Learning Outcome

Statements

1 © Copyright 2022 Institute of Certified Management Accountants Updated 8/18/22

 Institute of Certified Management Accountants
Certified in Strategy and Competitive Analysis Exam
Learning Outcome Statements

Section A. Strategic Analysis

Section A.1. The strategic planning process

The candidate should be able to:

What is strategy?
a. define strategic planning and distinguish strategic planning from tactical planning
b. discuss how strategic planning determines the path an organization chooses for fulfilling its
mission and attaining its long-term goals and vision
c. identify the time frame appropriate for a strategic plan
d. demonstrate an understanding of the strategic management process, beginning with the
mission, scanning the environment, analyzing competitors, setting objectives, establishing the
strategic plan, developing policies, creating the organizational structure (structure follows
strategy), implementing the plan, creating the annual plan and operating budgets, and
evaluating performance
e. demonstrate an understanding of how to create an effective feedback system
f. discuss the similarities and differences in the strategic planning process for for-profit
companies vs. nonprofit organizations
g. discuss the similarities and differences in the strategic planning process for large, medium, and
small companies
h. discuss why the strategic management process is an ongoing process
Role of finance team in the strategic management process
i. identify and explain the role of the finance team in the strategic planning process, particularly
with respect to providing data to support analysis, assuring cash availability for implementing
plans, providing financial analysis of new opportunities, monitoring execution of the plan,
measuring and reporting performance, and providing general analytical and financial
perspectives to the planning processes
Vision, mission, and goals
j. distinguish between vision and mission
k. demonstrate an understanding of how mission leads to the formulation of long-term business
goals such as business diversification, the addition or deletion of product lines, or the
penetration of new markets
l. demonstrate an understanding of how objectives are developed in the context of the strategic
plan
m. identify and explain the characteristics of well-constructed objectives (e.g., SMART [specific,
measurable, achievable, realistic, and time-bound])
n. discuss the importance of setting and following a set of corporate or organizational core values
in delivering high performance
Analytical planning tools and frameworks
o. demonstrate an understanding of the following planning tools and techniques: SWOT analysis,
Porter’s Five Forces, situational analysis, PESTEL analysis, STEEP analysis, gap analysis,
scenario planning, competitive analysis, contingency planning, the BCG Growth-Share Matrix,
and the GE-McKinsey Matrix (GE Business Screen); and explain the limitations of each of
these tools and techniques
Strategic planning process synthesis
p. evaluate an organization’s planning practices and recommend a strategic management process

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Section A.2. Environmental scan and competitive analysis

The candidate should be able to:

Macro environmental forces
a. identify the external factors that should be analyzed during the strategic planning process and
explain how this analysis leads to recognition of organizational opportunities, limitations, and
threats
b. identify and explain sociocultural, technological, ecological, economic, political, legal, and
ethical factors in the environment
c. discuss the impact specific environmental trends could have on a company’s strategy
d. identify and explain the macroeconomic forces that can impact an organization’s strategy,
including GDP, interest rates, inflation, capital availability, unemployment levels, energy costs,
currency markets, and the global financial system
e. apply SWOT analysis, PESTEL analysis, STEEP analysis, gap analysis, and situational
analysis to a given scenario
Industry economic market structure
f. describe how industry competitive structure (i.e., pure competition, monopolistic competition,
oligopoly, or monopoly) can impact an organization’s strategy
Industry segmentation
g. discuss the importance of an organization identifying its industry segmentation
(i.e., identifying the business or businesses it is in and who its competitors are)
h. identify and explain the various bases for industry segmentation, including structural
differences in products or buyers and value chain differences
i. identify and explain segmentation variables, such as product variety, buyer type, distribution
channel, and buyer location
j. distinguish among domestic, regional, and global businesses and demonstrate an understanding
of the strategic implications of each
k. define fragmented industry, provide examples of such industries, and explain why low
economies of scale, local brand loyalty, and low entry barriers lead to fragmented industries
l. define strategic group, and identify strategic groups within an industry given a scenario
m. explain how the boundaries of an industry can change over time
Industry life-cycle analysis
n. define industry life-cycle analysis, including the embryonic (development) stage, the growth
stage, the shakeout stage, the maturity stage, and the decline stage
o. explain how revenues, expenses, and earnings are affected by each of the industry life-cycle
phases and how the stages could impact the company’s level of investment and cash
requirements
p. apply industry life-cycle analysis to a given scenario
Threat of new entry and/or substitution
q. evaluate the level of threats of new competitors for a given industry and organization
r. define economies of scale, brand loyalty, product differentiation, absolute cost advantage,
switching costs, capital requirements, access to distribution channels, and government policy;
and analyze how these factors impact the likelihood of new entrants into an industry
s. demonstrate an understanding of the economic and strategic implications of substitute products
and services
t. evaluate the level of threats of substitute products for a given industry and organization
Supplier and buyer power
u. explain how end-users, wholesalers, and retailers affect the price and the cost of products
throughout the supply chain
v. evaluate the strength of buyers for a given industry and organization

