Page 19 - CIMA MCS Workbook May 2019 - Day 1 Suggested Solutions

SUGGESTED SOLUTIONS

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 (those that can affect or be affected by business decisions) can influence the success
of a strategy, depending on whether they support or oppose it. For example, the lack of
availability of quality products or suitably skilled staff would disrupt JORD’s mission of
“constructing sustainable, bespoke and high‐quality buildings” and would challenge their
corporate values. This would potentially result in lost customers, damaged reputation and brand
which are to be avoided in such a highly competitive and fragmented industry. JORD 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

JORD must ensure that its decisions do not ignore the interests of all stakeholders, for example
the trade unions who will be interested to protect the best interests of their members e.g. Unite
or Unison in the UK.

Interest may be assessed by considering for example:

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

• customers – a complex area for JORD given that there are many different groups who will
have a variety of demands such as fair prices, quality, reliability, safety etc. It would
however seem that the main requirements for customers are “quality”, “product design”,
“delivery”, “continuous improvement” and investment in “state of the art manufacturing
processes”.

• suppliers – again a complex area for JORD given how many there are many suppliers
providing raw materials ranging from timber to heating and ventilation, final electrical
installations and lighting, external door fitting, decorating, flooring completion and
bathroom and kitchen fittings. They will require payment on time, fair negotiations, etc. It is
likely that some of the more established suppliers will be subject to contractual agreement.

• governments – imposing restrictions on fuel efficiency, environmental control, waste
disposal, health and safety legislation etc.

KAPLAN PUBLISHING 69