1. BUSINESS STRATEGY - 3
 STAKEHOLDER
A stakeholder is anybody who has an interest in an organization and who will be
affected by the decisions that the organization makes. By anybody I mean individual
people or I could mean groups or I could mean organisations. What I mean by interest
is that if the organization does well they will benefit positively in some way. And if the
organization does badly or goes bankrupt they will be negatively affected in some way.
For example, employees are stakeholders of an organization. They are interested in the
business and want the business to do well because if the business does well they will
continue to work there and get their salaries. If the organization does badly they will lose
their jobs and not get their salaries.
 STAKEHOLDER ANALYSIS
A stakeholder analysis is all about:
Finding out who your stakeholders are,
the interest they have in the organization
the influence they have on what the organization does
help you to understand them.
Interest
Some stakeholders have a little interest in the organization. Some stakeholders have a
lot of interest in the organization.
Influence / Power
Some stakeholders have a little influence in the organization. Some stakeholders have
a lot of influence on what the organization does.
Example of Interest and Influence / Power
For example, employees have a lot of interest in the organization because it is the
organization that gives them a job and pays them a salary for doing that job. They also
have a lot of influence over what the organization does. They can stop doing their jobs
and go on strike. This will affect the organization very badly because the work will not
get done and the organization will lose money.

2. STEPS IN THE STAKEHOLDER PROCESS
These are the steps to be followed when doing a stakeholder analysis (Mindtools,
2012):
Step 1 – Identify Your Stakeholders
Step 2 – Prioritize Your Stakeholders
Step 3 – Understand Your Key Stakeholders
LULU HYPERMARKET’S STAKEHOLDERS
These are the stakeholders of Lulu Hypermarket. This shows Step 1 of the stakeholder
analysis.
Owners
Employees
Suppliers
Community
Government
Sponsor
Creditors
Customers
Their bank/s
Potential customers
Investors / shareholders
Some of these are internal stakeholders and some are external stakeholders as shown
in Table 1.
TABLE 1: INTERNAL AND EXTERNAL STAKEHOLDERS OF LULU
Internal Stakeholders External Stakeholders
Employees Suppliers
Shareholders/Owners Potential customers
Creditors Government
Board members Community

3. Sponsor Banks
Internal stakeholders are people who are already committed to serving your
organization . They are all effected by wages and job stability. Managers may get
bonuses so they want the business to be very successful. Owners/Shareholders want
the best for the company so they make more money.And if something happens to the
company they will be effected.
External stakeholders are people who are not directly working within the business but
are affected in some way from the decisions of the business. Customers are interested
in prices and quality of the product. Suppliers are intersted in the success and stability
of the company so they can ensure they will have a customer in the future. The
Government is interested as company's (especially large ones) pay taxes and emply
people.
When identifying stakeholders and rating their level of interest and involvement in the
project, it will become important to use some sort of a tool — a rating scale, an influence
diagram, or a chart form to identify the level of power, influence, interest, or impact that
the stakeholder may have on the project.
 POWER/INTEREST GRID
All stakeholders have an influence on the organization and they all have an interest in
the organization. Some of these stakeholders have more influence than others and
some have more interest. This is shown in Figure 1.

4. Figure 1: Stakeholder Power / Influence and Interest Matrix
Source: (Bryson 1995: 71 -5).
This diagram shows step 2 of the process of stakeholders analysis and shows that
when an organization analyses its stakeholders it will put it stakeholders into one of four
boxes or quadrants according to how much interest and power/influence these
stakeholders have on the organization. Figure 1 also shows who the most important
stakeholders are and who the least important stakeholders are. By putting the
stakeholders into these different boxes or quadrants the organization will be able to
develop strategies for their stakeholders in a better way because they will base their
strategies on how much power each stakeholder has and how much interest they have.
Figure 2 shows the strategies that should be used for each group of stakeholders.

5. FIGURE 2: STRATEGIES FOR EACH GROUP OF STAKEHOLDERS
Source: Power versus interest grid adapted from Eden and Ackermann (1998: 121-5,
344-6).
Figure 2 shows that for each group there will be a different strategy because of the
different level of interest and influence
UNDERSTANDING STAKEHOLDERS BETTER
To help the organization understand their stakeholders better, they should ask
themselves these questions (Mindtools, 2012):
What financial or emotional interest do they have in the outcome of your work? Is it
positive or negative?
What motivates them most of all?
What information do they want from you?
How do they want to receive information from you?