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 w. demonstrate an understanding of how the organizations that supply input into a product or
service, such as materials, services, and labor, are able to raise the price of inputs
x. evaluate the strength of suppliers for a given industry and organization
y. demonstrate an understanding of Porter’s Five Forces model and apply it to an organization
and its industry given a scenario
Complementary products and services
z. demonstrate an understanding of the economic and strategic implications of complementary
products and services
Competitive intelligence
aa. define competitive intelligence and explain the purpose of obtaining competitive intelligence
bb. explain the differences among intelligence, data, and information
cc. explain how the process of gathering competitive intelligence should lead to the identification
of risks and opportunities that are on the horizon and not just in the current situation
dd. identify sources of competitive intelligence
ee. describe the ethical practice of competitive intelligence and distinguish this practice from
corporate espionage
ff. identify and explain the role of the management accountant in the competitive intelligence
process
Competitive forces analysis
gg. define strategic risk
hh. prepare a competitive forces analysis using Porter’s Five Forces model to identify and assess a
company’s strategic risks
ii. evaluate a company’s strategy in terms of strategic risk (i.e., is the strategy misaligned with
market and industry conditions?)
jj. define industry dissonance
kk. prioritize the strategic risks for a company in terms of magnitude, probability, and direct
linkage to strategy
ll. discuss the similarities and differences of competitive analysis between for-profit companies
and nonprofit organizations as well as the similarities and differences among small, medium,
and large organizations
Competitive rivalry
mm. evaluate the relative competitive rivalry in a given industry
nn. analyze industry-competitive structure and how it is related to the level of competitive rivalry
in an industry, including the number of competitors, the size of the companies in the industry,
the rate of industry growth, the nature of the product or service (unique or commodity), the
level of fixed costs, and exit barriers
Financial analysis of competitors
oo. perform a financial analysis of competitors, including an assessment of competitor
profitability, leverage, liquidity, efficiency, market pricing, dividend policy, cost structure, and
growth rate (Note: Knowledge of how to calculate ratios may be required, but emphasis will be
placed on interpretation of a set of ratios and what it says about a company’s financial position)
pp. demonstrate an understanding of common size income statement analysis and how this tool
could be used to evaluate competitor financial strength and flexibility
Innovation, change, and market disruption
qq. explain how innovation, change, growth, and market disruption can be both a threat and an
opportunity
rr. explain the importance of implementing a formalized monitoring or early warning system that
would help an organization identify change drivers and generate early warning signs or
indicators of possible industry shifts that could change an organization’s strategic assumptions

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Environmental scan and competitive analysis synthesis
ss. synthesize information presented for a given organization, integrate the concepts described
previously, and prepare an environmental scan and competitive analysis

Section A.3. Internal analysis

The candidate should be able to:

Organizational culture and core values
a. discuss how organizational culture and core values affect an organization’s assessment of its
internal strengths and weaknesses and how culture and values could impact an organization’s
strategic plan
b. discuss how organizational structure affects an organization’s strategy
c. discuss how an organization’s incentive structure aligns with its strategic plan
Strengths and weaknesses
d. identify the internal factors that should be analyzed during the strategic planning process and
explain how this analysis leads to recognition of organizational strengths, weaknesses, and
competitive advantages
e. identify and analyze a company’s strengths and weaknesses
f. explain the importance of information technology as a source of innovation, operational
effectiveness, and competitive advantage
Core competencies
g. define core competency and differentiated (distinctive) competency and explain how the
presence of these competencies gives an organization the ability to differentiate itself from its
rivals and make a higher relative profit
The value chain
h. define value chain, and explain how this chain of activities converts inputs into products and
services that customers value
i. distinguish between primary activities and support activities within the value chain
j. demonstrate an understanding of how analysis of a company’s value activities can lead to a
better understanding of the company’s strengths and weaknesses
k. demonstrate an understanding of how optimizing a company’s value chain relative to
competitors can lead to cost advantages and thus competitive advantage
l. define economies of scope
m. describe and apply value-chain analysis, including the identification of the following: activities
that create value, activities that are strengths and those that are weaknesses, linkages within
each product line’s value chain, possible synergies among the different product lines or
business units, and opportunities for achieving relative cost advantage
Operational effectiveness
n. define: operational effectiveness, efficiency, quality, excellence, innovation, and customer
responsiveness; and discuss how each could impact a company’s ability to differentiate itself in
the market and build an advantage over competitors
Financing strategy
o. explain how an organization’s financing strategy and financing capacity can have an impact on
its competitive strength and the strategic initiatives it can undertake
p. evaluate a given organization’s financing capacity and financing strategy
Internal analysis synthesis
q. apply SWOT analysis, gap analysis, and situational analysis to a given scenario
r. synthesize information presented for a given organization, integrate the concepts described
previously, and prepare an internal analysis

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Section B. Creating Competitive Advantage

Section B.1. What is competitive advantage?

