CHAPTER-TWO

STAKEHOLDERS ANALYSIS AND STRATEGIC

INTENT
 Definitions of Stakeholders
 Groups or individuals that have an interest in
the well-being of the company and/or are
affected by the goals, operations or activities of
the organization or the behavior of its members.
They have a ‘stake’ in what the organization
does.

 Any group or individual who can affect or is

affected by the achievement of the organization’s
objectives .
 Stakeholders Impact Analysis

The following steps should be followed in

stakeholders’ impact analysis:

1) Identify the stakeholders

2) Identify interest and concerns of stakeholders
3) Identify what claims stakeholders are likely to
make on the organization
4) Identify the stakeholder who are the most
important from organization perspective
5) Identify the resulting strategic challenge
 Multiple stake holding
• It is normal to consider all of these stakeholder groups
separately.
• It should be noted however that each person will belong to
several stakeholder groups at the same time.

• For example a single person might be a customer of an

organization and also an employee and a member of the local
community and of society at large.
• He or she may also be a shareholder and a member of a local
environmental association and therefore concerned about the
environment.

• Most probably that person will also be concerned about the

future also, on their own behalf or on behalf of their children.
 THE CLASSIFICATION OF STAKEHOLDERS

• There are three main ways to classify stakeholders:

1) Internal vs. External

• Internal stakeholders are those included within the

organisation such as employees or managers whereas

• external stakeholders are such groups as suppliers or

customers who are not generally considered to be a
part of the organisation.
 2) Voluntary vs involuntary

• Voluntary stakeholders can choose whether or not to be

a stakeholder to an organisation.

• For example an employee can choose to leave the

employment of the organisation and therefore is a
voluntary stakeholder.

• Clarkson (1995) suggests that the voluntary stakeholders

include shareholders, investors, employees, managers,
customers and suppliers and they will require some
value added otherwise they can withdraw their stake
and choose not to invest in that organisation again.
 Involuntary Stakeholders

• Involuntrary stakeholders cannot choose whether

or not to be a stakeholder to an organization
Example:
The local society or the environment are not able to
make this choice and must therefore be considered
to be involuntary stakeholders.
• individuals, communities, ecological
environments, or future generations do not
choose to deal with the organisation and
therefore may need some form of protection may
be through government legislation or regulation.
 3. Direct Stakeholders vs Indirect Stakeholders

Direct Stakeholders: are stakeholders who have close relationship

to the organization and contribute much for the organization
and with high expectation from the organization. These include;
a) Stockholders or shareholders
b) Employees
c) Customers
d) Creditors
Indirect Stakeholders: these are also have a claim to the
organization but the extent to the claim differ.
e) Government
f) The general public
g) Suppliers
h) Local communities
 Stakeholder Theory
• Stakeholder theory states that all stakeholders must
be considered in the decision making process of the
organization.

• The theory states that there are 3 reasons why this

should happen:

1) It is the morally and ethically correct way to behave

2) Doing so actually also benefits the shareholders
3) It reflects what actually happens in organization
 Group Discussion

• What is Corporate Social Responsibility (CSR)?

