Unit 2- Stakeholders

Question 1

Stakeholder

Answer 1

A stakeholder is any group or individual who can affect, or is affected by, the achievement of a corporation’s purpose.”

Question 2

From family business..

Answer 2

to larger companies

Question 3

Internal changes:

Answer 3

Owners:
“If you don’t like the management, sell the stock” => “If you don’t like the management, buy enough stock to throw the bums out”

Customers:
The rise of “Conscious Consumerism”.

Employees:
Emotional salary and internal customer.

Suppliers:
Political issues and the political of control are as important in managing supplier relationships as are price-quality relationships.

Question 4

1. External changes:

Answer 4

Governments:
- During the last years an increase has been seen in the awareness of the role of government in the business enterprise.
- So much that even some politicians are elected on the promise of reverse this role, returning countries to “free enterprise.”
- The role of the government has been founded on the principles of the “watch-dog”.

Question 5

2. External changes

Answer 5

Competitors:

• It could be considered an internal change but the international dimension usually makes analysts to consider it as an external change.
• The “Made in Japan” it’s a great example, and probably the new emergent Chinese market.
• The emergence of international competition leads to abandon the managerial enterprise view.

Question 6

3. External changes

Answer 6

Customer advocates:

• Since the 60’s, specially the Ralph Nader case in the US, consumer advocates have started to play a mayor role not only in politics but also in the enterprises policies.
• The problem nowadays is more complex as many consumer advocates are seen as “as merely a means to publicity and national prominence for aspiring politicians”.
• Hirschman model of exit, voice and loyalty.

Question 7

4. External changes

Answer 7

Environmentalists:

• Again since the 60’s (publication of Rachel Carson’s The Silent Spring in 62). Large corporations were to blame for the trouble due to pollution in which our society was.
• The answer was government regulation.
  For example the supersonic transport aircraft (SST) attacks.

Question 8

5. External changes

Answer 8

Special Interest Groups:

• Any association of individuals or organizations, usually formally organized, that, on the basis of one or more shared concerns, attempts to influence public policy in its favour.
• It is not a new phenomenon but the recent changes in communications technology, the global market and the different kinds of political financing has completely changed the battlefield.

Question 9

6. External changes

Answer 9

Media:

• Specially after the Watergate scandal, seminars for managers on how to handle the media have multiplied along the world.
• Actually nowadays bonds between big companies, political parties and media corporations are normally seen by the general public.

Question 10

Primary stakeholders

Answer 10

These are essential for the survival of the organization. They have a direct, economic, or responsibility-based relationship with the company, meaning that the company’s functioning directly depends on their involvement. They are usually part of the organizational structure or in constant interaction with it.

Examples:
Shareholders or equity owners, Corporate partners or owners, Executives, Employees, Customers, Suppliers…

Question 11

Secondary stakeholders:

Answer 11

Secondary Stakeholders:
They do not have a direct or economic relationship with the organization, but they may be affected by its decisions or influence them. Their connection to the company is more indirect, and while they are not essential to its daily operations, their influence can be significant in social, political, or media contexts.

Examples: Competitors, Media outlets, Labor unions, Political parties, Public administrations, Consumer organizations, Society at large…

Question 12

Why stakeholder engagement is important:

Answer 12

1. Informed decision making
2. Managing risks and conflict
3. Building trust and legitimacy
4. Long-term relationships and sustainability

Question 13

Role of pressure groups in stakeholder engagement:

Answer 13

1. Representation of Marginalized Voices
2. Mobilizing Public Support
3. Facilitating Dialogue Between Stakeholders

Question 14

Techniques for Engaging Different Types of Stakeholders

Answer 14

1. Informing
2. Empowerment
3. Negotiations

Question 15

Key Factors for Successful Stakeholder Engagement

Answer 15

1. Transparency
2. Inclusivity
3. Accountability

Question 16

Four ways facing the change:

Answer 16

• inactivity
• reactivity
• proactivity
• interactive

Question 17

The stakeholder framework

Answer 17

1. The rational level- who are the stakeholders? Make the map.
2. The process level- Organizations use various processes to accomplish tasks.
   Common processes in large organizations:
   - Portfolio Analysis
   - Strategic Review
   - Environmental Scanning
3. The transactional level-

Question 18

Portfolio analysis

Answer 18

A method used to manage a company’s business units as if they were part of a financial investment portfolio.
Managers evaluate each business unit based on two factors:

• Industry Attractiveness (how fast the industry is growing)
• Business Strengths (market share)

This process helps companies allocate resources to the most promising units while scaling back on less successful ones. The goal is to balance risk and maximize returns, much like managing a portfolio of stocks.

• focus too much on financial metrics and ignores the influence of non-market stakeholders

Question 19

Strategic review

Answer 19

The Strategic Review Process involves regular meetings between senior executives and division managers to assess progress and adjust strategies.

The process is intended to ensure that divisions stay aligned with corporate goals. However, this process is often more about impressing senior executives than addressing critical stakeholder concerns. Because personal performance is reviewed alongside business performance, division managers may focus more on “looking good” to their bosses than on innovation or dealing with potential issues involving stakeholders.

This can create a culture where bad news are avoided, and necessary stakeholder considerations are ignored.

Question 20

Stakeholder engagement

Answer 20

Stakeholder engagement is the process by which organizations or institutions involve individuals, groups, or organizations that may be affected by or have an interest in a decision, project, or policy.

Question 21

Stakeholder engagement techniques

Answer 21

Informing- hig interest, low influence
Empowerment- high interest, high influence
Negotiation- hig influence, low interest

Question 22

Challenges in stakeholder engagement

Answer 22

1. Balancing diverse interest
2. Limited recourses
3. Overcoming mistrust