The candidate should be able to:

Delivering unique value
a. define competitive advantage
b. explain the two types of competitive advantage an organization can have (i.e., low cost or
differentiation)
c. explain the differentiation/low-cost trade-off
d. explain why having a competitive advantage should result in a company operating at a lower
cost and/or commanding a higher price compared to its competitors (i.e., relative superior
performance)
e. using value chain analysis, explain how differences in activities being performed can lead to
competitive advantage
Differentiated competencies
f. distinguish between core competencies and differentiated (or distinctive) competencies
g. demonstrate an understanding of how differentiated competencies can help an organization
deliver unique value and/or achieve an absolute cost advantage, thus leading to a sustainable
competitive advantage
h. explain why the aim of competitive strategy is to create a sustainable competitive advantage
i. explain why delivering a unique product or service is often more effective than competing to
deliver the best product
j. demonstrate an understanding of how competitive advantage can derive from a firm’s position
in the industry and/or a firm’s resources/capabilities
k. explain why an organization with a competitive advantage should have a higher-than-average
profitability level for for-profit companies or higher-than-average efficiency and effectiveness
in delivering value for nonprofit organizations
l. analyze a given scenario, identifying and explaining organizational sources of competitive
advantage

Section B.2. Strategy in a global context

The candidate should be able to:

Market expansion
a. discuss the globalization of production and markets and explain the impact this has on global
strategies
b. identify and explain how cultural, political (administrative), geographic, and economic
differences impact global business strategy (sometimes called CAGE Distance Framework)
c. explain national competitive advantage (e.g., country advantages in the cost and quality of the
factors of production, the local demand conditions, the presence of suppliers and related
industries, the intensity of rivalry of companies within the nation), and apply Porter’s Diamond
model (of National Advantage)
d. identify and explain the benefits of conducting business within an economic community
(e.g., European Union, African Economic Community, Association of Southeast Asian
Nations)
e. demonstrate an understanding of how a company can increase revenue growth and profitability
through market expansion
f. define multinational company, and discuss the benefits and risks of operating in two or more
countries

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 g. identify and explain the basic modes of entering a foreign market: exporting, licensing,
franchising, joint ventures, strategic alliances, wholly-owned subsidiaries, and acquisitions
h. explain the advantages and disadvantages of each of the seven modes of entering a foreign
market
i. evaluate a given scenario and recommend a foreign market entry approach for an organization
Value chain optimization
j. demonstrate an understanding of how a company can realize cost economies from increased
global volume of sales
k. demonstrate an understanding of how a company can realize cost economies by performing a
value creation activity or support activity outside the company’s home country
l. explain how optimizing the global value chain by exploiting regional economic differences can
lead to absolute cost advantages over competitors (sometimes known as arbitrage)
m. identify the benefits of establishing subsidiaries, affiliated companies, or divisions, and discuss
how a company can leverage the skills of each
n. explain the differences between a global standardization strategy (achieving economies of
scale) and a localization strategy (customizing the business model) [sometimes known as
aggregation and adaptation, respectively]
o. define transnational strategy and discuss the benefits and inherent challenges of such a strategy
p. define global strategic alliance and explain its advantages and disadvantages
q. evaluate a given scenario and propose a strategic alliance approach that would increase the
probability of success considering factors such as partner selection and alliance structure
r. identify and explain how pressure to reduce cost and/or pressure to customize for local markets
impacts the decision to pursue specific strategies
Risks of conducting international business
s. identify and explain the risks of conducting international business, including exchange rate risk
and political risk
t. identify, explain, and apply methods to mitigate the risks of conducting international business
u. demonstrate an understanding of hedging foreign exchange