6. What is the best way of communicating your message to them?
What is their current opinion of your work? Is it based on good information?
Who influences their opinions generally, and who influences their opinion of you?
Do some of these influencers therefore become important stakeholders in their own
right?
If they are not likely to be positive, what will win them around to support your
project?
If you don't think you will be able to win them around, how will you manage their
opposition?
Who else might be influenced by their opinions? Do these people become
stakeholders in their own right?
These questions should be asked in Step 3 of the stakeholder analysis process.
It is important that we ask these questions. For example, we can find out more about
our customers when we ask these questions. These questions will help us to find out
the buying roles in a family. These roles are:
Initiator
Influencer
Decision maker
Buyer
User
By knowing who initiates the buying process we will be able to target this person. By
knowing who is the influencer we can target this person. By knowing who is the decision
maker, we can target this person. By knowing who is the buyer we can target this
person. By knowing who is the user we can target this person. Each of these persons
will receive a different message from us and together all our messages will translate into
a purchase.
QUESTION 2
This question is about three types of strategies that an organization can follow:
Substantive strategy
Limited growth strategy
Retrenchment strategy

7.  SUBSTANTIVE GROWTH
Substantive growth strategies are those companies that want to grow quickly and fast
and who think that their sales will be high enough to carry or absorb the increase in
costs will go for a substantive growth strategy.
The following are the strategies in substantive growth:
horizontal and vertical integration,
related and unrelated diversification.
 Horizontal integration and Vertical integration :
(Google images ,2012)
Source: http://bizdharma.com/blog/what-is-vertical-and-horizontal-integration/ (2012, 887-9)
 Vertical integration is the process in which several steps in the production
and/or distribution of a product or service are controlled by a single company or
entity, in order to increase that company’s or entity’s power in the marketplace.
Example of vertical integration: while you are relaxing on the beach sipping chilled cold drink,
the brand that you see on the bottle is the producer of the drink but not necessarily the maker of
the bottles that carry these drinks. This task of creating bottles is outsourced to someone who can
do it better and at a cheaper cost. But once the company achieves significant scale it might plan
to produce the bottles itself as it might have its own advantages (discussed below). This is what

8. we call vertical integration. The company tries to get more things under their reign to gain more
control over the profits the product / service delivers.
Types of Vertical Integrations:
There are basically 3 classifications of Vertical Integration namely:
1. Backward integration – The example discussed above where in the company tries to
own an input product company. Like a car company owning a company which makes
tires.
2. Forward integration – Where the business tries to control the post production areas,
namely the distribution network. Like a mobile company opening its own Mobile retail
chain.
3. Balanced integration –A mix of the above two. A balanced strategy to take advantages
of both the worlds.
 Horizontal Integration:
Much more common and simpler than vertical integration, Horizontal integration (also known as
lateral integration) simply means a strategy to increase your market share by taking over a
similar company. This take over / merger / buyout can be done in the same geography or
probably in other countries to increase your reach.
Examples of Horizontal Integration are many and available in plenty. Especially in case of the
technology industry, where mergers and acquisitions happen in order to increase the reach of an
entity.
 Related and unrelated diversification:
Related diversification is when a business adds or expands its existing product lines or
markets. For example, a phone company that adds or expands its wireless products and
services by purchasing another wireless company is engaging in related diversification.
Un-Related diversification is when a business adds new, or unrelated, product lines or
markets. For example, the same phone company might decide to go into the television
business or into the radio business. This is unrelated diversification: there is no direct fit
with the existing business.
 LIMITED GROWTH
A limited growth strategy is suitable for those organizations that do not want to have to
borrow money to grow the company. Limited growth can be achieved for companies
who want to grow through sales. Also, those companies who do not want to give
managers the chance to focus on managing the business and at the same time being
able to spend time on growing the business.
Limited growth strategies are:

9. Market penetration
Product development and
Market development.
These strategies are shown in Figure 3.
FIGURE 3: LIMITED GROWTH STRATEGIES
Source: Google Images, 2012
Figure 3 shows that:
1. Market penetration - involves selling more established products into existing
markets, often by increased promotion or price reductions or better routes to
market, for example online.
2. Product development - involves developing new products or services and placing
them into existing markets.