• To whom firms are responsible and in what

way they are responsible?
 Acting Responsibly to Satisfy Society
Social Responsibility
• Management’s consideration of profit,
consumer satisfaction, and societal
well-being of equal value in evaluating
the firm’s performance.
• Contributions to the overall economy,
job opportunities, and charitable
contributions and service.
• Organizations measure through social
audits.
Areas of Responsibility
 Responsibilities to the General Public
• Public Health Issues. What to do about inherently
dangerous products such as alcohol, tobacco, vaccines, and
steroids.
• Protecting the Environment. Using resources efficiently,
minimizing pollution.
• Recycling. Reprocessing used materials for reuse.
• Developing the Quality of the Workforce. Enhancing
quality of the overall workforce through education and
diversity initiatives.
• Corporate Philanthropy. Cash contributions, donations of
equipment and products, and supporting to volunteer
efforts of company employees.
 Responsibilities to Customers
• The Right to Be Safe. Safe operation of products,
avoiding product liability.
• The Right to Be Informed. Avoiding false or
misleading advertising and providing effective
customer service.
• The Right to Choose. Ability of consumers to
choose the products and services they want.
• The Right to Be Heard. Ability of consumers to
express legitimate complaints to the appropriate
parties.
 Responsibilities to Employees
• Workplace Safety. Monitored by
Occupational Safety and Health Administration.
• Quality-of-Life Issues. Balancing work and family through
flexible work schedules, subsidized child care, and different
regulations.
• Ensuring Equal Opportunity on the Job. Providing equal
opportunities to all employees without discrimination;
many aspects regulated by law.
• Age Discrimination.
• Sexual Harassment and Sexism. Avoiding unwelcome
actions of a sexual nature; equal pay for equal work
without regard to gender.
 Responsibilities to Investors
• Obligation to make profits for shareholders.
• Expectation of ethical and moral behavior.
• Investors protected by regulation by the Securities
and Exchange Commission and state regulations.
 The Ten Best Socially Responsible Companies in the World

1. Microsoft
2. Google
3. Walt Disney Company
4. BMW
5. Apple
6. Daimler (Mercedes-Benz)
7. Volkswagen
8. Sony
9. Colgate-Palmolive
10. LEGO Group
Source: Based on information at http://www.forbes.com/pictures/efkk45mmlm/no-
1-microsoft/
 The Meaning of Strategic Intent

 Strategic intent is the leveraging of a firm’s resources,

capabilities, and core competences to accomplish a firm’s goals
in competitive environment.
 Strategic intent also refers to the purposes the organisation
strives for. These may be expressed in terms of a hierarchy of
strategic intent.
 Broadly stated, these could be in the form of a vision and
mission statement for the organisation as a corporate whole.
 At the business level of a firm these could be expressed as the
business definition.
 When stated in precise terms, as an expression of the aims to be
achieved operationally, these may be the goals and objectives.
 The Meaning of Strategic Intent…Cont’d
 But the term 'strategic intent' has a definite
meaning in strategic management.
 Let's first see the meaning and some associated
concepts before we learn about the hierarchy of
strategic intent.
 Hierarchy of strategic intent:

Business
Vision Mission Definition Strategies
What we want to Who we are? What How we Goals and
become? What we societal need will achieve Objectives
value? we can our vision?
satisfy?
 Vision
Vision
“Vision is the art of seeing things
invisible”...........Jonathan Swift

“The very essence of leadership is that you have

vision. You can’t blow an uncertain trumpet”
....Theodore Hesburgh.

Vision is a picture of what the firm wants to be

and, in broad terms, what it wants to ultimately
achieve.
 Vision…Cont’d
 The vision statement points the firm in the
direction of where it would eventually like to be
in the years to come.

 Vision is “big picture” thinking with passion that

helps people feel what they are supposed to be
doing.

 A vision stretches and challenges people and

evokes emotions and dreams.
 Vision…Cont’d
 Vision statement reflects a firm’s values and aspirations
and is intended to capture the heart and mind of each
employee, and hopefully, many of its other stakeholders.

 A firm’s vision tends to be enduring while its mission can

change in light of changing environmental conditions.

 Example of vision:
1) Vision of CBE: ‘To be world class commercial bank by 2025’
2) Vision of Arsi University: ‘ Arsi University aspires to be
among the leading East African Universities and recognized
university in the world by 2033’
Mission

 While the essence of vision is a forward-looking

view of what an organisation wishes to become,
mission is what an organisation is and why- it
exists.
 Peter F. Drucker raised important philosophical
questions related to business:

i) What is our business?

ii) What will it be? and
iii) What should it be?
Mission…Cont’d
 These three questions, though simply worded,
are in reality the most fundamental questions
that any organisation can put to itself.

 The answers are based on the analysis of the

underlying needs of the society that any
organisation serves to fulfil.

