Topic 1B: Stakeholders

Question 1

What is a stakeholder?

Answer 1

People who have a stake in the organisation - they have an interest in what the organisation does.

Question 2

What is agency?

Answer 2

Where one person acts on behalf of another

Question 3

Explain stakeholder and agency?

Answer 3

An organisations managers acts as agents for the stakeholders, whose influences varies from organisation to organisation.

Question 4

What does agency relationship in a company refer to?

Answer 4

The separation between between an organisations owners (the shareholders) as the principal and those managing the organisation on their behalf as their agents.

Question 5

What is at stake for a shareholder in a business and what do they expect?

Answer 5

Money invested - a return on their investment so that their wealth increases:

steady growing profits paid out by business

growth in capital value of their share of the business.

Question 6

What is at stake for directors, managers, employees and trade unions and what do they expect?

Answer 6

Livelihoods, careers and reputation - expecting fair and growing renumeration, career progression, a safe working environment, as well as training and pension.

Question 7

What is at stake for customers and what do they expect from the business?

Answer 7

Their custom - expecting Products and services that are of good quality and value, as well as fair terms of trade and continuity of supply

Question 8

What is at stake for suppliers and other business partners and what do they expect from the business?

Answer 8

The items they supply are at stake - expecting fair terms of trade as well as continuity of custom

Question 9

What is at stake for lenders and what do they expect from the business?

Answer 9

Money lent is at stake - expect a return on their investment in terms of interest and repayment of capital

Question 10

What is at stake for government and its agencies and what does it expect from the business?

Answer 10

National infrastructures used by the business, as well the welfare of employees and tax revenue- expecting reasonable employment and other business practices, as well as a steady or rising stream of tax revenue.

Question 11

What is at stake for the community and public at large and what does it expect from the business?

Answer 11

National infrastructure used by the business - expecting reasonable employment and other business practices

Question 12

What is that stake for the natural environment?

Answer 12

The environment shared by all - expecting reasonable environmental and other business practices.

Question 13

What is the difference between primary and secondary stakeholders?

Answer 13

Primary are internal and connected, whilst secondary are external.

Question 14

What are primary stakeholders?

Answer 14

Corporate management ad
Employees

Question 15

What are connected stakeholders?

Answer 15

Shareholders
Debt holders
Intermediate and final consumers
Suppliers

Question 16

What are external shareholders?

Answer 16

Immediate community and society at large

Competitors

Special interest groups

Government

Question 17

Where does stakeholder conflict occur and who deals with it?

Answer 17

Can occur where interests may be widely different between shareholders, and it is the need of the manager to deal with it, for example between managers and shareholders

Question 18

Explain the situation of shareholder conflict in the case of that between managers and shareholders?

Answer 18

This can occur when the managers decisions are to focus on maintaining the corporation as a vehicle for their managerial skills, whilst the shareholders seek to see radical changes so as to ensure that there is an increase dividends and increase the value of the value of their shares. This is as the shareholders will feel the business is a managerial corporation run for the benefits of the managers and employees with no regard the objective owners, which can affect stability of company.

Question 19

What is Mendelow’s Matrix?

Answer 19

This is where stakeholder can be mapped to look at how interested they are in the company strategy and how much power they have over the company strategy.

Question 20

How can Mendelow’s matrix be used?

Answer 20

To track the changing influences between different stakeholder groups over time as a means to trigger change if needed, as well as track the impact that a strategy will have on stakeholder groups, with an aim to assess if stakeholder resistance is likely to inhibit the success of the strategy and what policies or actions may ease the acceptance of the strategy.

Question 21

Give an example of low interest and low power, and the action needed?

Answer 21

Casual labour - action needed is minimal effort

Question 22

What is an example of high interest and low power, and the action needed?

Answer 22

Core employees - who need to be kept informed

Question 23

What is an example of of low interest and high power and the action required?

Answer 23

Institutional stakeholder who needs to be kept satisfied

Question 24

What is an example of high interest and high power and the action required according to the Mendelow Matrix?

Answer 24

Main suppliers, who are key players so need to be kept happy over all other stakeholders.