10. 3. Market development - entails taking existing products or services and selling
them in new markets.
4. Diversification - involves developing new products and putting them into new
markets at the same time. Diversification is considered the most risky strategy.
This is because the business is expanding into areas outside its core activities
and experience as well as targeting a new audience. It also has to bear the costs
of new product development.
 RETRENCHMENT
This strategy is the right one for organizations who are facing tough economic times.
The organization will cut down on its activities and so will not do so many activities.
They will sell assets, discontinue unsuccessful product lines, dismiss employees,
restructure debt and maybe even liquidate the organization. all this will save them
money and allow them to be prepared to grow when things change and the situation
improves. .
Retrenchment strategies are:
Divestment
cost reduction,
turnaround,
bankruptcy or liquidation.
Divestment
Divestment is a form of retrenchment strategy used by businesses when they downsize
the scope of their business activities. Divestment usually involves eliminating a portion
of a business. Firms may elect to sell, close, or spin-off a strategic business unit, major
operating division, or product line. This move often is the final decision to eliminate
unrelated, unprofitable, or unmanageable operations.
Cost reduction
―Cost reduction is to be understood as the achievement of real and permanent
reductions in the unit cost of the goods manufactured or services rendered without
impassing their suitability for the use that is intended‖- ICWA London.

11. In other words the process of identifying and eliminating unnecessary costs to improve
the profitability of a business is a cost reduction program. It may be implemented when
a company is having financial problems and must "tighten its belt." In some cases, the
firm is initiating a policy to eliminate waste and inefficiency.
Turnaround
The concept or meaning of turnaround strategy covers following points:
1. Turnaround strategy means to convert, change or transform a loss-making company
into a profit-making company.
2. It means to make the company profitable again.
3. The main purpose of implementing a turnaround strategy is to turn the company from
a negative point to a positive one.
4. If a turnaround strategy is not applied to a sick company, it will close down.
5. It is a remedy for curing industrial sickness.
6. Turnaround is a restructuring strategy. Here, a loss-bearing company is transformed
into a profit-earning company, by making systematic efforts.
7. It tries to remove all weaknesses to help a sick company once again become strong,
stable and a profit-making institution.
Bankruptcy / liquidation:
Bankruptcy is a legal status of an insolvent person or an organization, that is, one who
cannot repay the debts they owe to creditors. And when a business or firm is terminated
or bankrupt, its assets are sold and the proceeds pay creditors. Any leftovers are
distributed to shareholders.
Hence Creditors liquidate assets to try and get as much of the money owed to them as
possible. They have first priority to whatever is sold off.
QUESTION 3
BACKGROUND
This question is about the strategy that American Airlines has chosen.
 AMERICAN AIRLINES:
Founded in 1930, American Airlines, formerly American Airways, Inc. began trading on the New York
Stock Exchange on June 10, 1939. Originally headquartered in New York City, where it continues to
maintain a strong presence, American moved its headquarters to Fort Worth, Texas, in 1979 and has
since become one of the largest airlines in the world, contributing nearly $100 billion to the U.S. and

12. international economies. It has helped create more than 900,000 jobs worldwide, and supported
approximately 1,400 non-profit organizations worldwide.
The combined network fleet numbers almost 900 aircraft. In 2009, American carried approximately 85.7
million passengers, about equal to one-third of the U.S. population.
On an average day, American Airlines alone will…
Fly about 275,000 passengers
Receive more than 239,000 reservations calls.
Handle more than 300,000 pieces of luggage.
Fly about 3,400 flights.
STRATEGIC OBJECTIVES
These are their strategic objectives, that is, what they want to achieve.
Growth
Achieve $1 billion in annual revenues with $60 million in profits by 2011
Maintain a net profit rate equal to or better than the best world class companies
in our industry by 2011
Have investment policies and fiscal procedures to foster aggressive growth and
profitability by 2001
Have a comprehensive business development plan 2001
Have 6 projects in 3 countries 2001
Management
Have a management team capable of meeting our strategic objectives.
Have a complete management team.
Safety
Have an injury free workforce.