 The satisfaction of that need is, then, the

business of the organisation.
Mission…Cont’d
 Hunger and Wheelen (1999) say that mission is the
"purpose or reason for the organization's existence.”
 Some examples of mission statements are shown
below:
1) To create value to our customers and stakeholders
by providing safe and reliable passenger and cargo
air transport service.
2) Dashen Bank has the following mission statement:
Provide Efficient and Customer Focused Domestic and
International Banking Services, overcoming the
continuous Challenges for excellence through the
Application of Appropriate Technology.
Mission…Cont’d
• Mission of Arsi University

Arsi University is committed to produce competent

and ethical graduates through practical teaching,
research, community engagement, and
innovation to the sustainable development of
the country.
 Mission…Cont’d
From above examples we can see that mission
statements include:

1) Social responsibility
2) Quality
3) Commitment to survival, growth, and profitability
4) Identify customers and market
5) Identify products and/or services
6) Family values
A mission statement provides answer to 5 essential
questions
1. What functions the organization performs?
2. For Whom does the organization perform

this function?
3. Where does the organization operate?
4. How does the organization go about fulfilling
these functions?
5. Why does the organization exist?.

*It must be well conceived & clearly defined.

 What?
(Service user's needs; services)

How? Who?
(Activities (Service
Methods) Users)

Why?

Where?
(Geography)
 Group Discussion

Evaluate your Company’s mission and

state whether it answer the above five
questions or not. If it doesn’t answer
modify and rewrite your company’s
mission statement
 Value Statements
 

 Values: also known as Shared principles,

standards.

 Values are sets of beliefs that shape behavior in

organizations, and they strongly determine
internal and external perceptions

 Values are sets of beliefs that people in the

organization think are important and to which
they pay significant attention.
Value Statements
 Values include beliefs and attitudes that guide
behaviour and relationships with others.
 Accordingly, our values include:
• Customer focused
• Quality First
• Innovation
• Accommodation of diversity
• Environment Friendly
• Effectiveness and Efficiency
• Professional commitment
• Transparency
 Business Definitions

 Understanding business definition is vital for

answering the question “What is our business?”
that defines the mission statement of the firm.

 Business definition is also pointer to answer the

question “What will be our business?” and
“What should it be?”

 Mission statements use the ideas generated in

business definition.
 Dimensions of Business Definitions

 Derek Abell suggested Business definitions along three

dimensions:
1) Who is being satisfied? (Customer group),
2) What is being satisfied? (Customer function), and
3) How customers are need being satisfied? (Alternative
technologies)

 Customer groups are created according to the identity of

the customers.
 Customer functions are based-on what the products or
services provide to the customers.
 Alternative technologies describe the manner in which a
particular function can be performed for a customer
 Business Definitions….Cont’d
 Business definition is helpful for strategic
management in many ways.
 For instance, business definition can indicate:

a) the choice of objectives,

b) help in exercising a choice among different
strategic alternatives,
c) facilitate functional policy implementation, and
d) suggest appropriate organizational structure.
 Roles Played by Mission and Vision

Mission and vision statements play three critical

roles
1) mission and vision provide a vehicle for
communicating an organization’s purpose and
values to all key stakeholders
2) mission and vision create a target for strategy
development
3) mission and vision provide a high-level guide,
and the strategy provides a specific guide, to the
goals and objectives
 Crafting Vision and Mission: Development Process

 Vision and mission development are analogous

to “P” (planning) in the P-O-L-C framework.

 To the greatest extent possible, people

responsible for executing the mission and vision
drive the development of vision and mission.

