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All change ahead

Familiarising yourself with the new format of the Advanced Level paper is crucial to passing the Strategic Business Management module

The first sitting of the new Advanced Level module, Strategic Business Management (SBM), will take place in July 2014. The module forms a bridge to the Case Study in terms of exam format and approach, but has an identity in its own right in developing students’ expertise to formulate and implement financial strategy.

Finance, in particular areas such as valuation and securities, is an important aspect of the SBM syllabus. The broad topic weightings examined within the SBM syllabus are as follows:

Topic Weighting
Strategy 35–45%
Finance, financial risks, valuations for businesses and securities, investment and distribution decisons 30–40%
Ethics 5–10%
Corporate reporting issues 15–20%
Assurance issues 10%

None of the topics will be examined in isolation, and will interact in each exam paper. Strategy incorporates a number of disciplines in both business strategy and financial management areas, including corporate governance and financial strategy.

Brought forward knowledge is important at SBM. You will be expected to apply knowledge from the Business Strategy and Financial Management modules. Also brought forward are elements of the Financial Accounting and Reporting and Audit and Assurance modules.

Question format

The SBM exam will be three and a half hours long and is open book. Discount tables will no longer be provided with the exam paper – you should take them into the exam with you and make sure you know how to use them. For the question format, see the table below.

Question Approx. mark allocation Description
1 60 Mini case study. Scenario-based question in context of business and financing issues. Can include corporate reporting and/or assurance.
2 40 Scenario-based question in context of financing and business issues. Can include corporate reporting and/or assurance
 Ethics may feature in either question

Question one

The mini case question is referred to as such because the majority of information provided will be in the form of exhibits. This is intended to make the scenario more realistic and to give you more opportunity to apply your professional judgement and scepticism. The exhibits will be accompanied by an element of narrative to explain their purpose (unlike the Case Study, where all information is provided in the style of exhibits). The industry featured could be based in the UK or in another territory; there will usually be some kind of international context to the scenario.

You will be presented with one or more problems to solve, which may or may not interact, and you will need to assimilate the information provided and apply your judgement to provide reasoned advice to the client. There will be no right or wrong answer, but there may be several reasonable approaches.

Question two

Question two will also be scenario based, and will be similar in approach to the previous Business Change exam questions, but with a wider topic range. It will tend to focus on one issue (as opposed to the mini case, which might feature several), and will also integrate topics.

New topics

There are a number of new topics included within the SBM module, which were not previously tested at the Advanced Level. The SBM module broadens from business strategy into business management and incorporates elements such as:

  • strategic marketing and brand management
  • supply chain management
  • operations management
  • corporate governance
  • human resources management
  • information strategy
  • performance management
  • treasury and working capital management

Approach to ethics

Ethics is an important topic and will be covered in every exam in either question. An ethical dilemma will arise and you will be expected to identify and explore the ethical issues and actions required.

You should take a balanced approach and offer reasonable solutions. You should also consider whether any further information or evidence might be provided to support your recommendation; if this is the case make sure you state this in your answer to the question.

Advice to candidates

The key areas of focus of the SBM module are problem solving and advice. The client in the scenario will present a problem and you will be expected to provide reasoned advice which solves the problem, rather than sitting on the fence and offering a variety of options. The intention is to reflect the real world, where a chartered accountant would be expected to provide guidance and advice.

Identify the key issues within the scenario and prioritise them. Follow the implications from the key issues and identify any relevant links and interaction between the issues if present. Look for the embedded points within the scenario, which may be subtle or omitted altogether.

Professional scepticism should be applied: who is supplying the information, why it has been supplied? What is the motivation of the information supplier? Can the quality of the information be relied upon? A questioning mind is important in all areas of work, not just in auditing. Take care to be realistic in your responses and don’t simply follow one particular line. Requirements should be answered in the order they are given – the examiners are not trying to catch you out, and there is usually a logical flow to the requirements.

Start your answer to each requirement on a new page – that way you can go back and add further points later on if they occur to you. Don’t be afraid to space out your answers within the workbook; the examiners and markers must indicate that they have seen every page of the booklet during the marking process, whether or not it has been written on. Also remember that full sentences are important and unexplained bullet points are unacceptable.

Finally, ensure you clearly give each paragraph a subheading. This can help the marker to decipher the detail. As a rule, the worse your handwriting is, the more important the layout of your answer. 

This article originally appeared in the April 2014 edition of VITAL.