Section B.3. Business-level strategies

The candidate should be able to:

a. discuss how business-level strategy is directly linked to mission (i.e., identify which customers
and customer needs to target, determine which products and services to offer, and develop the
business model and customer value proposition)
b. describe how the focus of business-level strategies is to improve a company’s competitive
position (i.e., positioning in the market so that the company can achieve and sustain a
competitive advantage)
Low cost, Differentiation, and Focus
c. identify and explain Porter’s generic strategies: cost leadership, differentiation, and focus
d. demonstrate an understanding of expanded generic strategies (e.g., broad low cost, focus low
cost, broad differentiation, focus differentiation, and best value)
e. define competitive scope (i.e., broad [mass] market vs. narrow [niche] market
f. apply the generic strategies framework to a given scenario
g. explain why strategy involves trade-offs and describe what “straddling” and “getting stuck in
the middle” mean
Value innovation
h. define value innovation and describe how innovation can change the differentiation/low-cost
trade-off and therefore lead to greater value and differentiation at a lower cost, creating a new
market space
i. identify and explain the benefits of an innovation funnel and innovation management

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Market segmentation
j. define market segmentation
k. identify and explain the various approaches to market segmentation (e.g., geographic,
demographic, and socioeconomic, psychographic, and behavioral)
l. analyze a given scenario and recommend a market segmentation approach for an organization
Pricing as a strategic lever
m. explain how pricing can be a strategic lever, creating market demand and differentiating
products and services from competitor offerings
n. define price signaling and price leadership, and explain how they can be used as tactics to
reduce price rivalry
o. discuss the legal dimensions of price leadership (e.g., antitrust laws) and predatory pricing
p. identify the economic market structure where price leadership is common
q. define non-price competition as a means of differentiation and as a way to deter potential
entrants into an industry
r. demonstrate an understanding of penetration pricing and skimming
New product and new market development
s. describe how new product development can create differentiation and grow market share
t. describe how new market development can grow market share by leveraging a brand in
different market segments
u. demonstrate an understanding of Blue Ocean and Red Ocean strategies, and provide an
example of such a strategy for a given scenario
v. explain how business-level strategies are impacted by different types of industries
(e.g., fragmented industries, consolidated industries)
w. explain how business-level strategies are impacted by an organization’s stage in the industry
life cycle (i.e., embryonic [development] industries, growth industries, shakeout stage
industries, mature industries, and declining industries)
Business-level strategies synthesis
x. synthesize information in a given scenario, evaluate the situation, integrate the concepts
mentioned previously, and recommend a business-level strategy for an organization

Section B.4. Corporate-level strategies

The candidate should be able to:

a. describe the focus of corporate-level strategies (i.e., examining the organization’s business
model, deciding which businesses/industries to be in, and determining the value creation
activities and the optimal allocation of resources)
b. demonstrate an understanding of how corporate-level strategies create and/or sustain
competitive advantage by reducing costs or increasing the level of differentiation
Horizontal and vertical integration
c. identify and explain the benefits and challenges of an organization being in only one industry
d. identify and explain the benefits and challenges of an organization having a multi-business
model
e. identify and explain the ways an organization can enter, consolidate, or exit businesses
f. define horizontal integration
g. define the two types of horizontal integration (i.e., acquisition and merger)
h. identify and explain the advantages of horizontal integration (i.e., lower cost structure,
increased bargaining power, increased differentiation, and reduced competitive rivalry)
i. identify and explain the challenges of horizontal integration (i.e., implementation and
integration difficulties, possible governmental intervention, and adapting to changing market
conditions)
j. define vertical integration

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 k. distinguish between forward and backward vertical integration
l. identify and explain the advantages of vertical integration (i.e., improved quality, reliability,
and scheduling, as well as more committed investments in specialized assets)
m. identify and explain the challenges of vertical integration (i.e., increasing costs, changing
technologies, and unpredictable demand)
n. evaluate a given scenario and recommend an integration approach for the company or
companies described in the scenario
o. discuss how long-term contracting and cooperative contractual relationships can help
overcome the challenges of vertical integration while achieving the same benefits
Strategic alliances and joint ventures
p. define strategic alliance, discuss its advantages and disadvantages, and identify how this
mechanism can be used as an approach to entering or expanding a business
q. define joint venture, discuss its advantages and disadvantages, and identify how this
mechanism can be used as an approach to entering or expanding a business
Strategic outsourcing
r. define strategic outsourcing
s. identify and explain the benefits of strategic outsourcing (i.e., lower costs and increased focus
on core business)
t. identify and explain the risks of strategic outsourcing (i.e., the possibility of becoming too
dependent on one source, the possibility of losing leverage on price, increased competition, and
loss of learning opportunities)
u. analyze a given scenario and evaluate the organization’s approaches to alliances and
outsourcing for effectiveness
Diversification
v. define diversification and discuss the rationale for diversifying
w. distinguish between concentric (related) diversification and conglomerate (unrelated)
diversification
x. identify and explain how a diversified company can increase profitability (i.e., transferring and
leveraging distinctive competencies, sharing resources, extending brands, bundling products,
and leveraging general managerial competencies)
y. identify and explain the possible disadvantages of diversification (i.e., changes in industry
dynamics, increased complexity and bureaucracy, difficulties integrating new businesses,
challenges coordinating among the various business units, and unwillingness to change the
strategy when diversification is failing)
z. evaluate a given scenario and recommend a diversification strategy for a company
aa. define portfolio analysis and identify and explain the advantages and limitations of portfolio
analysis
bb. apply the BCG Growth-Share Matrix (including calculation of an entity’s relative market
share) and the GE-McKinsey Matrix (GE Business Screen) to a given scenario
Mergers and acquisitions
cc. compare the following approaches to entering a new business: internal investment in a new
venture (organic growth), merging with another entity, and acquisition of a new business; and
identify and explain the benefits and challenges of each approach
dd. evaluate a given scenario regarding a specific company and industry context, as well as the net
present value of forecasted cash flows, and recommend whether a company should enter a new
business venture through merger or acquisition
Restructuring
ee. identify and explain strategic approaches to dealing with a declining industry, including a niche
strategy, a harvest strategy, and a divestment
ff. define restructuring and explain why a company would restructure
gg. distinguish between a sell-out strategy and a divestment strategy

