Stakeholders + Stakeholder Mapping Flashcards
What are stakeholders?
Stakeholders are those who have an interest in a business and can affect or be affected by the business’s actions, objectives, and policies.
What are shareholders?
Shareholders are individuals or entities that own stock in a public or private corporation, making them partial owners of the company.
What are pressure groups?
Pressure groups are organised groups that attempt to influence business decisions or government policies to align with their specific interests or causes.
What are the types of stakeholders?
- primary stakeholders (direct involvement)
- secondary stakeholders (indirect involvement)
- internal stakeholders
- external stakeholders
Examples of internal stakeholders
shareholders, employees, managers, etc.
Examples of external stakeholders
customers, suppliers, banks/investors, local community, pressure groups, government.
Why does conflict between stakeholders occur?
When looking at stakeholder needs it is often difficult to appease the needs of all. This can often result in disagreements and conflicts of the two.
Why may there be conflict between employees and managers?
Job security and high wages which may increase costs, versus high bonuses paid as a result of improved cost efficiency.
Why may there be conflict between customers and shareholders?
Good quality products and low prices which may reduce profits, versus high profits and dividends.
Why may there be conflict between local community/pressure groups and shareholders?
Reduction in the adverse impact of business activity on the environment which may increase costs, versus low costs leading to high profits and dividends.
What is a win-lose outcome of conflict?
Where a company has a fixed pot of benefits to share out, and it is not possible to meet all stakeholder needs.
What is a win-win outcome of conflict?
A firm aims to grow the ‘pot of benefits’ so all stakeholders share in success. This can require a long term approach.
What is stakeholder mapping?
Medelow’s power - interest matrix includes the level of power and the level of interest for a range of stakeholders.
What is the aim of stakeholder mapping?
It is designed to help manage stakeholder’s conflicting interests.
What does the position of the stakeholder depend on?
Their relative power and interests in current business operations.
What are the different quadrants in stakeholder maps?
- low interest low influence: monitor
- low interest high influence: keep satisfied
- high interest low influence: keep informed
- high interest high influence: manage closely
Why might interest be high for a stakeholder?
- staff have a personal, financial, or career investment in the business.
- there are few alternatives.
- official bodies (councils) are accountabel for actions.
What might power depend on?
- status, pay, reputation, social standing.
- claim on resources in terms of size of budget/department.
- extent of represenation in meetings.
How should a business interact with the low interest high influence quadrant of stakeholders?
KEEP SATISFIED
Keep this group satisfied in order to avoid them gaining more interest and shifting to the high interest high influence quadrant.
This could be by informing them of the likely outcomes of any changes in advance, or for shareholders, giving a positive dividend forecast.
How should a business interact with the high interest high influence quadrant of stakeholders?
MANAGE CLOSELY
Key players could be major supporters or opponents, that will influence the business’s level of success. Extensive communication needed to assure them of necessity of decisions.
How should a business interact with the low interest low influence quadrant of stakeholders?
MONITOR
Lack of interest means they are more likely to accept decisions, so minimal effort needs to be devoted to managing expectations.
How should a business interact with the high interest low influence quadrant of stakeholders?
KEEP INFORMED
Stakeholders are interested but lack power in realtion to decisions. Rational explanations would be required, and proactive communication. Evidence of consultation may placate them.
What are the benefits of effective communication and consultation?
- discussion can help shape support for projects.
- working with powerful stakeholders can improve chance of success.
- active communication can help manage expectations.
