3.2.3 Understanding the role and importance of stakeholders. Flashcards
What does the the influence of stakeholders on decision making depend on?
In some small family businesses - the interests of shareholders may be the major influence.
Location can have a major impact on the local environment, local communities or environmental pressure groups may be powerful stakeholders and influence decision making.
Highly competitive markets - customers will be large stakeholders.
Businesses that are dependant on a highly skilled but hard to find workforce - employee’s are stakeholders.
Outline the factors stakeholders must take into account.
Manager and the management team.
Customers/supporters.
Employees of Manchester
United.
Government.
Media.
Shareholders.
Local community.
Creditors.
Suppliers.
What two categories can stakeholders be divided into?
Internal - within the business e.g. employees.
External - Outside the business e.g. competition or customers.
What are the alternative classifications of stakeholders?
Primary stakeholders: those who are directly involved and affected, either positively and negatively, by an organisations actions.
Secondary stakeholders: Indirectly affected by a businesses actions.
Key stakeholders: Can be either primary or secondary, but will have significant influence upon or importance within an organisation.
Outline the impact of needs on a family owned businesses decision making.
Needs and interests may be the major influence on decision making. Likely to be a small number of shareholders, each with a substantial shareholding.
Outline the impact of needs on a businesses in highly competitive markets decision making.
Customers will be powerful stakeholders and their needs - likely to include fair prices and good quality products - will be a major influence on decision making.
Outline the impact of needs on the decision making of a business which is dependant on highly skilled, specialists employees.
Highly dependant on highly skilled, specialist workers, employees may be powerful stakeholders, particularly if they are hard to find.
Outline common or overlapping needs.
Although different groups of stakeholders have different needs in relations to a business, in general, they all have something in common - their needs can usually be filled only if the business is sufficiently prosperous and successful.
Outline conflicting needs.
Stakeholders have different needs and interests, these could cause conflict as each individual shareholder sees their own needs as a priority.
Outline stakeholder mapping.
The extent to which stakeholder groups are able to influence business decisions depend on a range of factors, including their power over, and their interest in, the activities in the business.
Outline the features of each element of the Mendelow power-interest matrix.
Low power & low interest = minimal effort.
High power & low interest = keep satisfied.
Low power & high interest = Keep informed.
High power & High interest = Key players.
What are the influences on the relationship with stakeholders?
Influences include the extent to which statements:
Have status and power within or outside the organisation and in relation to the project under consideration.
Control resources relevant to the project being considered; this includes control of relevant budgets and manpower within an organisation.
Are involved in the decision making process within the organisation or in other organisations in relation to the product.
Have specialist expertise, knowledge and skills related to the project under consideration.
Have needs and objectives that are similar to, or conflict with, those of the other stakeholders and those of the organisation.
etc.
How can Cyert and March help to approach stakeholder relations.
Cyert and March: - Satisficing - negotiations between key stakeholders to arrive at an acceptable compromise. - Sequential action - management focus on stakeholders needs in turn. - Side payments - used where a stakeholders primary needs and objectives cannot be met so they are compensated in some other way. - Exercise of power: when a deadlock is resolves by a senior figure forcing through a decision based on the power they possess.
How can stakeholder mapping help to approach stakeholder relations.
Such as Mendelows power - can help managers classify stakeholders according to their power and interest and make recommendations about how to manage different groups in relation to this.
How can mission statements help to approach stakeholder relations?
Summarise the essential values and priorities, thus helping to resolve some conflicts between different stakeholder groups’ expectations of a business.
