Strategic Business Leader · Financial analysis and decision-making techniques

Non-Financial Factors and Strategic Decision Evaluation in ACCA SBL

Updated 11 October 2026 · Fact-checked

Strategic decision evaluation combines financial results (NPV, profit, returns) with non-financial factors: strategic fit, risk, ethics, stakeholders, sustainability and capability. In SBL you use the numbers as evidence, then judge the option against suitability, acceptability and feasibility. You finish with a clear, justified recommendation.

Understand Non-Financial Factors and Strategic Decision Evaluation

Financial analysis tells you whether an option is likely to create value. It does not tell you whether the option fits the strategy, whether stakeholders will accept it, or whether the organisation can deliver it. Many SBL cases are built so that the best number is not the best decision.

Non-financial factors are the things that are hard to put a figure on. They include strategic fit, brand and reputation, staff morale, customer loyalty, legal and regulatory exposure, ethical impact, environmental and social effects, and the organisation's skills and resources. Some can be measured (for example, staff turnover), but they are not in the cash flows.

The standard way to structure evaluation is suitability, acceptability and feasibility (Johnson, Scholes and Whittington).

Suitability: does the option fit the strategic position, objectives and environment? Does it build on strengths and address weaknesses?
Acceptability: will stakeholders accept the returns, the risk and the wider impact? Financial return sits here, along with ethics and stakeholder reaction.
Feasibility: can it be done? Think funding, people, skills, technology, time and supply chain.

The balanced scorecard helps you check that a decision is not judged on finance alone. It looks at four perspectives: financial, customer, internal business process, and innovation and learning. An option that lifts profit but harms customer satisfaction or staff capability may fail the wider test.

Integrated and sustainability-related information widens the view further. Integrated reporting looks at value creation across several capitals (financial, manufactured, intellectual, human, social and relationship, natural). Sustainability and ESG information shows risks and opportunities that do not yet appear in profit. In an exam, link these to long-term value, risk and stakeholder expectations. Then reach a conclusion: weigh the factors, say which matter most in this case, and recommend.

Key rules to remember

Suitability: Suitability = fit with strategic position, objectives, strengths and environment; Ask: does it solve the problem or use the opportunity in the scenario?
Acceptability: Acceptability = returns + risk + stakeholder reaction + ethics; Financial return belongs here, but so do shareholder, employee, regulator and community views.
Feasibility: Feasibility = funding + people and skills + technology + time + legal and operational ability; Look for resource gaps in the scenario.
Balanced scorecard perspectives: Financial | Customer | Internal business process | Innovation and learning; Use it as a checklist to test whether an option supports all four, not only finance.
Decision rule for finance: Accept if NPV > 0 (at the right cost of capital), then test the non-financial factors; A positive NPV is necessary evidence, not a full decision.

How to solve Non-Financial Factors and Strategic Decision Evaluation questions

Use this method for any question that asks you to evaluate, advise on or recommend between strategic options.

1Read the requirement and note the verb (evaluate, advise, recommend) and who you are advising.
2Pull the key numbers from the scenario and state what they show, with a short comment on reliability and assumptions.
3Structure the non-financial points under suitability, acceptability and feasibility, or another framework the task suggests.
4Apply each point to the scenario facts. Name the stakeholder, the risk or the resource gap. Avoid generic lists.
5Cover ethical, sustainability and long-term value issues where the case hints at them.
6Weigh the factors. Say which ones matter most and why, and note any conflict between financial and non-financial results.
7Give a clear recommendation with conditions or next steps (for example, further information or risk mitigation).
8Check your tone and format suit the audience, for the professional skills marks.

Quickest way: Numbers, SAF, verdict

When to use it: Use when time is short and you must evaluate options in a few minutes.

One line on what the financials say, with one caveat.
Three short headings: suitability, acceptability, feasibility.
Two or three scenario-specific points under each, each ending with an effect (so what).
One ethical or stakeholder point if the case gives a clue.
Finish with a firm recommendation and one condition.

Common mistakes in Non-Financial Factors and Strategic Decision Evaluation

Treating the financial result as the answer.
Students trust numbers because they feel exact.
Fix: Present the figure, then test the option against fit, stakeholder views and delivery. Say when a non-financial factor outweighs the figure.
Listing generic factors such as 'reputation' and 'morale' with no link to the case.
Students memorise lists and write them out.
Fix: Tie every factor to a named fact in the scenario and explain the consequence for this organisation.
Putting returns under feasibility, or mixing up the three tests.
The headings are learned as words, not as questions.
Fix: Use the questions: does it fit (suitability), will they accept it (acceptability), can we do it (feasibility).
Ignoring ethics and sustainability unless the requirement names them.
Students think they are separate topics.
Fix: Scan the scenario for environmental, social, safety or integrity hints and include them as part of acceptability and long-term risk.
Ending without a recommendation.
Students run out of time or fear being wrong.
Fix: Always conclude with a justified choice. A reasoned view earns marks even if the examiner would choose differently.
Using the balanced scorecard as a description of the model only.
Students recall theory but do not apply it.
Fix: Name one measure per perspective that suits the case, and say how the option would move it.

