law, tort and
environmental law) 6
8 Data analysis
(a) Undertake appropriate quantitative and qualitative data analysis,
business analysis and financial statement analysis 8
(b) Explain financial and operational data and other management
information, drawing inferences relating to its completeness, accuracy
and credibility, as a basis for a meaningful analysis of the position, future
prospects and risks for a business 8
(c) Demonstrate how suitable financial, strategic and operational analysis
techniques can be used to analyse financial and operational data and to
evaluate business position, prospects and risks, including the analysis
and benefits of 'Big Data', artificial intelligence and machine learning 8
(d) Communicate an explanation (stating any reservations regarding
transparency and objectivity of data and information) of the position,
prospects and risks of a business, based on analysis of financial and
operational data and information, including data analytics and assess the
extent to which limited assurance and reasonable assurance
engagements can identify and mitigate information risks in this context 8

Covered
in chapter
9 Information strategy
(a) Outline proposals and advise on outline requirements for information
technology applications to support business strategy, for example in the
context of e-commerce, e-business, virtual arrangements, artificial
intelligence, digital assets and cloud computing, including assurance
issues in relation to data security 9
(b) Use management accounting information (for example, costs, prices,
budgets, transfer prices) and management accounting tools (for example,
break-even, variances, limiting factors, expected values, ABC, balanced
scorecard) to evaluate short and long term aspects of strategy 9
(c) Explain and appraise how management information systems can provide
relevant quantitative and qualitative data to analyse markets, industry and
performance, including the capture and analysis of big data 9
(d) Demonstrate and explain methods for determining the value of
information in the context of developing an information strategy 9
(e) Assess financial and operational data and information from management
information systems, drawing inferences relating to its completeness,
accuracy and credibility, and provide an evaluation of assurance
procedures in evaluating information risks, including those relating to
cyber security 9
(f) Demonstrate and explain how businesses capture, analyse and utilise
information to develop competitive advantage 9
(g) Evaluate the impact of cloud computing and the borderless business on
the provision of strategic management information, including the use of
cryptocurrencies 9
(h) Explain and appraise corporate strategies for ensuring security of data and
preventions of attacks against data in the context of cyber security 9
10 Human resource management

(a) Assess, explain and advise on the role of human resource management in
implementing strategy 10
(b) Demonstrate and explain how human resource management can
contribute to business strategy, including flexible workforce management 10
(c) Identify the impact of remuneration structures on organisational
behaviour and other aspects of human resource management, and show
the corporate reporting consequences 10
(d) Demonstrate and explain the role and impact of human resource
management in change management 10

Financial Strategy
Students will be able to identify and advise upon appropriate finance requirements; evaluate
financial risks facing a business and advise upon appropriate methods of managing and
quantifying those risks; provide valuations for businesses and securities; and advise upon
investment and distribution decisions. Students will also be able to apply corporate reporting
and assurance principles and practices in the context of key financing decisions and events.
Covered
in chapter
11 Finance awareness
(a) Demonstrate and explain the financing alternatives available for projects
and assets, and make informed choices as to which alternative is the most
compatible with the overall financial strategy of the entity, showing the
corporate reporting consequences relating to presentation, disclosure,
recognition and measurement of projects and their financing 11
(b) Assess and explain current and emerging issues in finance 11
(c) Identify social responsibility, sustainability and environmental factors for a
range of financial stakeholders, including UN sustainable development
goals and natural capital, and assess assurance and corporate reporting
issues relating to such factors 11
(d) Explain how financial crises, which have occurred in the past over a long
time period, may impact on approaches and attitudes to financial risk and
may inform corporate reporting practice 11
12 Business and securities valuation

(a) Explain, advise on and demonstrate appropriate valuation methods for
businesses and equity securities using: asset-based; adjusted earnings-
based; and cash-based methods (for example SVA, EVA®, VBM, MVA and
other appropriate techniques) 12
(b) Critically appraise business and securities valuation methods in the
context of specified complex scenarios, including the consideration of
natural capital 12
(c) Explain and demonstrate appropriate valuation techniques in the context
of acquisitions and mergers; assess the contribution of due diligence
procedures; and show the impact on corporate reports arising from
acquisitions for groups in consolidated financial statements 12
(d) Explain and demonstrate appropriate valuation techniques in the context
of demergers and for disposal of entities and business units, and show
the impact on corporate reporting issues relating to discontinued
operations 14
(e) Determine the value of debt and explain the techniques used 12

