Page 20 - CIMA MCS Workbook November 2018 - Day 1 Suggested Solutions

CIMA NOVEMBER 2018 – MANAGEMENT CASE STUDY

EXERCISE 3
Strategic decision making requires the consideration of stakeholders. How these stakeholders are
affected by or can affect strategic developments is assessed by the use of two parameters:

Stakeholder Power
Stakeholders can affect the success of a strategy, depending on whether they support or oppose
it. For example, the lack of availability of suitably skilled staff would disrupt GRAPPLE’s strategy of
“maintaining market share” via “technical innovation and product quality” potentially resulting in
lost customers, damaged reputation and brand. GRAPPLE must therefore consider stakeholders
before setting, revising or implementing strategic objectives.

Power may be assessed by considering for example:

 The status of the stakeholder
 The claim on resources that the stakeholder has
 Level of representation in the decision making process

Stakeholder Interest
GRAPPLE must ensure that its decisions do not ignore the interests of all stakeholders, not just the
shareholders of the company, for example the trade unions and associations who will be
interested to protect the best interest of their members e.g. the British Soft Drinks Asssociation

Interest may be assessed by considering for example:

• employees – require reward, job security, good working conditions

• customers – a complex area for GRAPPLE given that there are many different socio‐
demographic groups who will have a variety of demands such as fair prices, quality etc. It
would however seem that the main requirements for customers are quality, reputation,
taste and of course “value for money”.

• suppliers – the inputs specifically the materials are extremely differentiated as every firm is
trying to create the best product this is a complex area for GRAPPLE given the processes
involved in the production. The suppliers are nonetheless important and they will require
payment on time, fair negotiations, etc., some of which will be subject to contractual
agreement.

• governments – imposing taxation, regulations defining which ingredients can be used,
government legislation re environmental control and charges etc. The soft drink industry
has become politically sensitive area for the governments given the rise in concern from
heath lobbyists.

70 KAPLAN PUBLISHING