ACCA SBL

STRATEGIC BUSINESS LEADER

COMPLETE SUBJECT NOTES
BY VERTEX LEARNING SOLUTIONS
VALID UNTIL DEC 2025
Copyright Notice

©️ https://vls-online.com 2025. All Rights Reserved

The material contained within this electronic publication is protected under International and UK
Copyright Laws and treaties, and as such any unauthorized reprint or use of this material is strictly
prohibited. You may not copy, forward, or transfer this publication or any part of it, whether in
electronic or printed form, to another person, or entity.

Reproduction or translation of any part of this work without the permission of the copyright
holder is against the law.

You’re downloading and use of this eBook requires, and is an indication of, your complete
acceptance of these ‘Terms of Use.’

You do not have any right to resell or give away part, or the whole, of this eBook.

1
VERTEX LEARNING SOLUTIONS - https://vls-online.com Click to go to Table of Content
 TABLE OF CONTENTS

CHAPTER TOPIC PAGE NO.

1 Strategy, Leadership, and Culture 3

2 Stakeholders and Social Responsibility 14

3 Impact of Corporate Governance on Strategy 32

4 The External Environment 54

5 Strategic Capability 66

6 Competitive Advantage and Strategic Choice 76

7 Assessing and Managing Risk 97

8 Internal Control System 112

9 Applying Ethical Principles 131

10 Financial Analysis 144

11 Applications of IT 160

12 E-business 183

13 Enabling Success and Strategic Change 198

14 Process Redesign 225

15 Project Management 235

2
VERTEX LEARNING SOLUTIONS - https://vls-online.com Click to go to Table of Content
Chapter 1

Strategy, Leadership and Culture

Leadership

Leadership: Is the process of influencing an organization (or group within an organization) in its
efforts towards achieving an aim or goal (Johnson et al, 2017: p.470).

Organizational success typically depends on good leadership. Visionary leaders are supposed
to express a clear vision for the organization's future and inspire others.

Ethics are key to leadership. Leaders are responsible for upholding ethical standards in their
actions and decision-making, which impacts the entire business. Later in this Chapter and Chapter
9, we will look more into ethics.

Perspectives on Leadership

According to Yukl (2013), there are several primary methods for researching leadership.

▪ Trait Approach

Trait theories: The qualities possessed by good leaders.

In the early 20th century, research assumed that ‘natural leaders’ had unique attributes including
energy, intuition, and persuasiveness. However, this research did not establish a set of attributes
that guarantee leadership success. Recent research emphasizes how certain traits impact
leadership behavior and effectiveness. Some studies highlight ethical leadership values. `

▪ Behavior Approach

This approach examines how managers handle job demands and limits to determine leadership
effectiveness.

3
VERTEX LEARNING SOLUTIONS - https://vls-online.com Click to go to Table of Content
 ▪ Power-Influence Approach

This discusses leadership effectiveness based on the power a leader possesses and how they use
it. Power extends beyond subordinates to peers, superiors, and external stakeholders.
Leadership can be autocratic where leaders exercise significant power or participative where
leadership involves reduced power and more decision-making and autonomy for subordinates.

▪ Situational Approach

Effective leadership traits, abilities, and behaviors vary by scenario. Effective leadership styles
vary based on follower traits, work kind, organization, and external environment. This is also
known as contingency theory.
▪ Integrative Approach

This means considering more than one type of leadership variable described above.

Leadership Roles

Johnson et al (2017) identify various key roles in strategic leadership.

▪ Top Managers

CEOs and other senior managers do these duties:

▪ Communicate a clear vision of the future and plan to internal and external stakeholders.
▪ Aligned organization to deliver strategy, fostered trust, and empowered people to deliver it.
▪ Showing transformation is an organization's symbol and role model.

▪ Middle Managers

Middle managers play a wider role than just implementing top-down strategic plans.

▪ Senior management advisors, as they know daily operations well.

▪ Making sense of strategy entails applying it to specific settings.
▪ Adapting strategy to changing internal and external circumstances.
▪ Local change leadership, like senior management, aligns and embraces change at a local level,
especially in large businesses.

4
VERTEX LEARNING SOLUTIONS - https://vls-online.com Click to go to Table of Content
Change and Leadership

Change Agent: ‘Is an individual or group that helps to effect strategic change in an organization.’
(Johnson et al, 2017)

Organizations and individuals interact; thus, change is inevitable. How can leaders ensure their
organizations can adapt to change?

Change agency is the process of implementing change, which can be centralized or distributed
among a group, such as a project team or management staff. Consultants, for example, may
contribute to change agency.