13. Administrative
Have standardized cost management and financial systems.
Have standard operating procedures.
Employees
Have a comprehensive career development program.
Achieve an employee turnover rate less than 5%.
Define and communicate organizational roles, responsibilities, and expectations
for all employees.
Physical plant
Have all digital equipment.
Have a replacement equipment financing plan.
Have a technology development and implementation plan.
Quality
Complete the ISO 9000 certification of all projects.
Achieve zero errors and omissions claims.
Achieve compliance with federal, state and local environmental mandates.
STRATEGY
Given the analysis from Ansoff matrix, there are two main strategies SW will focus on:
Penetration strategy: Continue to penetrate US market
Market development: To venture into international route in Vietnam
RESOURCE REQUIREMENTS
To implement this new strategy, SW needs the following resources:

14. Physical Resources:
Aircrafts - For both US and VN market
New distribution outlets in US
Local VN office
People Resource:
VN office staff
VN air crews
Director in charge of VN operation
Director in charge of US operation
Initial Start-Up Cost:
Operations and procurement of airport service
Launch of new office
Promotions
PRIORITY
Because the VN is a new operation, it is important that HQ of SW to set priority by
having a Director who has the right experience and who understands the VN culture
and who has worked in VN and understands how people work and think there. He
needs to have this experience so that he can make sure that he has the right people in
the office with the right experience so that the office can be a success. He will know
what knowledge, skills and competencies the staff need to make the office a success.
He will send them on training courses to acquire the right knowledge, skills and
competencies.

15. TABLE 1: ACTION PLANS
This table outlines the action plans, person responsible and start and end dates for
each strategic objective.
Objective Objective Due Responsibility Impact on List of Actions Start date End Date Success
Code Date Revenue Indicators
A1 Achieve $1 Dec Marketing Sales of Monthly ticket Jan 2013 Dec 2013 Meeting monthly
billion in 2013 Director $120m sales $10m targets
annual
revenues with Operate on a
$60 million in
60% gross profit
profits by 2013
margin
A2 Maintain a net Dec Finance Director EBIT of Operate on a Jan 2013 Dec 2013 Meeting monthly
profit rate 2013 $40 billion operating profit targets
equal to or margin of 40%
better than the
best world
class
companies in
our industry by
December
2013
A3 Have Dec Finance Director Sales of Revise Jan 2013 March Weekly monthly
investment 2013 $120m; GP Investment 2013 targets
policies and of $60m; Policies and
fiscal EBIT of
Fiscal Procedures
procedures to $40m
foster Manual
aggressive
growth and
profitability by
2013
A4 Have a Jan 2013 Marketing Achieveme Make sure BDM’s Dec 2012 Dec 2012 Weekly progress
comprehensive Director nt of have monthly reports from
business $120m in targets for 2013 BDM’s showing
development sales by sales for the
plan for 2013 year end week and
Make sure BDM’s
with $60m potential sales
gross profit know their for the next
and $40m monthly targets week and
EBIT variances on
targets
A5 Have 6 Dec Marketing Get the
projects in 3 2013 Director $120b in Identify the 6 countries Dec 2012 Dec 2012 Weekly report
countries in sales by back meetings to
2013 Finance year end monitor progress
2012
Director

16. Operations Set up the Jan 2013 Feb 2013
Director infrastructure
Human
Resources
Director
Start generating March Dec 2013
income 2013
A6 Have a Dec Human Achieveme Determine people Oct 2012 Oct 2012 Daily progress
management 2012 Resources nt of sales resource reports
team capable Director and profit requirements for
of meeting our objectiveds
each functional
strategic
objectives area
A7 Have a Dec Human Achieveme Recruit, select Oct 2012 Nov 2012 Weekly progress
complete 2012 Resources nt of sales and train report
management Director and profit management
team objectives
team
Construct an
Organisation
Chart showing all
positions and
incumbents
A8 Have an injury Dec Health & Safety Achieveme HSE Awareness Jan 2013 Dec 2013 Monthly
free workforce 2013 Director nt of sales campaigns awareness
and profit campaigns and
objectives report backs on
progress
A9 Have Feb 2013 Finance Achieveme Streamline June 2012 Feb 2013 Monthly
standardized Director nt of sales finance systems progress reports
cost and profit
management Information objectives
and financial
Systems
systems
Director
A10 Have standard Dec Marketing Achieveme Draw up June 2012 Dec 2012 Monthly
operating 2012 Director nt of Sales operation progress reports
procedures and profit procedure manual
Finance objecgtives
Director
Operations
Director
Human
Resources
Director

