How does a strategic decision differ from a tactical decision?

A strategic decision is long term, affects the whole firm and is taken by senior leaders. A tactical decision is shorter term and carries out part of the strategy.

Why do clients hire professional services firms to help with strategic planning?

A consultancy brings objective analysis, specialist tools and experience of other firms and markets. Owners absorbed in daily running may struggle to step back and plan.

Name the five techniques a consultant commonly uses for strategic planning and decision making.

The five techniques are cost–benefit analysis, SWOT analysis, PESTEL analysis, the Ansoff matrix and the Boston matrix. Each technique looks at a decision from a different angle.

What does a cost–benefit analysis weigh up when a firm makes a strategic decision?

A cost–benefit analysis compares all the costs of a decision with all its benefits, including wider social ones. The decision goes ahead only if the benefits outweigh the costs.

Why should a cost–benefit analysis include opportunity cost?

Resources used for one option cannot be used for the next best alternative. The benefit given up is a real cost of the decision.

CCEA AS-Level Professional Business Services 3210

The Business Environment

Topic overview Primary, secondary, tertiary and quaternary production Private, public and voluntary sector objectives Sole traders and partnerships Private and public limited companies Stakeholder interests and conflicts Factors of production

The Professional Business Services Sector

Topic overview The nature of professional business services The range of consultancy services Tangible goods and intangible services Local, national and global firms Why businesses use consultancy services

The Consultancy Process

Topic overview The consultancy process and the entry phase The diagnosis phase The action planning phase Implementation and termination phases

Understanding the Client's Market

Topic overview Market size, market share and market growth Reasons for market research and using its findings Primary market research methods Secondary market research and choosing a method Sampling methods in market research Market segmentation

Client Relationships

Topic overview Why client relationships matter Communication, personal contact and client needs Business culture and professionalism Trust, ethical behaviour, intellect and ideas

Business Ethics

Topic overview Fairness, integrity and freedom from bias Trust, confidentiality, transparency and openness The benefits of an ethical code

Persuading, Negotiating and Influencing

Topic overview Persuasion techniques for consultants Negotiation stages and strategies Influencing clients and stakeholders

Business Planning and Risk Management

Topic overview Strategic planning and cost–benefit analysis SWOT and PESTEL analysis in strategic planning The Ansoff matrix and the Boston matrix Assessing and managing business risk

Government Regulation

Topic overview The purpose of business regulation Regulators and compliance in Northern Ireland Codes of conduct versus external regulation

Organisational Structure and Culture

Topic overview Human resources and effective HR management Tall, flat, centralised and decentralised structures Roles, chain of command, span of control and delayering Changing and comparing organisational structures Culture, Schein's model and the McKinsey 7S framework

Recruitment and Selection

Topic overview Internal and external recruitment methods Job descriptions and person specifications Interviews and psychometric testing Competency profiling, situational judgement tests and EI questionnaires Contracts of employment and effective recruitment

Learning and Development

Topic overview Why learning and development matters to a business Induction, on-the-job, off-the-job training and CPD Outcomes of learning and development

Employee Well-Being and Motivation

Topic overview What employee well-being is and why employers value it Methods of supporting employee well-being Causes of low workplace well-being Maslow and Taylor on motivation Herzberg and Mayo on motivation Financial and non-financial methods of motivation

Managing Conflict

Topic overview Functional and dysfunctional conflict Causes of conflict at work Effects of conflict on performance, motivation and behaviour Improving employer–employee relations

Business Research Methods

Topic overview Research aims, objectives and literature searches Questionnaires, interviews and designing research tools Sampling, reliability, validity and research ethics Presenting, analysing and evaluating research findings

Sources of Finance

Topic overview Financial decision making in a client business Internal sources of finance Loans, overdrafts and share issues Leasing, hire purchase and trade credit Choosing the right source of finance

Cash Flow

Topic overview Types of budget and why firms set them Adverse and favourable variances Cash flow, profit and why firms forecast Constructing and analysing a cash flow forecast

Financial Statements

Topic overview Revenue, cost of sales and gross profit Expenses and net profit Assets on the statement of financial position Equity and liabilities

Ratio Analysis

Topic overview Profit margins and return on capital employed The current ratio, liquidity and gearing Trade receivables and trade payables days Earnings per share and return on equity Using and evaluating ratio analysis

Investment Appraisal and Financial Decisions

Topic overview The payback method Net present value and discounting Average rate of return and choosing a method Appraising an investment for a client Using financial data for growth and staffing decisions

Business Planning and Risk Management

4 subtopics
12 things to know
AS 1

What Business Planning and Risk Management covers

Business Planning and Risk Management is examined in Unit AS 1, Introduction to Professional Business Services. It covers strategic planning and cost–benefit analysis, SWOT and PESTEL analysis in strategic planning, the Ansoff matrix and the Boston matrix and Assessing and managing business risk.