▪ Charismatic and Transactional Leadership

Johnson et al (2017) note that leadership styles may be fitted into a general model of leadership
that recognizes two general types.
1. Instrumental leadership: Leadership based on systems and controls (also called
transactional leadership).
2. Transformational leadership: Leadership that energizes people and builds a clear vision
of the future (also called charismatic leadership).
In practice, these are extremes and there are many positions in between. According to the
situational approach, leadership style should be tailored to specific conditions.

▪ Change Management Styles

Balogun and Hope Hailey (2008) identify five styles of change management which may be
appropriate in each context.

5
VERTEX LEARNING SOLUTIONS - https://vls-online.com Click to go to Table of Content
 Education and communication
• Explaining in detail why change is necessary, to win people round
Collaboration and participation
• Bringing people affected by change into the process of managing it
Intervention
• Change is led by a change agent who will delegate some tasks to project teams; the idea
is that involvement of those teams will lead to greater commitment from them
Direction
• Management use their authority to establish their strategy and how change will occur in
a top-down fashion
Coercion
• An extreme form of direction – change is simply imposed by management

Entrepreneurship

▪ Entrepreneurship: Is a process by which individuals, teams or organizations identify and

exploit opportunities for new products or services that satisfy a need in a market.
Entrepreneurship entails identifying opportunities and developing a suitable business
model and strategy. Social entrepreneurship involves addressing social issues without
profit but requires a finance strategy. This is detailed in Chapter 12. However, friction with
corporate management may be important to promote ideas and developments.
▪ Intrapreneurship: Means applying entrepreneurial principles within organizations.

To foster innovation, some firms promote intrapreneurship by promoting autonomy, risk-taking,

rewarding intrapreneurial behavior, and devoting resources to new ventures.

Strategy

Definition:

Strategy: Is the long-term direction of an organization.’ (Johnson et al, 2017)

▪ The long term this will mean several years, which can be thought of as ‘three horizons’.
▪ Horizon 1 means defending and extending the current business.

6
VERTEX LEARNING SOLUTIONS - https://vls-online.com Click to go to Table of Content
 ▪ Horizon 2 businesses are emerging activities that should provide new sources of
profit.
▪ Horizon 3 ventures are new and risky and might provide returns in several years’ time.
Managers need to consider all three in formulating strategy.
▪ Strategic direction organizations will generally have objectives and then organize themselves
to meet those objectives.
▪ Organization: organizations generally contain people with differing views and interests, which
are relevant in setting strategy. It will also have to consider its internal and external
stakeholders and its boundaries – what it decides to include or exclude in its activities.

Levels of Strategy

Mission Statements

▪ These are formal documents that state the organization’s mission.

▪ They are published within organizations to promote desired behavior: support for strategy
and purpose, adherence to core values and adoption of policies and standards of behavior.

7
VERTEX LEARNING SOLUTIONS - https://vls-online.com Click to go to Table of Content
Objectives
▪ A mission needs to be supported by more detailed objectives.
▪ A simple model of the relationship between the various goals, objectives and targets is a
pyramid analogous to the traditional organizational hierarchy.

▪ Drucker (1989) was the first to suggest that objectives should be SMART. (Specific,
measurable, achievable, realistic, time related)
▪ Today, realistic is often replaced with results-focused, to emphasize that managerial
attention needs to be directed towards achieving results rather than just administering
established processes.

Strategic Values

Ethics in Business

Ethics: The study of right and wrong

Ethics underpins leadership. Leaders are responsible for upholding ethical standards in their
actions and decision-making, which impacts the entire business.
Business presents ethical challenges due to its focus on profit-making. Successful businesses
generally seek constant advantage over competitors, leading CEOs to feel compelled to pursue
8
VERTEX LEARNING SOLUTIONS - https://vls-online.com Click to go to Table of Content
such opportunities. Pressures can cause ethically questionable behavior and poor business
judgements.

The Ethical Values of Leaders

The ethical views of leaders are often based on values including:

▪ Accountability
▪ Integrity
▪ Honesty
▪ Objectivity
▪ Fairness
▪ Transparency
▪ Openness
▪ Responsibility
▪ Loyalty

Ethical Leadership and the Fair Treatment of Stakeholders

▪ To operate ethically, leaders must treat stakeholders fairly and acknowledge their rights.
▪ Respect for workers' dignity, equality, diversity, and health and safety requirements are
included.
▪ Redundancy makes ethical handling of staff crucial.
▪ Leaders must select redundancy candidates fairly and legally.
▪ The fair treatment of stakeholders includes respecting customer rights and not
intentionally exploiting them, such as by charging inflated rates for goods or services.
▪ This rationale also protects shareholder interests by avoiding hazardous or reckless
strategies that could harm their investment. Leaders must balance commercial viability
with stakeholder interests in business operations.

