Page 5 - CIMA SCS Workbook August 2018 - Day 1 Suggested Solutions

SUGGESTED SOLUTIONS

EXERCISE 2
The stakeholders in FNG can be analysed using Mendelow’s Power/Interest matrix as follows:

High interest, Low power

Staff

The staff at FNG will naturally have high interest in the organisation, as they will presumably be
dependent on it for their livelihood. However, as individuals they will have little power to
influence the strategic thinking of the company (although staff interests could be linked to the
trade unions – see below) as they will not be able to market their skills elsewhere in an industry
which is struggling.

Suppliers

Suppliers of items such as paper for newsprint and printing equipment will also have high interest
in FNG as a source of revenue. As more and more newspapers move to digital, sales of paper and
printing presses will undoubtedly go into decline, with the reduced demand meaning that supplier
power is reduced.

Customers – local titles

Those who purchase local newspaper titles will have little choice as to how they get their news;
the local paper may be the only title covering their region. They will therefore have high interest
in FNG but low power due to lack of alternative options.

High power,Low interest

Bank

The provider of debt finance (it is assumed to be a bank) will have high power over FNG, as the
debt contract will presumably contain lending covenants; should it have occasion to do so, it
could seriously disrupt the activities of the company.

However, FNG has been able to reduce the debt outstanding over the last 2 years and so
presumably has kept up with interest payments. It is likely therefore that the bank will have low
interest in FNG, until a point whereby it starts to be concerned at the recoverability of the debt, in
which case its interest would increase.

Advertisers

Those who spend on advertising will be able to exert high power over FNG, as they presumably
have alternative options for getting their marketing message to the target audience. As long as
FNG provides the appropriate platform and hits that target audience, the interest of advertisers
will remain low.

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