17. Information
Systems
Director
A11 Have A Dec Human Achieveme Succession Plan June 2012 Dec 2012 Monthly
Comprehensiv 2012 Resources nt Of Progress
e Career Director Monthly Talent Reports
Development Sales And Management Plan
Programme Profit
Line
Figures
Managers Career Plan For
Each Individual
A12 Achieve An Dec Human Achieveme Profit Sharing For June 2012 Dec 2013 Monthly
Employee 2013 Resources nt Of Employees Progress Report
Turnover Rate Director Monthly
Less Than 5% Sales And Bonuses Based
Profit
Line On Performance
Figures
Manager
Salaries Higher
Than Industry
Norm
A13 Define and Dec Human Achieveme Job descriptions June 2012 Dec 2012 Monthly review
communicate 2012 Resources nt of for all staff meetings
organisational Director monthly June 2012 Ongoing
roles, sales and Performance
responsibilities profit
Line feedback
, and targets
expectation for Managers sessions for all Jan 2013 Ongoing
all employees staff each month
Coaching scheme
introduced
A14 Have all digital June Finance Achieveme Digitalise June 2012 June Monthly review
equipment 2013 Director nt of everything 2013 meetings
monthly
Information sales and
profit
Systems
figures
Director
A15 Have a Dec Finance Achieveme Draw up the plan June 2012 Dec 2012 Monthly
replacement 2012 Director nt of progress
equipment monthly meetings
financing plan Department sales and
profit
Heads
figures

18. A16 Have a Dec Information Achieveme Draw up the plan June 2012 Dec 2012 Monthly
technology 2012 Systems nt of progress
development Director monthly meetings
and sales and
implementation profit
Finance
plan figures
Director
A17 Complete the Dec All Achieveme Complete the June 2012 June Monthly
ISO 2013 Department nt of documentation 2013 progress
certification Heads monthly and submit for meetings
sales and
approval
profit
targets
A18 Achieve zero Dec All Achieve Systems in place June 2012 Dec 2012 Monthly
errors and 2013 department monthly to ensure no progress
omissions heads sales and errors and meetings
claims profit
omissions
targets
A19 Achieve Ongoing Finance Achieve Systems in place June 2012 Dec 2012 Monthly
compliance Director monthly to comply with progress
with federal, sales and mandates meetings
state and local All profit
environmental targets
department
mandates
heads
 CONCLUSION :
This assignment focused on stakeholders analysis, strategies and action plans.
1. It’s in my opinion that knowing your stakeholders are important because they
generate an initial list of people that are interested and will be affected with the
happenings in the business and because Stakeholders can greatly influence the
intended outcome and success of a project. Knowing and identifying your
stakeholders better and dividing them into categories like important, less important
and very important will give you an understanding of who can enable or block a
decision.
For example the media may be a potential stakeholder but their involvement has to
be treated with caution particularly in high conflict situations.
I believe that you can then use the opinions of the most powerful stakeholders to
shape your projects at an early stage. Not only does this make it more likely that
they will support you, their input can also improve the quality of your project
By acknowledging them, you can anticipate what their reaction to your project
may be, and build into your plan the actions that will win their support.

