Free CPA Australia GSL Exam Flashcards

Best practices improve operational effectiveness, but rivals can often copy them. Strategy also requires choices about which customers to serve and how connected activities create distinctive value.

A vision describes the desired future direction; a mission explains the organisation’s purpose and the customers or needs it serves. Neither replaces the choices and actions needed to achieve that direction.

Corporate strategy asks which businesses the organisation should operate in. Business strategy asks how a particular business competes in its market; the choices must fit the wider organisation.

Transformational leadership builds commitment to a shared direction and encourages change. Transactional leadership relies more on agreed tasks, rewards and corrective exchanges; either can be useful in context.

Test its cash-flow assumptions, resource needs, risks and performance measures, then explain the consequences to decision-makers. Financial insight supports strategic judgement within an ethical framework.

Explain how a political, economic, social, technological, environmental or legal trend changes the organisation’s opportunities or threats. A list of trends without business consequences is incomplete.

The chosen product need and geographic scope determine which firms, buyers, suppliers and substitutes belong in the analysis. Poor boundaries can hide meaningful competition or distort conclusions about profitability.

It meets the underlying need for interaction through a different service. Substitutes need not resemble the industry’s product; an attractive alternative can limit the price customers will pay.

Power tends to rise when the customer buys a substantial volume, can switch easily and has credible alternatives. It can seek lower prices or better terms, reducing the supplier’s margin.

Few alternatives and high switching costs give that supplier leverage over prices and terms. The resulting higher input costs can reduce industry profitability unless firms can offset them.

An entrant may need substantial volume to match incumbents’ unit costs. Entering at a smaller scale can leave it at a cost disadvantage; the barrier’s strength depends on the market and likely entrants.

Firms may need to win customers from rivals rather than rely on a growing market. Price competition is especially damaging where offers are similar and firms have incentives to keep capacity busy.

Compare several plausible combinations of external conditions and test the strategy under each. This reveals vulnerabilities and possible responses; a scenario is a decision aid rather than a prediction.

A resource is an asset or input the organisation possesses. A capability is its ability to combine and use resources, such as coordinating people and technology to deliver reliable service.

Competitors can obtain comparable value from it. It may be necessary to compete, but value alone does not establish a distinctive advantage; rarity, imitation difficulty and organisational support also matter.

It shows how activities and their links create customer value and costs. Reconfiguring a combination of activities may improve differentiation or efficiency, even when each department already performs well individually.

Different stakeholders care about different outcomes. Profit measures can be supplemented by customer, employee or other relevant indicators to assess whether performance supports the organisation’s strategy and key stakeholder needs.

Financial, customer, internal business processes, and learning and growth (also called innovation and learning). Their measures should connect to strategic objectives; adding unrelated metrics does not make a scorecard balanced.

ROI = operating profit ÷ average operating assets = 24,000 ÷ 200,000 = 12%. Use a consistent profit and asset basis; the ratio alone does not establish cash generation or strategic success.

Skilled staff can be an internal strength; the competing technology can be an external threat. Combine the two analyses to assess whether current capabilities can support a response.

Established norms and incentives shape behaviour. If a strategy requires collaboration but people are rewarded only for individual targets, those internal drivers may obstruct delivery despite adequate funding and technology.

Selling existing products or services more extensively in existing markets. It may involve greater usage or winning share, but remains exposed to competitor responses and limits to demand.

Market development: the offer is existing and the market is new. Local demand, channels and regulatory conditions still need investigation before committing resources.

Product or service development: the market is existing but the offer is new. Familiar customers reduce some market uncertainty, while development and delivery capability still need assessment.

It combines a new product or service with a new market. The firm must assess demand and its ability to deliver; related capabilities may help, but newness in both dimensions creates uncertainty.

Future cash flows that change because of the launch, including incremental operating cash flows, investment and opportunity costs. Sunk research costs do not change the decision; noncash depreciation alone is not a cash outflow.

A patent concerns rights in an invention; a trademark distinguishes one enterprise’s goods or services from another’s. The protection needed depends on the asset and jurisdiction, rather than treating every idea or brand as a patent.

Keep commercially valuable confidential information secret and take reasonable protective steps, such as access controls and confidentiality agreements. Exact legal requirements vary by country; secrecy is essential to this form of protection.

An alliance allows separate organisations to cooperate under an agreement. An acquisition involves buying control of another business. Compare capabilities, commitment, control and integration demands when choosing a method.

Whether the option addresses the strategic situation and fits the organisation’s purpose: it should respond to relevant opportunities, threats and internal capabilities. An affordable option can still be unsuitable.

Whether the organisation can implement it with available or obtainable finance, people, skills, systems and other resources. Attractive expected returns do not remove a capability or funding constraint.

Whether key stakeholders consider its expected returns, risks and consequences acceptable. An option can be suitable and feasible yet face resistance because it conflicts with stakeholder expectations.

The amount and type of risk an organisation is prepared to take in pursuing its objectives. It guides choices and responses; it is a management judgement rather than a forecast that losses will stay below a certain amount.

Risk remaining after responses or controls have been implemented. Assess the remaining exposure rather than assuming that choosing a mitigation action eliminates the risk.

NPV = −8,000 + 9,680 ÷ (1.10)^2 = AUD 0. With no other cash flows, it exactly meets the assumed return requirement. Strategic, funding and risk considerations still need assessment.

It shows how the result changes when a key assumption changes, such as sales volume or cost. A sensitive assumption deserves attention, but sensitivity alone does not give the probability that it will change.

Specify accountable owners, required resources, milestones and measures of progress. This connects the chosen direction to work that can be assigned, monitored and corrected.

Strategy, structure, systems, shared values, skills, style and staff. They interact: changing the organisation chart alone may fail if skills, incentives or working practices still support the old strategy.

Participation can reveal practical obstacles and improve understanding and commitment. Leaders still need to explain the purpose, provide resources and address resistance; participation does not guarantee acceptance.

13 days: the longer path determines completion. The 9-day path has 4 days of float under these assumptions; adding the parallel durations would incorrectly give 22 days.

People need to know who can approve spending, change scope and resolve conflicts. Clear authority and escalation routes reduce delays and make accountability practical.

Investigate its cause, compare current conditions with the plan’s assumptions and choose a corrective response. Monitoring should inform decisions, rather than merely report a variance after it occurs.

A plan’s assumptions can become outdated while work proceeds. Changes in competition, technology or demand may require revised priorities or measures, even when the original implementation milestones are on schedule.

A business model explains how the organisation creates, delivers and captures value. Competitive strategy explains the choices that position it against rivals; a familiar revenue model does not by itself create an advantage.

More participation on one side increases value for participants on the other, such as more suitable sellers attracting buyers. Value depends on useful interactions; user growth alone does not ensure profitability.

Interdependent organisations, including complementors and platform participants, jointly create value. Strategy must consider partner incentives and dependencies as well as what the focal organisation controls directly.

Disruption describes a process beginning in a low-end or new-market foothold and moving toward mainstream customers. A superior product aimed at established customers can instead be sustaining innovation.

A direction develops through learning, experimentation and repeated decisions as conditions change. Leaders can still set purpose and constraints; emergence does not require abandoning discipline or evaluation.

Exploiting established operations while exploring new products, markets or business models. Different activities may need different systems and incentives, with leadership connecting them to a shared direction.

Resource constraints, customer expectations and environmental or regulatory changes can affect costs, demand and risk. Include these effects in long-term strategic choices rather than relying only on today’s profit.