Theme 3 - Business decisions and strategy

3.1 Business objectives and strategy

3.1.1 Corporate objectives

3.1.2 Theories of corporate strategy
a) Development of corporate strategy

3.1.3 SWOT analysis

3.1.4 Impact of external influences

3.2.1 Growth
a) Objective of growth:
b) Problems arising from growth:

3.2.2 Mergers and takeovers
a) Reasons for mergers and takeovers
b) Distinction between mergers and takeovers
c) Horizontal and vertical integration
d) Financial risks and rewards
e) Problems of rapid growth

3.2.3 Organic growth

3.2.4 Reasons for staying small
a) Small business survival in competitive markets:
Product differentiation and USPs
Flexibility in responding to customer needs
Customer service
E-commerce

3.3.1 Quantitative sales forecasting
a) Calculation of time-series analysis
Moving averages (three period/four quarter)
b) Interpretation of scatter graphs and line of best fit - extrapolation of past data to future
c) Limitations of quantitative sales forecasting techniques

3.3.2 Investment appraisal
d) Calculations and interpretations of figures generated by these techniques (within individual pages)
e) Limitations of these techniques (within individual pages)

3.3.3 Decision trees
a) Construct and interpret simple decision tree diagrams
b) Calculations and interpretations of figures generated by these techniques
c) Limitations of using decision trees

3.3.4 Critical Path Analysis
a) Nature and purpose of Critical Path Analysis
b) Complete and interpret simple networks to identify the critical path
c) Calculate: 
Earliest Start Time
Latest Finish Time
Total Float
d) Limitations of using Critical Path Analysis

3.4.1 Corporate Influences

3.4.2 Corporate Culture

3.4.3 Shareholders versus Stakeholders

3.4.4 Business Ethics

3.5.1 Interpretation of financial statements
a) Statement of comprehensive income (profit and loss account):
Key information
Stakeholder interest
b) Statement of financial position (Balance Sheet)
Key information
Stakeholder interest

3.5.2 Ratio analysis
a) Calculate: 
Gearing ratio
Return on capital employed (ROCE)
b) Interpret ratios to make business decisions
c) The limitations of ratio analysis

3.5.3 Human resources
a) Calculate and interpret the following to help make business decisions:
Labour productivity
Labour turnover and retention
Absenteeism
b) Human resource strategies to increase productivity and retention and to reduce turnover and absenteeism:
Financial rewards
Employee share ownership
Consultation strategies
Empowerment strategies

3.6.1 Causes and effects of change
a) Causes of change:
Changes in organisational size
Poor business performance
New ownership
Transformational leadership
The market and other external factors (PESTLE)
b) Possible effects on:
Competitiveness
Productivity
Financial performance
Stakeholders

3.6.2 Key factors in Change
a) Organisational culture
b) Size of organisation
c) Time/speed of change
d) Managing resistance to change

3.6.3 Scenario planning
a) Identifying key risks through risk assessment
Natural disasters
IT systems failure
Loss of key staff
b) Planning for risk mitigation
Business continuity
Succession planning


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