Considering I have put together similar blogs for Corporate Reporting (CR) and the ACA Case Study exam, it is only right that I complete the ACA Advanced Level with a blog on SBM. I know some of you have been asking for this one so here it is! Strategic Business Management is honestly not a bad exam compared to other ACA exams. I have even actually ranked some Professional Level exams to be more difficult than SBM. In this blog, I will be sharing all the tips I can think of to help you pass this exam.
What is Strategic Business Management (SBM)?
Let’s recap from my Advanced Level breakdown but add some more detail. The SBM exam is 3.5 hours in duration and 2.1 minutes per mark. As with all Advanced Level exams, the pass mark for this exam is 50%. I have found a nice table from ICAEW that summaries the relative weighting of subjects in SBM:
As can be seen above, Strategic Business Management is a combination of the Financial Management (FM) and Business, Strategy and Technology (BST) Professional Level exams. This exam can be quite difficult if you have not sat FM due to credit for prior learning/exemptions. I would highly recommend learning/recapping FM, regardless of whether you have exemptions or not. You definitely need to bring your FM knowledge to an examinable standard. Remember, this exam is completely open book so you do not need to memorise everything. It is also worth recapping BST but do not worry about spending too much time on this. I will touch on this more below.
The exam consists of two written questions, usually split around 60 and 40 marks. Given the variety of topics covered in this exam, these questions can also vary paper to paper. FM wise, a lot of the content is all still relevant and can come up. This includes investment appraisal, raising finance, business valuations and financial risk management. There is also 15-20% of Corporate Reporting (CR) in this exam but this does actually work quite nicely if you sit these exams together. An example of where CR commonly ties into a financial risk management question is to do with the financial reporting of hedging and IFRS 9.
There is also an element of ethics. As I have said in several previous blogs such as BPT, these are essentially the easy marks you should be able to get the majority of. If the exam has 7 ethics marks and you can bag these, that’s 14% out of the 50% to pass!
With a good open book and question practise, I feel by time you get to the SBM exam it is a fairly passable.
Business Strategy and Technology (BST) Prerequisite
As per ICAEW page 25, in the Business Management part of this exam, students may be required to:
- Undertake a critical assessment of key business issues.
- Structure market data and industry data from various sources.
- Explain and evaluating the strengths and weaknesses of an organisation or segments of an
- Evaluate the impact of decisions on business strategy.
- Evaluate the impact of financial strategy on business strategy.
Honestly, when it came to BST and even SBM, it is actually very difficult to prepare for the above. This is because application is key! From question to question, they are all usually very different. The business, scenario and question with sub requirements varied from paper to paper. You could not predict what would come up either. It all quite skills based and involves usually stating the obvious and using common sense to some extent. You can even pull in other sensible yet relevant points that are not in the question such as COVID-19. However, I did tend to just use the information given.
It can be difficult to know/judge how much work you need to do. It is up to you how much you feel you need to do. As I did quite well in BST (80), I did not go over it at all. I would suggest recapping by attempting the SBM Question Bank questions, instead of recapping BST questions. The difficulty marking these yourself remains that the model answers are very detailed and are not realistic for answers under exam conditions. Regarding the BST models and actual content, I would not suggest relearning these as they are not needed in this exam. It may be worth having them to hand for reference but I would not spend too much time on this.
What is actually worth doing from the list above is the point on structuring market and industry data. I am reading this to be the financial performance and position analysis question as in BST. This tends to come up in most exams (potentially all). See my August 2020 (July delayed exam due to COVID-19) paper here where this did come up.
After you do a few, you will start to understand the calculations that are relevant and pick up identifying the more difficult calculations. These less obvious/harder ratios should score you more marks (1 mark vs 1/2 a mark) so are worth doing if you can. Again, you of course need to apply this to the scenario but I think with practise you can get better at this. Sitting the ACA Case Study with SBM can help in this aspect.
A tip I would give on the calculations is to not go overboard. If I remember correctly, you will only get a mark for bringing the numbers into your wordy analysis. You therefore should not waste time doing loads of different calculations if you are not going to be able to discuss them. It is quality over quantity here and that is particularly important given the time pressure of this exam.
Financial Management (FM) Prerequisite
For BST I advised not really to go over the content too much as it is much more applied. However, for FM I would say the opposite and definitely advise getting up to scratch with this. From memory there were much more business valuation questions in SBM than FM so really practise these. Financial risk management cannot be ignored either. As mentioned above, this would be an easy way to tie IFRS 9 in as they did in my real exam. Investment appraisal and raising finance is also a possibility. I did not see much WACC at all when practising questions.
There is not much more I can add here other than what I have already stated. Therefore to summarise, brush up on FM! Make use of the open book here because you do not need to memorise it all again. Practising questions on the same examinable area would be most effective. I would advise practising SBM questions rather than FM unless you have a lot of time where you can do both. They are not much more difficult content wise but they are more scenario based.