Financial Structure and Financial Reconstruction
Covered
in chapter
13 Capital structure
(a) Appraise and evaluate the sources of finance and the process for raising
finance 14
(b) Advise on and develop proposals for determining the appropriate
financing mix for new businesses and projects 14
(c) Explain and advise on issues relating to the cost of capital 14
(d) Show and explain how dividend policy impacts upon equity value and
upon financing and investment decisions 14
(e) Appraise and explain how the choice of financing impacts on reported
corporate performance, and on the recognition and measurement of
financial assets and financial liabilities 14
14 Financial reconstruction
(a) Show and explain how financial reconstruction takes place and explain
the consequences of such reconstructions for corporate reporting 14
(b) Appraise and evaluate financial reconstruction proposals in a given
scenario, and determine the nature and role of assurance procedures in
this context 14
(c) Explain the different reasons for refinancing, and demonstrate how
companies in financial distress can be managed, having regard to
insolvency law 14
(d) Explain and appraise the workings of, and reasons for, securitisation,
showing the impact on financial statement information 14
(e) Explain and appraise the nature and consequences of leveraged buy outs 14
(f) Appraise and evaluate various forms of reconstruction (for example,
spin-off, MBO, divestment, demergers, purchase of own shares, use of
distributable profits), explaining the corporate reporting impact 14
15 Small and medium company financing

(a) Appraise and explain the small and medium-sized enterprise financing
problem 14
(b) Appraise and evaluate the various methods of financing available to small
and medium-sized enterprises, and explain the nature and role of
assurance for small and medium-sized companies in raising such finance 14
(c) Assess and explain the characteristics of sources of equity for smaller
companies and the financial institutions operating in these markets (for
example, venture capital and private equity) 14

Financial Instruments and Financial Markets
Covered
in chapter
16 Equity instruments
(a) Assess and explain the types of equity securities, and evaluate the
implications for disclosure, presentation, recognition and measurement
in financial statements 13
(b) Appraise and explain the characteristics of equity markets and the
financial institutions operating in these markets 13
(c) Analyse and evaluate the cost of equity, portfolio theory and the use of
appropriate asset pricing models, applying principles of financial
economics 13, 14
17 Fixed interest
(a) Explain the types of fixed interest securities and evaluate the implications
for disclosure, presentation, recognition and measurement in financial
statements 13
(b) Appraise and explain the characteristics of bond markets and the
(c) Appraise and evaluate the use of bonds/loans as a method of finance,
and explain the implications of terms included in loan agreements in a
given scenario (for example, covenants and guarantees) and explain the
procedures by which monitoring and assurance can be provided in
respect of such agreements 13
(d) Explain and appraise bond valuation techniques and assess flat and gross
redemption yields 13
(e) Explain and appraise yield curves, sensitivity to yield and components of
the yield 13
(f) Evaluate and explain interest rate risk 15
(g) Appraise and evaluate credit risk and credit spread 13
18 Derivatives
(a) Explain the types of derivative securities and evaluate the implications for
disclosure, presentation, recognition and measurement in financial
statements 13
(b) Assess and explain the characteristics of derivative markets and the
(c) Appraise and evaluate the characteristics of forwards, futures, options,
swaps, and credit derivatives 13

Covered
in chapter
19 Financial risk management
(a) Analyse and evaluate financial risks and their implications (for example
financing, currency and interest rate risks) and show the application of
qualitative and quantitative risk disclosures for financial instruments, and
other corporate reporting disclosures relevant to risk assessment 15
(b) Appraise and advise on appropriate methods to assess, manage and
quantify financial risk in specific business scenarios 15
(c) Explain and appraise financial instruments available for hedging against
interest rate and foreign exchange rate risk, for example, swaps, collars
and floors 15
(d) Demonstrate and explain the nature and operation of financial
instruments underlying the disclosure, recognition and measurement
requirements in financial statements 15
(e) Demonstrate and explain how interest rate hedging strategies and
foreign currency risk management strategies can be formulated, both at
the level of the individual transaction and for macro hedging
arrangements 15
20 International financial management