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 hh.distinguish between bankruptcy and liquidation
ii.evaluate a given scenario, and recommend an approach to restructuring (i.e., merger,
reorganization, or divestment)
Corporate-level strategies synthesis
jj. synthesize information in a given scenario, evaluate the situation, integrate the concepts
mentioned previously, and recommend a corporate-level strategy for an organization

Section B.5. Functional-level strategies

The candidate should be able to:

a. describe the focus of functional-level strategies (i.e., improving the effectiveness of operations
with the goal of achieving operational excellence and optimization)
b. demonstrate an understanding of how the operational fit across functional policies and
activities can create competitive advantage via consistency, reinforcement, and optimization
c. identify strategies and methodologies that can be utilized to improve performance in operating
functions (e.g., research and development, information technology, procurement, logistics,
human resources)
Operational excellence
d. explain how operational excellence is achieved through improvements in efficiency, quality,
innovation, and customer responsiveness
e. explain the concept of economies of scale and how it leads to increased efficiency
f. define supply chain management and explain how optimizing the global supply chain can
improve the effectiveness and efficiency of operations
g. define, identify, and provide examples of value-added activities and explain how the value-
added concept is related to improving performance
h. discuss the importance of hiring, mentoring, and training employees for achieving higher
productivity
i. explain how well-constructed performance compensation systems contribute to operational
excellence
j. define customer responsiveness and explain the importance of quickly adapting to customers’
changing needs
k. demonstrate an understanding of how customer loyalty can lead to a higher profit per customer
Quality optimization
l. explain why quality is defined in terms of both reliability and excellence (superior features),
and how quality can lead to a competitive advantage in both differentiation and cost
m. describe and identify the components of the costs of quality, commonly referred to as
prevention costs, appraisal costs, internal failure costs, and external failure costs
n. identify the following quality-focused methodologies and programs that can help an
organization achieve quality and operational excellence: Total Quality Management (TQM),
Kaizen, Six Sigma, Lean, Baldrige Performance Excellence Program, and ISO 9000
Technology as a competitive advantage
o. provide examples of how computer technology and information systems can lead to a higher
level of efficiency
p. identify and describe the operational benefits of an enterprise resource planning (ERP) system
Innovation strategy
q. describe the role that innovation, technological breakthroughs, and smart investments in R&D
can play in jump-starting operational excellence
r. evaluate a scenario and explain how innovation helps the company described in the scenario
achieve a competitive advantage by differentiating its products or services and/or lowering its
cost structure

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Functional-level strategies synthesis
s. synthesize information in a given scenario, evaluate the situation, integrate the concepts
mentioned previously, and recommend functional-level improvements for an organization

Section B.6. Sustaining competitive advantage

The candidate should be able to:

