Business

Organisation
Topic 2 : Stakeholders in business organisation
 Origins of the Stakeholder Concept
Stake -
• An interest or a share in an undertaking.

Can be categorized as:

An Interest A Right Ownership

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 Stakeholders

Stakeholder -
• Any individual or group who can affect or
is affected by the actions, decisions,
policies, practices, or goals of the
organization.

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Who are Business’s Stakeholders?
Stockholders Employees

Customers Community Competitors

Business Stakeholder Groups

Special-Interest
Suppliers Media
Groups

General
Society
Public
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 Three Views of the Firm

Production Managerial Stakeholder

View View View

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Production and Managerial Views
of the Firm (fig 3-2 slightly different)

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Stakeholder View of the Firm

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Internal and External Stakeholders
Internal stakeholders -
• Have a direct stake in the organization and
its success.
External stakeholders -
• Have a public or special interest stake in
the organization that is more indirect.

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Internal and External Stakeholders

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 Internal Stakeholders
Directors
Director refers to a rank in management. A
director is a person who leads, or supervises a
certain area of a company, a program, or a
project.
Directors look for :
• Salary
• Job Satisfaction
• Status
• Bonuses & Perks
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 Internal Stakeholders
Managers
A Manager is a person who drives the work of
others in order to run a business efficiently
and make a large profit
Managers look for :
•Bonuses
• Profit Maximization
• Growing the business

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 Internal Stakeholders
Employees
An Employee contributes labor and expertise
to an endeavor of an employer and is usually
hired to perform specific duties which are
packaged into a job.
Employees look for :
• High pay • Job security • Good working
conditions • Fair treatment • Fringe benefits
• Health and safety • Promotion prospects
• Training opportunities
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 External Stakeholders
Customer
A customer (also known as a client, buyer, or
purchaser) is the recipient of a good, service,
product, or idea, obtained from a seller,
vendor, or supplier for a monetary or other
valuable consideration
Customer look for :
• Low prices • Value for money • High quality
products • Good services • Innovation
• Clear and accurate information
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 External Stakeholders
Suppliers
A party that supplies goods or services. A supplier
may be distinguished from a contractor or
subcontractor, who commonly adds specialized
input to deliverables. Also called vendor.
Suppliers look for :
• A long term relationship with the firm • Large
size and value of contracts • Frequent and regular
orders • Prompt payment • Fair prices • Growth
of the firm leading to more orders

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 External Stakeholders
Government
A Government is the system by which a state
or community is governed. Government
normally consists of legislators,
administrators, and arbitrators.
Government look for :
• Compliance with laws and regulation
• Efficient use of resources • Employment
• Contribution to National Economy
• Payment of taxes • To control the business
operation
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 External Stakeholders
Local Community
A Local Community is a group of interacting
people sharing an environment. In human
communities, intent, belief, resources,
preferences, needs, risks, and a number of other
conditions may be present and common,
affecting the identity of the participants and their
degree of cohesiveness.
Local Community look for :
• Employment prospects • Sage guarding the
environment • Acceptance of social responsibility
• Road building • Pollution control • Safety
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 External Stakeholders
Media
Communication channels through which
news, entertainment, education, data, or
promotional messages are disseminated.
Media look for :
• Keep the public informed on all issues •
Monitor the company • Support freedom of
expression • Independence and accessibility
of the mass media • To combat harmful
elements in the mass media.
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The Importance of Stakeholders
Long-Term Relationships
• Lead to more efficient and can have a
better chance of producing profits
Feedback and Product Development
• Can provide feedback during the entire
product development process, can
positively influence the product/ company
success.

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The Importance of Stakeholders
A Sense of Community
• Sense of community among stakeholders
can positively shape the organizational
development within a company and
increase consumer sales.
Considerations
• Acting upon stakeholder criticism can
actually give a company competitive edge,
and help the company determine the
stakeholders who hold most value for it.
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Role of Stakeholders in Business
• Voting and Decision-making
• Management
• Investing
• Social and Environmental
Responsibilities

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 Three Values
of the Stakeholder Model

Descriptive Value

Instrumental Value

Normative Value

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 Three Values
of the Stakeholder Model

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 Three Values
of the Stakeholder Model
Descriptive value
The stakeholder model is descriptive - it
provides a language and concepts to
describe corporations, the way they
work and their impacts on the wider
environment.

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 Three Values
of the Stakeholder Model
Instrumental value

The stakeholder model is instrumental, in

that managing stakeholders should result
in the achievement of business goals:
increased profitability, growth,
sustainability. The stakeholder model also
allows for the testing of the connections
between managing stakeholders and
reaching business targets.

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 Three Values
of the Stakeholder Model
Normative value
The third aspect of the stakeholder model
is the presumption that stakeholders have
inherent value. Stakeholders have
legitimate stakes in corporate activity
based on their interest in the corporation
and that stakeholders have intrinsic value

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Mendelow’s Matrix

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 Mendelow’s Matrix
Mendelow (1991) suggests we analyse our
stakeholder groups based on Power (the ability
to influence our organisation strategy or project
resources) and Interest (how interested they
are in the organisation or project succeeding).
Remember, all stakeholders may seem to have
lots of power or we hope they would have lots
of interest, but relatively speaking, some
stakeholders will hold more Power than others,
and some stakeholders will have more
Interest.

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 Mendelow’s Matrix
High power, highly interested people (Manage Closely): aim to
fully engage these people, making the greatest efforts to satisfy
them.

High power, less interested people (Keep Satisfied): put enough

work in with these people to keep them satisfied, but not so much
that they become bored with your message.

Low power, highly interested people (Keep Informed): adequately

inform these people, and talk to them to ensure that no major
issues are arising. These audiences can also help point out any areas
that could be improved or have been overlooked.

Low power, less interested people (Monitor): don’t bore these

stakeholder groups with excessive communication, keep an eye to
check if their levels of interest or power change.

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 Stakeholder’s Conflict
Stakeholder conflict is a condition in
which different stakeholders have
incompatible goals.
It creates a “problem” for the company
because this can affect its performance
and success.

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 How to overcome stakeholder
conflicts
•

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THANK YOU

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