(a) Explain and appraise the various methods of financing available for
foreign investments and evaluate the implications for disclosure,
presentation, recognition and measurement of changes in foreign
exchange rates in financial statements 16
(b) Appraise and explain global treasury organisation and international
liquidity management 18
(c) Appraise and evaluate the factors affecting the capital structure of a
multinational company 16
(d) Explain and appraise the advantages and risks associated with
international borrowing 16
(e) Demonstrate and explain the risks associated with international trade and
the ways in which these risks can be managed, and assess the nature and
role of assurance procedures in mitigating risk and the financial reporting
consequences of currency hedging 16
(f) Appraise and evaluate the different methods open to multinationals
wishing to set up foreign operations and the choices of finance available,
identifying tax and corporate reporting consequences 16
(g) Assess and explain the impact of exchange controls and how companies
can overcome the effects of these controls 16
(h) Appraise and evaluate the management of dividends in multinational
organisations 16
(i) Appraise and evaluate the management of transfer prices in multinational
organisations and the implications for reported profit and tax 16

Covered
in chapter
21 Investment appraisal
(a) Select and advise on investment appraisal techniques which are
appropriate to the objectives and circumstances of a given business 17
(b) Appraise and advise on appropriate measures of return and risk for
assessing business projects 17
(c) Demonstrate and evaluate investment appraisal techniques for
international projects, identifying the impact of tax and the effects on
corporate reporting 17
(d) Explain and appraise real options and determine the impact of options to
abandon, expand, delay and redeploy 17
(e) Appraise and evaluate the quantitative and qualitative issues surrounding
international investment appraisal 17
(f) Evaluate the impact of externalities when making investment appraisal
decisions 17
(g) Identify social responsibility, sustainability and environmental
consequences of investment decisions, explaining corporate reporting
issues in relation to such policies 17
22 Treasury and working capital management

(a) Demonstrate and explain the role and responsibilities of the treasury
management function 18
(b) Demonstrate and explain the role of treasury management in short-term
finance, short-term investment and liquidity risk 18
(c) Appraise and evaluate the contribution of working capital management
to short-term and long-term financing 18
(d) Evaluate the risks arising from working capital management and how
these may be mitigated 18
(e) Evaluate and explain working capital requirements for a range of different
organisations and circumstances 18
(f) Demonstrate and explain the nature and role of working capital
management within financial management 18
(g) Appraise, evaluate and advise with respect to working capital
management techniques 18

Ethics
Students will be able to identify and explain ethical issues. Where ethical dilemmas arise,
students will be able to recommend, justify and determine appropriate actions and ethical
safeguards to mitigate threats.
Covered
in chapter
23 Ethics
(a) Recognise and explain ethical issues 19
(b) Explain the relevance, importance and consequences of ethical issues 19
(c) Evaluate the impact of ethics on an entity, its stakeholders and the scope
of its strategies and operations 19
(d) Recommend and justify appropriate actions where ethical dilemmas arise
in a given scenario 19
(e) Design and evaluate appropriate ethical safeguards 19

6 Technical knowledge grids
The tables contained in this section show the technical knowledge in the disciplines of financial
reporting, audit and assurance, business analysis, ethics and taxation covered in the ACA
syllabus by module.
For each individual standard the level of knowledge required in the relevant Certificate or
Professional Level module and at the Advanced Level is shown.
The knowledge levels are defined as follows:
Level D
An awareness of the scope of the standard.
Level C
A general knowledge with a basic understanding of the subject matter and training in its
application sufficient to identify significant issues and evaluate their potential implications or
impact.
Level B
A working knowledge with a broad understanding of the subject matter and a level of
experience in the application thereof sufficient to apply the subject matter in straightforward
circumstances.
Level A
A thorough knowledge with a solid understanding of the subject matter and experience in the
application thereof sufficient to exercise reasonable professional judgement in the application
of the subject matter in those circumstances generally encountered by chartered accountants.
Key to other symbols:
 The knowledge level reached is assumed to be continued

Assurance and Audit
Advanced Level
Assurance
Assurance
Audit and
Topic
The International Auditing and Assurance Standards Board D C

The Authority Attaching to Standards Issued by the International
C A
Auditing and Assurance Standards Board
The Authority Attaching to Practice Statements Issued by the
A
International Auditing and Assurance Standards Board
Discussion Papers C
Working Procedures C
International Standards on Auditing (UK)