Worked examples

Example 1

A listed manufacturer is considering moving production to a low-cost country. The NPV of the move is positive. The scenario states that the current plant is the town's main employer, the company has a 'responsible employer' brand, and the new site has no trained workforce. Advise the board whether to proceed.

Show the solution

Financials: the positive NPV shows the move is attractive on cost, but check whether it includes redundancy, training, transition and brand-damage costs, and how sensitive it is to labour and currency assumptions.
Suitability: the move supports a cost-led strategy, but it conflicts with the 'responsible employer' positioning. It may fit the cost objective yet weaken the differentiation.
Acceptability: employees, unions, the local community and possibly regulators will oppose it. Customers who value the brand may react badly. Shareholders may accept it if returns are strong and the risk is explained.
Feasibility: there is no trained workforce at the new site, so quality and output risk is high. Training time, supply chain set-up and management oversight from a distance are resource issues.
Ethics and sustainability: consider fair treatment of redundant staff, the working conditions at the new site and the supply-chain standards the company must apply.
Weighing: the financial gain is real, but the brand and delivery risks could erode it. The key issue is whether the cost saving outweighs lost reputation and execution risk.
Recommendation: do not proceed as proposed. Re-run the NPV with realistic transition and brand-risk costs, consider a phased move or partial relocation, and agree a support plan for affected staff before any decision.

Answer: Recommend that the board does not approve the move yet. The positive NPV is supported on cost, but suitability is mixed, acceptability is weak among employees and the community, and feasibility is poor because the new site lacks skills. Re-test the numbers with fuller costs, consider a phased approach and decide after a stakeholder and risk plan is in place.

Example 2

A retailer must choose between Option A, opening ten new stores (higher expected profit), and Option B, investing in an online platform and sustainable packaging (lower expected profit). Use the balanced scorecard to show how you would assess the options beyond profit.

Show the solution

Financial perspective: Option A gives higher expected profit but needs more capital and has fixed-cost risk. Option B gives lower profit but lower capital and more flexible costs. State this as evidence, not the verdict.
Customer perspective: A reaches local shoppers but only where stores open. B reaches a wider market and may attract customers who value sustainability. Measures: customer satisfaction, repeat purchase rate, online conversion rate.
Internal business process perspective: A needs store roll-out, staffing and property management. B needs fulfilment, IT systems and packaging supply chain. Measures: order fulfilment time, stock accuracy, packaging waste.
Innovation and learning perspective: A is an extension of the existing model and builds little new capability. B builds digital and data skills. Measures: staff digital training, new-service launches.
Wider value: B also reduces environmental impact and may lower regulatory and reputational risk. Integrated thinking would link it to natural and intellectual capital.
Weigh and conclude: A wins on short-term profit, B on capability, customer reach and long-term risk. If the strategy is to be a future-ready brand, B fits better, provided the profit shortfall is affordable.

Answer: Option B is the better strategic fit on three of the four perspectives, and A wins on the financial one. Recommend B if the board can accept lower short-term profit, with targets for online sales, customer satisfaction and packaging waste to track delivery.

Exam tips

Show the numbers first and then move on. Marks usually sit in the application and judgement, not in repeating figures.
Use headings such as suitability, acceptability and feasibility so the marker can find each point quickly.
Pick out scenario clues about stakeholders, ethics and capability. They are placed there deliberately.
Write a firm recommendation with a condition. This also helps your professional skills marks for commercial acumen and communication.
Match the format and tone to the audience in the task, such as a board report or briefing note.

Practice questions from Financial analysis and decision-making techniques

Non-Financial Factors and Strategic Decision Evaluation: frequently asked questions

What are non-financial factors in strategic decision making?

They are the qualitative and hard-to-measure issues that sit outside the cash flows. Examples are strategic fit, reputation, stakeholder reaction, ethics, sustainability, risk and organisational capability. They can change which option is best.

How do I use suitability, acceptability and feasibility in SBL?

Use them as three headings. Suitability asks if the option fits the strategy and environment, acceptability asks if stakeholders will accept the return, risk and impact, and feasibility asks if the organisation can deliver it. Apply each to facts in the scenario.

How does the balanced scorecard help evaluate decisions?

It stops you judging an option on finance alone. You test the option against financial, customer, internal process, and innovation and learning perspectives, and suggest a measure for each.

Should I always recommend the option with the best financial return?

No. A strong return can be outweighed by weak fit, stakeholder opposition, ethical problems or delivery risk. Explain the trade-off and justify your choice.