how to: business case
relevant to acca qualification paper p3
For many ACCA students there is no phrase which causes greater fear than ‘Using an appropriate model or models of your choice…’. Immediately a number of problems arise: ¤ Which might be appropriate? ¤ How many? ¤ Choice – I might not choose correctly – I’d much rather be told what to use. ¤ If I choose incorrectly I’ve ruined my chances. This article will look at some of these problems and will use as a subject to work on Question 1 from the June 2008 Paper P3 exam, AutoFone. This is reproduced here, with annotations. This is a typical Paper P3 Part (a) question with about three pages of information, ...view middle of the document...
… there are very clear barriers to entry signposted in the scenario and the data summarised in Table 2 provided information about industry competitors. Some candidates chose to use PESTEL and SWOT… candidates who used these two models could gain marks as they do identify relevant issues in the scenario…. Unfortunately many candidates penalised themselves by actually describing and using all three models (five forces, PESTEL and SWOT), leading to long answers with significant repetition. There is little to be gained by using different models to make the same points.’ a Word about models Models (or frameworks) are ubiquitous in Paper P3, but it is important to realise that models are not designed to guarantee anyone a correct answer. How could they? Organisations, their strategic positions, the requirements of their stakeholders and so on come in all shapes and sizes, and no model could cope perfectly with every situation thrown at it. At best, perhaps, models are better than starting with a blank sheet of paper; they give you a structure for the information and a methodology that might help you to progress your analysis towards a conclusion, such as giving advice. Sometimes the word ‘model’ is rather flattering. PESTEL, for example, is little more than a checklist of potential environmental influences. This is why the examiner complains about candidates describing models; at this level in your exams they are means to an end, not an end in themselves.
student accountant issue 16/2010
Studying Paper P3? performance objectives 7, 8 and 9 are relevant to this exam
analysis study approach
A second point is that although you might not be provided with input for all parts of the model, a model can still be used. For example, there might be information about your competitors and suppliers, so Porter’s five competitive forces might be of some use even if you know nothing about the other three forces. Similarly, you might be given some information about pending legal and technological changes and PESTEL can be used as a checklist to see that no other environmental factor has also been mentioned. Of course, you do have to know the models, and occasionally you might be specifically asked to use one. At other times a specific model might be heavily hinted at (see below) because the examiner feels it would be useful in the context of the information provided. But do not get too obsessed with them. I often see discussions about whether there are 7, 8 or 9Ms to list resources, or whether tax is a political, economic or a legal influence. It doesn’t really matter: you have identified that considering resources might be important and also that tax can be an important environmental influence. You do not need to know any models that are not mentioned in the ACCA Paper P3 Study Guide. clues about the main models might be useful The question mentions, or the scenario has information about, or we want to find out about: The environment Competitive...