200 (Revised June 2016) Overall Objectives of the Independent
Auditor and the Conduct of an Audit in Accordance with B A →
International Standards on Auditing
210 (Revised June 2016) (Updated July 2017) Agreeing the
B →
Terms of Audit Engagements
220 (Revised June 2016) (Updated July 2017) Quality Control for
B →
an Audit of Financial Statements
230 (Revised June 2016) Audit Documentation C B A
240 (Revised June 2016) (Updated July 2017) The Auditor's
Responsibilities Relating to Fraud in an Audit of Financial C B A
Statements
250 A (Revised December 2017) Consideration of Laws and
B A
Regulations in an Audit of Financial Statements
250 B (Revised June 2016) The Auditor's Statutory Right and Duty
to Report to Regulators of Public Interest Entities and Regulators C
of Other Entities in the Financial Sector
260 (Revised June 2016) (Updated July 2017) Communication
B A
with Those Charged with Governance
265 Communicating Deficiencies in Internal Control to Those
B A
Charged with Governance and Management
300 (Revised June 2016) Planning an Audit of Financial
B A →
Statements
315 (Revised June 2016) Identifying and Assessing the Risks of
Material Misstatement Through Understanding the Entity and its C A →
Environment
320 (Revised June 2016) (Updated July 2017) Materiality in
C A →
Planning and Performing an Audit

Advanced Level
Assurance
Assurance
Audit and
Topic
330 (Revised July 2017) The Auditor's Responses to Assessed

C B A
Risks
402 Audit Considerations Relating to an Entity Using a Service
C B
Organisation
450 (Revised June 2016) (Updated July 2017) Evaluation of
C A
Misstatements Identified during the Audit
500 (Updated July 2017) Audit Evidence B A →
501 Audit Evidence – Specific Considerations for Selected Items B A
505 (Updated July 2017) External Confirmations (Revised
B B A
July 2017)
510 (Revised June 2016) Initial Audit Engagements – Opening
C B A
Balances
520 Analytical Procedures B A A
530 Audit Sampling B B A
540 (Revised June 2016) Auditing Accounting Estimates, Including
C B A
Fair Value Accounting Estimates and Related Disclosures
550 Related Parties C B A
560 Subsequent Events B A
570 (Revised June 2016) Going Concern A →
580 Written Representations C B A
600 (Revised June 2016) Special Considerations – Audits of
Group Financial Statements (including the Work of Component C A
Auditors)
610 (Revised June 2016) Using the Work of Internal Auditors C B A
620 (Revised June 2016) Using the Work of an Auditor's Expert B A
700 (Revised June 2016) Forming an Opinion and Reporting on
B A →
Financial Statements
701 Communicating Key Audit Matters in the Independent
B A
Auditor's Report
705 (Revised June 2016) Modifications to the Opinion in the
A →
Independent Auditor's Report
706 (Revised June 2016) Emphasis of Matter Paragraphs and
A →
Other Matter Paragraphs in the Independent Auditor's Report
710 Comparative Information – Corresponding Figures and
B A
Comparative Financial Statements

Advanced Level
Assurance
Assurance
Audit and
Topic
720 The Auditor's Responsibility Relating to Other Information B A

800 Special Considerations – Audits of Financial Statements
B A
prepared in Accordance with Special Purpose Frameworks
805 (Revised October 2016) Special Considerations – Audits of B A
Single Financial Statements and Specific Elements, Accounts or
items of a Financial Statement
International Standards on Auditing
810 (Revised) Engagements to Report on Summary Financial
B
Statements
International Auditing Practice Note (IAPN)
1000 Special Considerations in Auditing Financial Instruments B
International Standards on Review Engagements (ISREs)
2400 (Revised September 2012) Engagements to Review
C B
Historical Financial Statements
International Standards on Review Engagements (UK & Ireland)
2410 Review of Interim Financial Information Performed by the
C B
Independent Auditor of the Entity
International Standards on Assurance Engagements (ISAEs)
3000 (Revised) Assurance Engagements Other than Audits or
C B
Reviews of Historical Financial Information
3400 The Examination of Prospective Financial Information C A
3402 Assurance Reports on Controls at a Service Organisation C B
3410 Assurance Engagements on Greenhouse Gas Statements C →
International Standards on Related Services (ISRSs)
4400 Engagements to Perform Agreed-upon Procedures
B
Regarding Financial Information
4410 Compilation Engagements (Revised March 2012) B
IAASB Statements
ISQC1 (Revised June 2016) (Updated July 2017) Quality Control
for Firms that Perform Audits and Reviews of Financial
C B
Statements, and Other Assurance and Related Services
Engagements

