Page 82 - Stakis Consolidated Teaching Note

• David Michels saw the value of linking Casinos and
hotels

• At book value Nursing Homes were valued on the basis

of the development potential of the options held by
Stakis. However, Stakis could not afford to develop

these options and their planning permissions were

running out. If Stakis failed to develop these options the

result would be a disasterous drop on the book value of
the company which would result in the banks calling in

their loans. Nursing Homes had to be sold as a strategic

necessity.

Consequently, nursing homes, which were another good

business but one which, due to lack of funds, Stakis could

not develop was sold. The City responded to these
developments. The new Stakis management were seen as

being capable of developing the company. Moreover, they

were seen as being able to deliver what they promised

within the constraints they had set.

Essentially the new Stakis management complied with the

expectation of the strategic analysis model (See figure 13)
they had addressed the areas of environment, culture,

stakeholders and capability and on the basis of these had

built a strategy which worked.