Page 6 - CIMA SCS Workbook August 2018 - Day 1 Suggested Solutions

CIMA AUGUST 2018 – STRATEGIC CASE STUDY

With more and more advertising moving to online platforms, those who spend on such activities
are able to exert high power over their traditional providers.

Government

National newspapers tend to have a political bias in terms of their opinion. For example, in the UK
The Daily Telegraph is typically read by those who would vote Conservative in a general election,
whereas the Guardian is read by Labour supporters. As long as the relevant title continues to lend
a sympathetic voice, the Government’s interest is likely to remain low. However, the
Government’s ability to influence any industry is likely to be considered high.

High power, High interest

Finch family

The Finch family members who own 60% of the issued share capital in FNG will undoubtedly have
high interest in the company; much of their wealth will be in the form of capital value in the
shares and the dividends they produce. They will also have high power as long as they vote
unanimously, as collectively they control the company.

Other shareholders

It is not known who owns the remaining 40% of the issued share capital; whether it is just a small
number of shareholders who own a large percentage of shares each, or many smaller
shareholders. Assuming that they act in unison, they can still exert significant influence over the
company, even though they cannot control it, so power could be high.

They should also have high interest in FNG, particularly in light of the declining financial
performance in recent years.

Trade unions

Unions such as the BUJ exist to look after the interests of their members, the staff employed by
the company. As such, they must demonstrate high interest in FNG, particularly at times when the
chances of redundancies are high.

They can also exert high power over the company in that, should the unions feel that member
interests are not been looked after by FNG, they can recommend that industrial action be taken
(such as staff going on strike). This would naturally be highly disruptive.

Customers – national titles

Those that pay to access the news will be showing high interest in the organisation, particularly at
a time when there is plenty of free news sources available as an alternative.

44 KAPLAN PUBLISHING