Barriers to imitation
a. explain why the speed with which rivals can imitate an organization’s distinctive competencies
is such a strong factor in determining the durability of competitive advantage
b. identify and explain resource barriers (e.g., economies of scale, capital requirements, switching
costs, access to distribution channels, government policy) and competency barriers
(e.g., brands, talent, patents/licenses, installed bases, influence networks, distribution networks)
to imitation given a specific organizational and industry scenario (i.e., value, rarity, and
imitability of resources, and the organizational capability to exploit these resources [VRIO
framework])
Capability of competitors
c. explain why the capability of competitors impacts the sustainability of an organization’s
competitive advantage (i.e., how agile, how financially flexible, how adaptive, and how
capable competitors or potential competitors are in absorbing new information [absorptive
capacity])
Industry dynamism
d. define industry dynamism and demonstrate an understanding of how the pace of change within
an industry can impact competitive advantage (i.e., highly dynamic industries [e.g., electronics
industry] have a high rate of innovation that can undo a differentiated product’s uniqueness)
e. identify and explain characteristics of a successful and enduring strategy (e.g., unique value
proposition, differentiated value chain, trade-offs different from rivals, organizational fit,
continuity)
f. identify and explain how, in a rapidly changing environment, sustained competitive advantage
(dynamic capabilities) often requires both exploitation of existing resources (operational
capabilities) and exploration of new knowledge and competency bases (strategic capabilities)
Sustaining competitive advantage synthesis
g. synthesize information in a given scenario, and evaluate the sustainability of an organization’s
competitive advantage

Section C. Strategy Implementation and Performance Evaluation

Section C.1. Analyzing strategic alternatives

The candidate should be able to:

Marginal costs and revenues; Adding or dropping products and services
a. define relevant costs (incremental, marginal, or differential costs), sunk costs, avoidable costs,
explicit and implicit costs, opportunity costs, and relevant revenues
b. demonstrate proficiency in the use of marginal analysis for decisions such as making or buying
a product or service, and adding or dropping a business segment or product line
c. calculate the effect of a strategic decision on projected operating income
d. recommend a course of action using marginal analysis
e. identify and explain qualitative nonfinancial factors to consider when making strategic
decisions, such as product quality, dependability of suppliers, learning opportunities, and
impact on employees

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Customer profitability analysis
f. define customer lifetime value (CLV), evaluate long-term customer profitability, and make
appropriate recommendations
g. demonstrate an understanding of the implications of customer profitability for strategic
planning (i.e., not all customers are equal)
Investment decision analysis
h. evaluate and recommend strategic investments based on discounted cash flow analysis (i.e., net
present value [NPV] and internal rate of return [IRR]) (Note: Long, detailed calculations will
not be required, but candidates should be able to analyze results and make recommendations
based on their analysis.)
i. define product life cycle, identify and explain the four stages of the product life cycle, and
explain why pricing decisions are likely to differ over the life of a product
j. identify and explain alternative approaches to dealing with risk in capital budgeting, including
sensitivity analysis, scenario analysis, and Monte Carlo simulation
k. demonstrate an understanding of real options and identify examples of the different types of
real options (e.g., abandon, delay, expand, scale back) (calculations not required)
Scenario planning
l. define scenario planning and explain how this tool can be used to model alternative outcomes
given the uncertainty inherent in forecasting future performance

Section C.2. Risk management

The candidate should be able to:

Risk analysis
a. identify and explain the different types of risk, including business risk, hazard risk, financial
risk, operational risk, and strategic risk
b. discuss cybersecurity risks and explain why organizations need to consider these risks in the
planning process
c. discuss the risks inherent in protecting intellectual property and explain why organizations
need to consider this type of risk in the planning process
d. define and demonstrate an understanding of credit risk, foreign exchange risk, interest rate risk,
market risk, industry risk, and political risk
e. define the concept of capital adequacy (i.e., solvency, liquidity, reserves, and sufficient
capital), and explain why capital adequacy impacts a company’s ability to manage risk
Mitigating risks
f. identify and explain strategies for risk response (or treatment), including actions to avoid,
retain, reduce (mitigate), transfer (share), and exploit (accept) risks
g. explain how an organization’s attitude toward risk affects risk management
h. demonstrate an understanding of diversification as a risk reduction strategy
i. demonstrate a general understanding of how currency futures, currency swaps, and currency
options can be used to manage exchange rate risk
j. define contingency planning and explain how this tool can be used to manage the risks inherent
in strategic decisions
The role of ERM
k. demonstrate an understanding of the benefits of integrating risk management with strategic
planning
l. describe the cyclical nature of risk management and explain why it is an ongoing activity
m. define enterprise risk management (ERM) and identify and explain the key objectives,
components, and benefits of an ERM program
n. identify and explain the key steps in the risk management process

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 o. define strategic risk management as a component of ERM (i.e., the process of identifying,
assessing, and managing risks that could inhibit an organization’s ability to achieve its strategy
and strategic objectives)
p. demonstrate an understanding of the COSO ERM Framework
Risk management synthesis
q. synthesize information in a given scenario, integrate the concepts mentioned previously,
evaluate a company’s risk management, and recommend improvements