9
VERTEX LEARNING SOLUTIONS - https://vls-online.com Click to go to Table of Content
Corporate Social Responsibility

Definition: It is the approach taken by organizations to provide benefit to society in general

rather than specific stakeholders.

Ethical Leadership and CSR

▪ Global demand for ethical behavior and environmental awareness has driven many top
firms to adopt corporate social responsibility (CSR)..
▪ Establishing CSR programmes demands ethical leadership at the top to assure their
seriousness and avoid allegations of superficial concern.
▪ To make programmes meaningful, executives must integrate ethics into the
organization's culture.
▪ The significance of culture in companies is elaborated in next section of this Chapter.

Corporate Governance

Definition: Concerns the conduct of senior officers in an organization. It also relates to the way
organizations are directed and controlled.

▪ The governance framework defines the organization's purpose and decision-making

process.
▪ Agency difficulties can occur in corporate governance due to the separation of ownership
(shareholders) and daily control (managers).

Ethical Values and Corporate Governance

Let’s see how the ethical values held by leaders supports and underpins corporate governance.
▪ Fairness
The leaders’ deliberations and values (and those of the board) that underlie the company must
be balanced by considering everyone who has a legitimate interest in the company.
▪ Openness/Transparency
Open and clear disclosure of relevant information to shareholders and other stakeholders, also
not concealing information when it may affect decisions.

10
VERTEX LEARNING SOLUTIONS - https://vls-online.com Click to go to Table of Content
 ▪ Honesty and Loyalty
Relates not only to telling the truth but also not misleading shareholders and other stakeholders.
▪ Responsibility
Requires that leaders’ need to be willing to accept the credit when things go well and be just as
willing to accept the blame for governance failings in the event they occur.
▪ Accountability
Requires organizational leaders’ to be answerable for the consequences of their actions.
Accountability is closely linked to the issue of judgement. Leaders’ need to make decisions which
enhance the prosperity of the organization.
▪ Integrity
Integrity can be taken as meaning someone of high moral character, who sticks to principles no
matter the pressure to do otherwise. In working life this requires leaders to adhere to the
principles of professionalism and probity.

Strategic Management

Johnson et al (2017) highlight the main elements of strategic management as consisting of the
following:

Later chapters address how strategic decisions can lead to organizational change, including
resource adjustments for new actions. Managing changes with cultural consequences is much
more challenging.

11
VERTEX LEARNING SOLUTIONS - https://vls-online.com Click to go to Table of Content
Culture
Organizational culture: ‘A pattern of shared basic assumptions…considered valid and transmitted
to new members’ (Schein, 1985). It has also been described as ‘the way we do things round here’.

The Cultural Web

An analysis that compares the paradigm (assumptions) in an organization’s culture with the
physical manifestations of that culture.

Johnson (1992) developed the term cultural web to mean a combination of the assumptions that
make up the paradigm, together with the physical manifestations of culture.

These are defined as follows:

▪ Control systems – what is measured and rewarded in the organization, e.g. people may
be rewarded based on volume of sales rather than customer service
▪ Routines – the way members of an organization behave to each other and to those
outside the organization and Rituals – events that are important to the organization,
whether formal (e.g. recruitment and induction processes) or informal (e.g. drinks after
work)
▪ Organization structure – this will determine formal and informal relationships and what
is important, for example a hierarchical structure suggest a ‘top-down’ approach
▪ Paradigm – the shared assumptions of the organization, including beliefs, that are taken
for granted and represent a collective experience

12
VERTEX LEARNING SOLUTIONS - https://vls-online.com Click to go to Table of Content
 ▪ Symbols – this can include logos, office layouts, titles and uniforms, often in the form of
‘status symbols’
▪ Power structures – people holding power in the organization. This may not just be based
on seniority, e.g. in professional firms’ technical experts may hold significant power
▪ Stories and myths – stories told to each other, outsiders and new recruits such as the
organization’s foundation or key decisions

You can remember these terms if you need to analyze an organization’s culture using the
cultural web by the mnemonic ‘CROPS PS’.

The Cultural Web and Organization Strategy

▪ The ability to examine cultural presumptions and practices to ensure that organizational
components are in line with one another and with an organization's plan is why the
cultural web is crucial for business strategy.
▪ If an organization's management is not getting the desired results, they can utilize the
web to determine whether the underperformance is being caused by the organization's
culture.
▪ Such an analysis has three stages.
▪ Management might start by examining the current organizational culture.
▪ Secondly, they can examine the culture as they envision it, and
▪ Thirdly, they can discern the distinctions between the two.
▪ These variations point to the adjustments that must be made to create the high-
performance culture they desire.
▪ The cultural network can thus be very helpful in managing change and altering
organizational culture.

13
VERTEX LEARNING SOLUTIONS - https://vls-online.com Click to go to Table of Content