Advanced Level
Assurance
Assurance
Audit and
Topic
Other Guidance
Bulletin (October 2016): Compendium of Illustrative Auditor’s
Reports on United Kingdom Private Sector Financial Statements B B
for periods commencing on or after 17 June 2016
FRC Briefing Paper
Professional Scepticism – establishing a common understanding B B
and reaffirming its central role in delivering audit quality

Business Analysis
Certificate and Professional

Levels
Business Strategy
Technology and
and Technology
Advanced Level
Topic
Management
Management
Information
Business,
Financial
Finance
STRATEGIC ANALYSIS
Environmental and market analysis tools
PESTEL analysis C A →
Porter's five forces C A →
Product life cycle C A →
Boston consulting group matrix C A →
Prices and markets C A →
Competitor analysis C A →
Positional and other analysis tools
Resource audit C A →
Resource-based strategy C A →
Value chain analysis C A →
SWOT analysis C A →
Gap analysis C A →
Marketing analysis C A →
Competitive advantage C A →
Benchmarking C A →
Directional policy matrix B
Business process analysis B A
Strategic risk analysis A →
Balanced scorecard C A →
STRATEGIC CHOICE
Strategy formulation, evaluation and choice C A →
Business risk management C A →
Financial analysis and data analysis A →

Levels
Business Strategy
Technology and
and Technology
Advanced Level
Topic
Management
Management
Information
Business,
Financial
Finance
Stakeholder analysis C A →
Objectives and stakeholders' preferences C A →
Corporate responsibility and sustainability C B A
STRATEGIC IMPLEMENTATION
Business plans C A →
Organisational structure C A →
Information management C B A
Change management A →
Project management A
BUSINESS MANAGEMENT
Performance management C A
Strategic marketing and brand management B A
Corporate Governance C B A
Information strategy B A
Human resource management C A
COST ANALYSIS FOR DECISION MAKING
Costing
Cost classification A → →
Costing systems – direct, marginal, absorption B → →
Activity based costing (ABC) C → B
Break even analysis B → A
Multi-product break even analysis B
Budgeting and performance management B → A
Pricing
Pricing decisions B A →
Transfer pricing B A →

Levels
Business Strategy
Technology and
and Technology
Advanced Level
Topic
Management
Management
Information
Business,
Financial
Finance
Decision making techniques
Expected values B A
Relevant cash flows B A
Sensitivity analysis B A
BUSINESS AND SHAREHOLDER VALUE
Valuation Techniques
Income – dividend yield B A
Income – P/E B A
Income – discounted cash flow B A
Asset based measures B A
Options approach B
Shareholder value
Value based management (VBM) B
Value drivers B A
Shareholder value analysis (SVA) B A
Short and long term growth rates and terminal values A
Economic profit A
Cash flow return on investment (CFROI) A
Total shareholder return (TSR) A
Market value added (MVA) A
INVESTMENT APPRAISAL AND RISK ANALYSIS
Project appraisal
NPV B A →
IRR B A →
Payback B A →
Relevant cash flows A →
Tax and inflation A →

Levels
Business Strategy
Technology and
and Technology
Advanced Level
Topic
Management
Management
Information
Business,
Financial
Finance
Replacement Analysis A →
Capital rationing A →
Adjusted present value (APV) A →
Assessing risk
Project appraisal and sensitivity analysis B A
Project appraisal and simulation B A
Expected values B A
Scenario planning A
Gap analysis B →
Continuous vs. event risk B →
FINANCIAL ANALYSIS
Cost of capital
Cost of equity B A
Cost of debt B A
Cost of preference shares B A
Cost of bank loans B A
Weighted average cost of capital (WACC) B A
Effective interest rates A
Splitting convertibles into equity and debt elements A
Equity instruments A
Portfolio theory and CAPM
Portfolio theory B A
CAPM B A
APT and MCPM A
CAPM and cost of capital B A
International cost of capital A

Levels
Business Strategy
Technology and
and Technology
Advanced Level
Topic
Management
Management
Information
Business,
Financial
Finance
Bonds and fixed interest securities
Bond pricing using NPV A
Yields to maturity A
Duration and price volatility A
Convexity A
Term structure of interest rates A
Corporate borrowing and default risk A
SOURCES OF FINANCE AND FINANCING ARRANGEMENTS
Short, medium and long term sources of finance C A
Loan agreement conditions (warranties; covenants;