Section C.3. Strategy implementation

The candidate should be able to:

Alignment of tactics with long-term strategic goals
a. explain why short-term objectives, tactics for achieving these objectives, and operational
planning must be congruent with the strategic plan and contribute to the achievement of long-
term strategic goals (i.e., the strategy comes first and informs tactical planning)
Leadership, communication, culture, and workforce engagement
b. discuss the importance of strategic leadership in the successful implementation of strategy
c. identify and explain characteristics of effective leadership, including vision, communication
skills, ability to motivate others to action, commitment, ability to delegate and empower,
emotional intelligence, competence, and character
d. evaluate a manager’s strategic leadership skills given a scenario and make recommendations
for improvement
e. explain why effective communication of the strategic plan is important for effective
implementation of the plan
f. identify and explain characteristics of effective communication, including clarity,
completeness, and conciseness of message; clear objectives; well-defined audience; well-
defined tactics; use of multiple channels; appropriate timing and frequency; and feedback
g. evaluate an organization’s communication of its strategy given a scenario and make
recommendations for improvement
h. discuss the importance of organizational culture in the implementation of a strategic plan and
assess the compatibility of a strategy with the culture of the organization
i. define workforce engagement and explain why engaged employees (i.e., employees who are
enthusiastic about their work) generally have a strong commitment to strategic goals, which
can lead to more successful implementation of strategy
Strategy deployment, including challenges and prioritization
j. identify and explain the challenges of strategy deployment, including prioritization, resource
allocation, project planning, time commitments, result forecasting, communication, buy-in, and
adapting to change
k. explain why clear accountability for results is necessary for successful implementation of a
strategy
Change management
l. discuss the increasing pace of change in the current business environment and the imperative to
be an adaptive (and/or resilient) organization
m. identify and explain best practices in change management including implementing a formal
approach; tone at the top; clearly stating the rationale; using a participative style; creating buy-
in and ownership; anticipating resistance; nominating change agents, champions, and sponsors;
soliciting feedback; addressing organizational culture; checking in frequently; clearly
communicating the imperative for change; and leadership
Linking strategy to the strategic financial plan
n. explain how enterprise strategy is linked to the strategic financial plan
o. demonstrate an understanding of how an annual financial plan is created

13 © Copyright 2022 Institute of Certified Management Accountants Updated 8/18/22

 p. evaluate the financial performance of a company and determine whether the company has
achieved its strategic objectives based on pro forma financial statements
Forecasting financial statements and organizational performance
q. analyze a multiyear financial forecast as part of an organization’s strategic financial plan to
estimate relative financial performance against competitors and against organizational goals
Financing for growth
r. identify, explain, and analyze strategies for financing both planned and unplanned growth, and
evaluate organizational financing capacity
Characteristics of a successful strategic management process
s. identify the characteristics of successful strategic plans including objective internal and
external analysis; clear statement of the strategy; attainable goals; alignment with values,
strengths, and culture; strong leadership; transparent and clear communication; effective
monitoring; commitment; discipline; and a sense of urgency
t. discuss the differences in strategy implementation for the following: small, medium, and large
companies; for-profit and nonprofit organizations; and public and private companies

Section C.4. Strategy measurement and organizational performance

The candidate should be able to:

Evaluation and control
a. discuss the importance of having an evaluation and a control system in place to monitor the
success of strategic choices
b. define critical success factors (CSFs) and key performance indicators (KPIs) and discuss the
importance of using such indicators in evaluating an organization
c. identify and explain the dangers of selecting the wrong performance measures
d. explain how annual budgets act as control mechanisms
e. define management by exception and explain the benefits of this approach
f. explain why performance evaluation measures should be directly related to strategic and
operational goals and objectives and why timely feedback is critical
g. describe how feedback loops provide information for monitoring and adapting the continuing
process of planning
Balanced scorecard
h. define balanced scorecard and explain the use of a balanced scorecard in measuring
performance
i. identify and explain the perspectives of a balanced scorecard, including financial, customer,
internal process, and learning and growth
j. describe the characteristics of successful implementation and use of a balanced scorecard
k. analyze and interpret a balanced scorecard and evaluate performance based on the analysis
Strategy map
l. define strategy map, describe its link to the balanced scorecard, and explain how a strategy
map helps management focus on the performance of key strategic objectives
m. demonstrate an understanding of a strategy map and the role it plays in performance
measurement for an organization given a scenario
Benchmarking
n. define benchmarking and explain why constantly measuring performance against best-in-class
competitors can help an organization more successfully achieve its strategic goals
Reporting results
o. identify and explain common financial performance measures, including return on investment
(ROI), earning per share (EPS), Economic Value Added (EVA®), and operating cash flow
p. identify and explain the problems with ROI, EPS, and EVA® as performance measures