My How to Pass FM blog may also have some helpful tips should you need it.
Corporate Reporting (CR)
Hopefully you are sitting CR at the same time as SBM. If not and you are perhaps sitting SBM first, you will unfortunately be in a more difficult position. This is because the 15-20% CR content in this exam and the questions/standards that could be examined are pretty much the same as in the CR exam. If you have read my blog on Corporate Reporting or if you are studying for it now, you will know there is a LOT of content. The content essentially overlaps so it is important to understand it.
Make sure you get a good understanding of IFRS 9 as I have said consistently throughout this blog. This is not a standard to leave to the last minute and I definitely found it to be the most difficult. You can practise questions from either the CR or SBM Question Bank for CR. This is because they are not very different, well not to me at least. This came up in my SBM exam in August 2020 which is one of the reasons I think I did not do as well as I could have!
Approach to SBM Revision
I sat the SBM progress test/mock in college months before going through/recapping the exam content and passed. This was a fairly comfortable pass of 62. Unlike the CR exam where I felt this gave me false confidence, I do think the SBM mocks give a fairly good indication of how you will do.
Besides CR content which was new to me but I was fortunately also sitting, there really is no new content in SBM. I would suggest recapping FM first and taking the time to understand the difficult CR standards. Then get straight to the Question Bank! As per minimising exams stress, I would plan out my revision. This involved practising one SBM question a day or every other day. If you do CR in between this works well as it covers part of SBM too. The questions are very long and can be time consuming. Take your time and try not to get drained.
SBM is an exam I do not think you need to practise all questions to pass. If you do not have time to practise all the questions, do not stress too much. As long as you have had good coverage you should be ok. You could plan your answers including estimating timing as outlined below or read through answers. This always is helpful so you can see whether you have interpreted the question correctly. The more you do, it should also help you recognise and think of relevant answers, the more you see what scores marks.
To stress the point again, the difficulty with SBM questions is that the BST parts are difficult to mark. You will be awarded marks for relevant/sensible points. This can be quite subjective. There are also more marks available than the maximum you can be awarded for a question. That being said, it is still worthwhile to do to help with your analysis answers, overall application skills and timing. Take advantage of any progress tests or mock exams as these will help you know how well you are performing.
Timing for SBM
Apologies if you have read this in the CR blog but it is essentially exactly the same for SBM. The question will be split into smaller examinable areas but you will not be told how many marks these are worth individually. With practise you should get more accurate at approximating the marks. As there are 2.1 minutes per mark, allocate this time and make sure to move on once the time is up. You do not want to run out of time and miss the easier marks at the start of the question!
SBM Open Book
In my opinion, your open book should include:
- FM summary notes with references to model Question Bank answers.
- BST models although you are unlikely to need these.
- A separate CR file helps so you can reference the SBM Question Bank for model answers. However, it is entirely up to you how you do this but I am not sure if you will have access to the CR Question Bank in this exam.
- Assurance notes – ensure to cover due diligence and procedures.
- Any ethics notes that may help you.
Make sure your notes are clear and concise and they are worth tabbing up to avoid wasting too much time. That being said, due to the amount of application required in this exam, I did not use my open book too much. It is helpful if you need to recap how to perform a specific valuation technique or for CR standards but otherwise, for SBM I would avoid relying on notes.
Exam Tips for Strategic Business Management
For SBM, I would suggest really reading the question. As you did in BST (if you have sat it), you should get marks for pulling out the relevant parts from the question and for stating the obvious. You will be swamped with information in all the exhibits and it can be overwhelming. A very useful tip is noting that the exhibits are in order and each part will usually only be relevant to one sub requirement. This means you do not need to jump around the whole paper to find the key information, just follow the exhibits. It is quite nicely organised and ensure to really use them!!
There will be a lot of information you can include in your answers. Given the time pressure, really make sure to stick to strict timings. You will do better if are able to tailor your answer to the question. Additionally, you are more likely to score higher if you can develop your points rather than making single, independent points. That being said, markers do prefer it where your answers are clearly laid out, making use of spaces and short sentences. Do not overthink it, mention anything you think is relevant and avoid going off on tangents.
I do think it is very difficult to tell how well you have done in this exam. I thought I did well but only ended up with 52 – I told you I needed that pass mark of 50! If you are sitting the exam and think you do not get it or have no idea whether you are scoring marks, just stick at it. Persistency is needed for this exam.
SBM Wrap Up
This exam is definitely one that you can pass with some work. It is similar to BST in the sense that it is quite random and unpredictable. Just make sure to recap FM and to cover CR standards in detail and you should pass. It is also worth practising the analysis number questions. The questions do vary and your answers need to be tailored. Stick to your timings, try not to rely on an open book and develop your points. As per these exam statistics, the pass rate is around 85%. You can do this – good luck!