Chapter 13 - Stakeholders

Chapter 13 Stakeholders

A stakeholder is agroup or individual who has an interest in what the organisation does, or an expectation of the organisation.

Part 1 Internal Stakeholders

Internal stakeholders are intimately connected to the organisation, and their objectives are likely to have strong influence on how it is run.

Stakeholder: Employees
Need/Expectation: Pay, working conditions and job security
Example: More responsibility, expect increased in pay

Stakeholder: Managers/Directors
Need/Expectation: Status, pay, bonus, job security
Example: If growth occur, want increased profits and increased in bonus.

Part 2 Connected Stakeholders

Connected stakeholders can be viewed as having a contractual relationship with the organisation.

Stakeholder: Shareholders
Need/Expectation: Steady flow of income, possible capital growth and the continuation of the business
Example: If capital is required, expect a rise in the dividend stream

Stakeholder: Customers
Need/Expectation: Satisfaction of customers' needs by providing value-for-money products and services
Example: Customers may be dissatisfied if there is an attempt in increase the quality and the price

Stakeholder: Suppliers
Need/Expectation: Paid Promptly
Example: If a decision is made to delay payment, existing suppliers may cease supplying goods

Stakeholder: Finance providers
Need/Expectation: Ability to repay the finance including interest, security of investment
Example: The firm's ability to generate cash.

Part 3 External Stakeholders

External stakeholders will have quite diverse objectives and have varying ability to ensure that the organisation meets their objectives.

Stakeholder: Community at large
Need/Expectation: The general public can be a stakeholder, especially if their lives are affected by an organisation's decisions
Example: Local residents' attitude towards out-of-town shopping centres

Stakeholder: Environmental pressure groups
Need/Expectation: The organisation does not harm the external environment
Example: If and airport wants to build a new runway, the pressure groups may stage a 'sit in'

Stakeholder: Government
Need/Expectation: Company activities are central to the success of the economy (providing jobs)
Example: Actions by companies could break the law, or damage the environment and governments therefore control what organisations can do

Stakeholder: Trade unions
Need/Expectation: Taking an active part in the decision-making process
Example: If a department is to be closed the union will want to be consulted, and there should be a scheme in place to help employees find alternative employment

Part 4 Stakeholder Conflict

Stakeholders: Employees vs Managers
Conflict: jobs/wages vs bonus (cost efficiency)

Stakeholders: Customers vs Shareholders
Conflict: Product quality/service levels vs profits/dividends

Stakeholders: General public versus shareholders
Conflict: Effect on the environment vs profit/dividends

Stakeholders: Managers vs Shareholders
Conflict: Growth vs Independence

Mendelow's Power-interest matrix

Level of Power LOW, Level of Interest LOW - Minimal Effort
Level of Power LOW, Level of Interest HIGH – Keep Informed
Level of Power HIGH, Level of Interest LOW – Keep Satisfied
Level of Power HIGH, Level of Interest HIGH – Key Players