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 q. demonstrate an understanding of the DuPont formula and use it to analyze performance of an
organization or group of organizations within the same industry
r. explain the issues involved in determining product profitability, business unit profitability, and
customer profitability, including cost measurement, cost allocation, investment measurement,
revenue recognition, and valuation
s. analyze and evaluate customers, products, and strategic business units based on profitability
t. define residual income (RI) and describe its advantages when compared to other performance
measures
u. analyze and interpret ROI calculations and compare these results to RI calculations
v. identify and analyze other financial ratios that could be used to evaluate financial performance
(i.e., liquidity, leverage, activity, profitability, and market ratios)
w. identify and explain international measurement issues for multinational organizations,
including transfer prices, currency fluctuations, different standards for products and services,
and income tax differences
x. discuss problems in measuring performance, including a short-term focus and suboptimization
of goals
y. recommend guidelines for evaluation for an organization (i.e., minimum amount of key
information, monitoring of most important activities, timely measures, using both long-term
and short-term measures, focus on exceptions, and emphasis on rewards and accountability)
z. define and describe the importance of a post-completion audit for strategic initiatives
aa. recommend performance measures and a periodic reporting methodology given operational
goals and actual results
bb. prepare a summary analysis and memo reporting results for an organization given a scenario

Section C.5. Governance, social responsibility, and ethics

The candidate should be able to:

Agency theory
a. define agency theory
b. demonstrate an understanding of the issues that arise when shareholders/members delegate
decision authority to their agents, the managers (e.g., managers may avoid risky decisions to
protect their jobs rather than making decisions for the long-term success of the organization,
thus resulting in a conflict of interest)
c. explain ways of mitigating the effects of the principal-agent relationship in an organizational
setting
Role of the Board of Directors
d. identify the Board of Directors’ responsibilities with respect to strategic planning and to
ensuring that the company is operated in the best interest of shareholders (for-profit
companies) or members (nonprofit organizations)
Role of the CEO and CFO
e. demonstrate an understanding of corporate governance, including the rights and responsibilities
of the CEO, the CFO, the Board of Directors, the Audit Committee, managers, and other
stakeholders
Incentives
f. explain how incentives can be designed to motivate managers to perform in the best interests of
the corporation (e.g., stock-based compensation, performance bonuses)
Organizational structure
g. demonstrate an understanding of how organizational structure can facilitate decision making
and the implementation of strategy (i.e., assigning responsibilities and tasks and specifying
how all tasks and responsibilities within the organization will be coordinated with the goals of
achieving operational excellence and amplifying distinctive competencies)

15 © Copyright 2022 Institute of Certified Management Accountants Updated 8/18/22

 h. identify and explain the virtues and pitfalls of flat vs. tall hierarchical structures and
demonstrate an understanding of span of control issues
i. identify and explain the characteristics, advantages, and disadvantageous of various types of
organizational structures including simple, divisional/SBU, functional, matrix, and network
j. recommend appropriate organizational structures for entities at various stages of development,
operating in varied environments, and utilizing specific types of strategies
Ethical decision making
k. identify and explain ethical issues in strategic management, including manipulation of financial
information, concealing quality and safety issues, self-enrichment at the expense of the
company, anticompetitive behavior, exploitation of employees, fraud, and willful pollution of
the environment
l. discuss corporate responsibility for ethical conduct and explain why it is important for an
organization to have a code of conduct
m. demonstrate an understanding of the role of “leading by example” or “tone at the top” in
determining an organization’s ethical environment
n. discuss the issues organizations face in applying their values and ethical standards
internationally
o. using the IMA Statement of Ethical Professional Practice, evaluate a given business situation
for its ethical implications, identify and describe relevant standards that may have been
violated, and explain why the specific standards are applicable
p. identify the practices that the U.S. Foreign Corrupt Practices Act prohibits and apply these
antibribery provisions to a business scenario describing a U.S. company doing business
globally
q. recommend a course of action to take when confronted with an ethical dilemma in the business
environment
Social responsibility
r. discuss social responsibility as a factor to consider in the strategic planning process (i.e., the
extent to which companies have responsibilities to society beyond making a profit for
shareholders)
s. identify and explain how sustainable business practices are those that can satisfy current needs
without jeopardizing the needs of the future
t. identify and explain how corporate social responsibility strategies and environmental
sustainability strategies can advance a company’s competitive advantage if they offer both
valuable social benefits as well as superior fulfillment of customer needs

16 © Copyright 2022 Institute of Certified Management Accountants Updated 8/18/22