ICAP CAF CAF-7: Business Insights and Analysis Syllabus

CAF-7: Business Insights and Analysis syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for CAF-7: Business Insights and Analysis in ICAP CAF, not a summary of it.

1. 1

   External Analysis

   4 topics

   • Political, legal and social environment
   • Technological disruption and opportunities
   • Economic environment
   • Competitive environment
2. 2

   Internal Analysis

   2 topics

   • Internal environment of an organization
   • Business model and value chain
3. 3

   Ethical Decision Making

   2 topics

   • Tucker's 5-question model
   • American Accounting Association 7-step model
4. 4

   Sources of Finance and Cost of Capital

   3 topics

   • Debt, equity and Islamic finance
   • Cost of equity, cost of debt and WACC
   • Capital Asset Pricing Model
5. 5

   Risk Management

   4 topics

   • Financial risk management techniques
   • Interest rate hedging
   • Foreign exchange hedging
   • ISO 31000 risk management guidelines
6. 6

   Financial Analysis

   3 topics

   • Budget preparation using quantitative techniques
   • Cash flow and working capital management
   • Investment appraisal
7. 7

   Introduction to Sustainability

   3 topics

   • Key sustainability concepts and stakeholders
   • Three pillars of sustainability
   • ESG factors in measuring corporate sustainability

CAF-7: Business Insights and Analysis flashcards for ICAP CAF

19 of 60 cards from the CAF-7: Business Insights and Analysis deck — real questions with worked answers.

1. What does the PESTEL framework analyze in a business's external macro-environment?

   Political, Economic, Social, Technological, Environmental (Ecological) and Legal factors that influence an organization but lie outside its control.

2. Give two examples of POLITICAL factors that affect a business's external environment.

   Government stability, taxation policy, trade tariffs/protectionism, subsidies, and government spending priorities.

3. Give two examples of LEGAL factors in the external environment.

   Employment law, health and safety law, competition/anti-monopoly law, consumer protection law, and contract/data protection law.

4. Give two examples of SOCIAL (sociocultural) factors affecting a business.

   Demographic changes, population age structure, lifestyle and attitude shifts, education levels, and cultural/religious values.

5. What is 'technological disruption'?

   Innovation in technology that significantly changes the way an industry operates, often displacing established firms, products or business models.

6. Name two opportunities that technological change can create for a business.

   New products/services, lower production costs, improved efficiency, new distribution channels (e-commerce), and better data/analytics for decisions.

7. Name two threats arising from technological disruption.

   Existing products/skills becoming obsolete, new competitors entering, high investment cost to keep up, and cybersecurity risks.

8. List four key ECONOMIC factors a business must monitor in its environment.

   Economic growth (GDP), interest rates, inflation, exchange rates, unemployment levels, and the business/trade cycle.

9. What are the four stages of the economic (business) cycle?

   Boom (peak), recession (downturn), slump (trough/depression), and recovery (upswing).

10. Define inflation and name one way it affects business decisions.

    Inflation is a sustained rise in the general price level; it raises input costs, erodes purchasing power and affects pricing, wage demands and investment decisions.

11. What does Porter's Five Forces model analyze?

    The competitive forces in an industry: threat of new entrants, bargaining power of suppliers, bargaining power of buyers, threat of substitutes, and competitive rivalry among existing firms.

12. In Porter's Five Forces, what factors raise the threat of new entrants?

    Low barriers to entry: low capital requirements, easy access to distribution, no economies of scale needed, weak brand loyalty and no legal/regulatory barriers.

13. In Porter's Five Forces, when is buyer (customer) bargaining power HIGH?

    When buyers are few/large, products are undifferentiated, switching costs are low, and buyers can integrate backwards or are price-sensitive.

14. What is the 'internal environment' of an organization?

    Factors within the organization's control: its resources, competences, structure, culture, systems, management and finances (often analyzed as strengths and weaknesses).

15. What does the McKinsey 7S model use to analyze the internal environment?

    Strategy, Structure, Systems (the 'hard' Ss) and Shared values, Skills, Staff, Style (the 'soft' Ss).

16. What is a business model?

    The way an organization creates, delivers and captures value, i.e. how it generates revenue and profit from its activities, customers and resources.

17. What is a value chain (Porter)?

    A framework that breaks a firm's activities into primary and support activities to analyze where value (margin) is added and where competitive advantage can be gained.

18. Name the five PRIMARY activities in Porter's value chain.

    Inbound logistics, operations, outbound logistics, marketing and sales, and service.

19. Name the four SUPPORT activities in Porter's value chain.

    Firm infrastructure, human resource management, technology development, and procurement.

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