Focus on Professional Competency: Industry/Sector Perspective Team goals,
standards, cooperation, and performance Review the following definition and elements
for the Industry/ Sector Perspective competency.
DEFINITION:
Individuals entering the accounting profession should be able to identify (through
research and analysis) the economics and broad business financial risks and
opportunities of the industry and economic sector in which a given organization
operates. Identification of these risks and opportunities should include both issues
specific to the enterprise, as well as those pervasive throughout the industry/sector.
The definition and elements are reprinted with permission from AICPA; Copyright © 1978–2000 &
2003 by American Institute of Certified Public Accountants. The AICPA’s Core Competency
Framework can be accessed at eca.aicpaservices.org.
ELEMENTS FOR THIS COMPETENCY INCLUDE
1. Identifies the economic, broad business, and financial risks of the industry/sector
2. Describes market forces that make a given organization a candidate for merger,
acquisition, and/or strategic alliance
3. Identifies and describes competitive advantages and disadvantages
4. Recommends courses of action that take advantage of an organization’s key
competitive advantages and disadvantages
5. Communicates the financial and non-financial performance of an organization’s
operational processes
6. Effectively addresses changes in the economic, broad business, and financial risks of
the industry/sector over time
REQUIRED:
A. Focus on competency elements 1, 3, and 4, which require accountants to have
knowledge about the business environment and competitive advantage. Answer the
following questions:
1. Explain how industry/sector risks lead to uncertainties in making the types of
long-term investment decisions addressed in this chapter.
2. Explain how competitive advantages can lead to a positive NPV for a proposed
long-term investment project.
3. Explain how competitive disadvantages can lead to failure of a long-term
investment project after it has been accepted.
4. Explain why the managers who propose a project might not fully recognize
relevant competitive disadvantages.
B. Focus on competency element 6, which addresses change in the business environment
over time. How can an organization monitor long-term investment projects to effectively
address changes in risks over time?
C. Focus on competency element 2, which addresses knowledge of the synergies between
businesses. Refer to the scenario presented in the chapter, “Focus on Ethical Decision
Making: The Right Thing to Do.” What market forces might have encouraged Glaxo-
SmithKline to enter into a strategic alliance with the World Health Organization to
develop a low-cost malaria drug?