B A
guarantees)
Raising capital C A
Gearing and capital structure A →
Loan agreements and covenants A →
Dividend policy A →
Financing reconstructions (eg: group reconstruction,

spin off, purchase of own shares, use of distributable B A
profits)
Treasury and working capital management C A
Small and medium company financing B
History of finance C
FINANCIAL ENGINEERING
Futures, options and swaps
Options B A
Interest rate futures B A
Interest rate options B A
Interest forward rate agreements (FRAs) B A
Interest rate swaps B A

Levels
Business Strategy
Technology and
and Technology
Advanced Level
Topic
Management
Management
Information
Business,
Financial
Finance
Foreign exchange
Currency forward contracts B A
Currency money market cover B A
Currency options B A
Currency swaps B A
Operational techniques for managing currency risk B A
Theoretical determinants of foreign exchange rates B A
Option value
Value of a call and put option C B
Black Scholes option pricing model B
Binomial Option Pricing Model B
Real options C B

Ethics Codes and Standards
Ethics Codes and Standards Level Modules
Certificate Level
C/D Accounting
B Assurance
C/D Business, Technology and Finance
D Law
C Management Information
C Principles of Taxation
Professional Level
IESBA Code of Ethics for Professional
Accountants A Audit and Assurance
(parts A, B and C and Definitions) B Business Strategy and Technology
B Financial Accounting and
Reporting
ICAEW Code of Ethics
B/C Financial Management
B Tax Compliance
B Business Planning
Advanced Level
A Corporate Reporting
A Strategic Business Management
A Case Study
FRC Revised Ethical Standard (2016) B Assurance

A Audit and Assurance
Advanced Level
A Corporate Reporting
A Strategic Business Management
A Case Study

Strategic Business Management: The Institute of Chartered Accountants in England and Wales

Uploaded by

Copyright:

Available Formats

Strategic Business Management: The Institute of Chartered Accountants in England and Wales

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Strategic Business Management: The Institute of Chartered Accountants in England and Wales

Uploaded by

Copyright:

Available Formats

The Institute of Chartered Accountants in England and Wales

For exams in 2019

3 Skills in the ACA 4

5 Syllabus and learning outcomes 52

6 Technical knowledge grids 63

ICAEW 2019 Study Guide 1

2 Strategic Business Management ICAEW 2019

Professional Level exams Permitted text

Audit and Assurance 

Financial Accounting and Reporting 

Business Strategy and Technology 

Business Planning No restrictions

Advanced Level exams

Corporate Reporting No restrictions

The exams which have no restrictions include the following:

ICAEW 2019 Study Guide 3

4 Strategic Business Management ICAEW 2019

ICAEW 2019 Study Guide 5

6 Strategic Business Management ICAEW 2019

ICAEW 2019 Study Guide 7

4.1 Help yourself study for your ACA exams

Believe in yourself Yes, there is a lot to learn. But thousands have

2 Focus on the exam

3 The right method

4 The right recap

8 Strategic Business Management ICAEW 2019

Key study steps Activity

4.3 Detailed study guide

ICAEW 2019 Study Guide 9

10 Strategic Business Management ICAEW 2019

ICAEW 2019 Study Guide 11

This is another important point to

12 Strategic Business Management ICAEW 2019

ICAEW 2019 Study Guide 13

14 Strategic Business Management ICAEW 2019

Section 5 considers the issues

ICAEW 2019 Study Guide 15

Make sure you complete all the

16 Strategic Business Management ICAEW 2019

ICAEW 2019 Study Guide 17

18 Strategic Business Management ICAEW 2019

Section 5 – Operations strategy and

ICAEW 2019 Study Guide 19

20 Strategic Business Management ICAEW 2019

ICAEW 2019 Study Guide 21

Social responsibility and

22 Strategic Business Management ICAEW 2019

ICAEW 2019 Study Guide 23

24 Strategic Business Management ICAEW 2019

Sections 6–8 focus primarily on

ICAEW 2019 Study Guide 25

26 Strategic Business Management ICAEW 2019

Stop and think

How many of the provisions in

ICAEW 2019 Study Guide 27

28 Strategic Business Management ICAEW 2019

ICAEW 2019 Study Guide 29

30 Strategic Business Management ICAEW 2019

ICAEW 2019 Study Guide 31