Where it is assessed

AS 1

Introduction to Professional Business Services — a written examination.

Check the CCEA specification ↗

The 4 subtopics

Each one has its own page. CCEA AS Professional Business Services students sit this topic in the first year.

What you need to know

Answer each one before you reveal it.

Your recallNot started

Key term

A consultancy is advising a Lisburn engineering firm on whether to automate its invoicing. Explain how a cost–benefit analysis would be carried out.

Evaluation

Evaluate the use of cost–benefit analysis in a client's strategic decision.

Key term

Analyse how a PESTEL analysis could help an accountancy practice decide whether to expand into the Republic of Ireland.

Evaluation

Evaluate the usefulness of SWOT and PESTEL analysis for a client's strategic planning.

Key term

Apply the Boston matrix to an accountancy practice whose main service is annual audit and whose newest service is sustainability reporting.

Evaluation

Evaluate the use of the Ansoff and Boston matrices when advising a client on growth.

Evaluation

Evaluate the value of a formal risk assessment to a small client business.

Key term

What is business risk?

Key term

What is strategic planning?

Key term

What are the four parts of a SWOT analysis?

Numbers

What is the Ansoff matrix?

Key term

Why does a client business need to assess and manage risk?

Take Business Planning and Risk Management further

The same content, four other ways.

Commonly confused

Pairs that lose marks when they are blurred together.

Market development vs Product development
Market development: selling existing services to new customer groups or regions. Product development: offering new services to the customers a firm already serves.
Cash cow vs Star
Cash cow: a service with high share of a slow-growing field that generates surplus funds. Star: a service with high share of a fast-growing field that needs heavy investment.
Question mark vs Dog
Question mark: a service with low share of a fast-growing field needing a decision to invest or withdraw. Dog: a service with low share of a slow-growing field and little prospect.

Questions from this topic

Each one with the model answer underneath.

1
What is strategic planning?
Model answer
Strategic planning sets a firm's long-term objectives and decides how resources will be used to reach them. A strategic plan typically looks three to five years ahead.
2
How does a strategic decision differ from a tactical decision?
Model answer
A strategic decision is long term, affects the whole firm and is taken by senior leaders. A tactical decision is shorter term and carries out part of the strategy.
3
Why do clients hire professional services firms to help with strategic planning?
Model answer
A consultancy brings objective analysis, specialist tools and experience of other firms and markets. Owners absorbed in daily running may struggle to step back and plan.
4
Name the five techniques a consultant commonly uses for strategic planning and decision making.
Model answer
The five techniques are cost–benefit analysis, SWOT analysis, PESTEL analysis, the Ansoff matrix and the Boston matrix. Each technique looks at a decision from a different angle.
5
What does a cost–benefit analysis weigh up when a firm makes a strategic decision?
Model answer
A cost–benefit analysis compares all the costs of a decision with all its benefits, including wider social ones. The decision goes ahead only if the benefits outweigh the costs.
6
Why should a cost–benefit analysis include opportunity cost?
Model answer
Resources used for one option cannot be used for the next best alternative. The benefit given up is a real cost of the decision.

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The Business Environment

The Professional Business Services Sector

The Consultancy Process

Understanding the Client's Market

Cram a whole paper in one sitting

Sort every topic into what you know and what you do not, then drill only the weak ones.

A payback is usually preferred.

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AA firm might move its staff to a new office.

BA firm might install a new client database.

CA firm might run a graduate recruitment campaign.

Build It gets the exam shape right

Assemble a full-mark answer from its marking points, in the order an examiner wants them.

Equity means the owner's investment in the business.

TrueFalse

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Spot the fault in a statement. The traps are the mistakes students actually make.

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Short focus games to reset attention, so the next set lands better than the last.

Business Planning and Risk Management revision questions

Is Business Planning and Risk Management examined at AS in CCEA Professional Business Services?: Yes. It sits in AS 1, which you take in the first year, so it is on the AS paper as well as counting towards the full A level.
What does Business Planning and Risk Management cover in CCEA AS-Level Professional Business Services?: 4 subtopics: strategic planning and cost–benefit analysis, swot and pestel analysis in strategic planning, the ansoff matrix and the boston matrix and assessing and managing business risk. Each one has its own page with questions and model answers.
How is Business Planning and Risk Management organised?: By the CCEA 3210 specification, subtopic by subtopic, so it matches the order you are taught it in.

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