19. 2. In my opinion Small projects typically don't have to worry about understanding and
managing the stakeholder community. You usually have to deal with a sponsor (the
person that requested the work) and that's about it. But if you have a large and
diverse stakeholder community then it does make sense to perform a stakeholder
analysis.
Performing a stakeholder Analysis is a good idea because it helps you identify and
understand your key stakeholders and win their support. Familiarizing yourself with
the stakeholders need s will initially make your job a lot easier and performing a
stakeholder analysis during the planning stage can greatly influence the
development of an effective project strategy.
A Stakeholder analysis goes through a process which will help you determine the
various stakeholder groups, their needs, and how you will satisfy their needs which
are all equally important for a good stakeholder management.
It will also give you a look at each stakeholder and determine how important he or
she is to the success of your project so the business can make decisions
accordingly.
3. The steps I have identified may not be complete but are enough to know and
analyze your stakeholders better.
For a briefed analysis a step can be added which is to profile each identified
stakeholder.
Though the provided approach is efficient and provides a quick review of all
stakeholders, completing a more detailed, narrative profile is strongly encouraged.
This will allow for a greater understanding of each stakeholder and how to get each
stakeholder involved.
A detailed stakeholder profile can include, but is not limited to, the following
types of information :
Types of Information Collected in a Detailed Stakeholder Profile
Identified Role
Motivation for Being in the Project
How will the project benefit them?
Perceived Expectations and Goals in Relation to the Project
Do the stakeholder’s goals and expectations support or conflict with the
project goals?
Level of Importance for the Success of Project
What resources might the stakeholder bring to the project? What is the
stakeholder willing to organize for the project?

20. Potential Negative Impact on the Project§
What can the stakeholder prevent from happening? Are there any
stakeholder interests that conflict with project goals?
Level of Influence over the Project for Decision-Making
What is the stakeholder’s power and status in relation to the project?
Does the stakeholder control key resources? Does the stakeholder have
informal influence or personal connections that will affect the project?
What power does the stakeholder have over implementation of the
project or over other stakeholders?
Intention to Participate According to the Project Design
Does the stakeholder want to be involved or merely need to be
informed about the project and its process? How much does the
stakeholder need to participate to make the project a success?
Intended Use of the Project or the Project Results
How will the stakeholder directly benefit from the project and how will
this affect the stakeholder’s motivation?
 Or even a LADDER OR PARTCIPATION step can be used for further analysis and to know how
each one of them is contributing to the project.
I
I
I
I
I

21. 4. I believe it is equally important for a deeper understanding to draw up a power
matrix plotting the power the stakeholder has over setting the rules for your business
against the operational power (resources, funding, people).
Power interest grid classifies stakeholders in relation to their power and the extent to
which they are likely to show interest in the actions of the organisation. And it can be
used to indicate the nature of the relationship which should be adopted with each
group, which are basically the strategies to follow.
5. In my opinion asking question to your stakeholders does help you better engage
with them.
If you need to know more about your key stakeholders, If you need to know how
they are likely to feel about and react to your project, if you also need to know how
best make them participate in your project and how best to communicate with them.
Just asking questions will give you answers to all these needs.
The phrase “keep your friends close and your enemies closer” comes to mind here.
Someone who is a strong supporter you will want to keep that way so keeping them
informed as progress is made and ensuring you know what they expect as time
moves on is essential with this type of stakeholder.
6. I believe knowing about the three types of strategies will guide you towards the
right strategy to choose in a right way.
However I cannot right away buy an oil company therefore I have to horizontally
integrate my way through it.
These are the ways with which one can decide which step to take next.
Or even if a strategy calls it retrenchment as a whole. It still works to either turn
around a business unit, to divest or simply cut-off a particular unit. Henceforth giving
you a direction of how a business can be profitable.
7. I feel we should draw up an action plan because it is a process which will help
you to focus your ideas and to decide what steps you need to take to achieve
particular goals that you may have. It is a statement of what you want to achieve
over a given period of time. Preparing an action plan is a good way to help you to
reach your objectives : don't worry about the future, start planning for it!

22. SOURCES:
http://www.referenceforbusiness.com/management/De-
Ele/Divestment.html#ixzz2CakYkGII
http://www.investopedia.com/terms/l/liquidation.asp#ixzz2Caoo2OLA
http://www.aa.com/i18n/amrcorp/corporateInformation/facts/amr.jsp
http://en.wikipedia.org/wiki/Ford_River_Rouge_Complex
http://www.slideshare.net/tutor2u/business-strategy-retrenchment
http://influenzatraining.org/documents/s18763en/s18763en.pdf