 Participating or involving different key

stakeholder during vision and mission statement
is vital during strategy implementation phase.
Crafting Vision and Mission: Development
Process….Cont’d
 The following points are important to understand while
developing vision and mission of an organization:
Context
1) Let the business drive the mission and vision.
2) Involve all stakeholders in its development; otherwise,
they won’t consider it theirs.
3) Assign responsibility so that it’s clear how each person,
including each stakeholder, can contribute.
4) Seek expert facilitation to reach a vision supported by all.
5) Revise and reiterate; you’ll likely go through multiple
iterations before you’re satisfied.
Crafting vision and mission….Cont’d

Content 
 The content of the mission and vision statements
are analogous to the O (organizing) part of the P-
O-L-C framework.
 Begin by describing the best possible business
future for your company, using a target of five to
ten years in the future.
 Your written goals should be dreams, but they
should be achievable dreams.
Crafting vision and mission….Cont’d
 The O’Hallarons find that the best mission statements have
given attention to the following six areas:

1) What “want-satisfying” service or commodity do we produce

and work constantly to improve?
2) How do we increase the wealth or quality of life of society?
3) How do we provide opportunities for the productive
employment of people?
4) How are we creating a high-quality and meaningful work
experience for employees?
5) How do we live up to the obligation to provide fair and just
wages?
6) How do we fulfil the obligation to provide a fair and just
return on capital?
 Crafting vision and mission….Cont’d
Use descriptive statements describing what the business
looks like, feels like, using words that describe all of a
person’s sense.
 Start from where you are to get to where you want to go.
 Build in the values of the organization
 Build on the core competencies of the organization
 Factor in your style
 Make it visual
 Make it simple to understand
 Make it achievable
 Phase it in
 Make it actionable
 Crafting vision and mission….Cont’d
Communications
 The communications step of the mission and vision
statements development process is analogous to the
“L” (leading) part of the P-O-L-C framework.
 Communicate often: Internal communications are the
key to success. People need to see the vision, identify
with it, and know that leadership is serious about it.
 Managers must evaluate both the need and the
necessary tactics for persuasively communicating a
strategy in four different directions: upward,
downward, across, and outward.
Crafting vision and mission….Cont’d
Application
 It is the successful execution of this step—actually using the
mission and vision statements—that eludes most
organizations.
 Even the most enthusiastic proponents acknowledge that
mission statements are often viewed cynically by
organizations and their constituents.
 “Mission statements are tools, and tools can be used or
abused or ignored…
 Management must lead by example. It’s the only way
employees can live up to the company’s mission statement.
 Use it, Live it, Be real
Crafting vision and mission….Cont’d
Monitoring
 The monitoring step of the mission and vision
statements development process is analogous to
the “C” (controlling) part of the P-O-L-C
framework.

 Identify key milestones that are implied or

explicit in the mission and vision.
 Crafting vision and mission….Cont’d
1) Identify key milestones: While traveling to your
destination, acknowledge the milestones along
the way.
2) Monitor your progress: A strategic audit,
combined with key metrics, can be used to
measure progress against goals and objectives.
3) Use external audit team: An external team
brings objectivity, plus a fresh perspective.
 Goals and Objectives

 Goals and objectives play an important role in

translating the vision and mission into outcomes
or manifestations.
 Goals and objectives provide the foundation for
measurement
 Goals are the outcome statements that define
what an organization is trying to accomplish, both
programmatically and organizationally.
 Goals are usually a collection of related programs,
a reflection of major actions of the organization,
and provide rallying points for managers.
Goals and Objectives…Cont’d
 For example, Wal-Mart might state a financial
goal of growing its revenues 20% per year or have
a goal of growing the international parts of its
empire.

 Try to think of each goal as a large umbrella with

several spokes coming out from the center. The
umbrella itself is a goal.
Goals and Objectives…Cont’d
 In contrast to goals, objectives are Very precise,
time-based, and measurable actions that support
the completion of a goal. Objectives typically must:
1) be related directly to the goal;
2) be clear, concise, and understandable;
3) be stated in terms of results;
4) begin with an action verb;
5) specify a date for accomplishment; and
6) be measurable.
Apply our umbrella analogy and think of each spoke
as an objective.
Goals and Objectives…Cont’d
 Without specific objectives, the general goal could not be
accomplished—just as an umbrella cannot be put up or
down without the spokes.
 Importantly, goals and objectives become less useful when
they are unrealistic or ignored.
 Measures is the actual metrics used to gauge
performance on objectives. For instance, the objective of
improved financial performance can be measured using a
number metrics, ranging from improvement in total sales,
profitability, efficiencies, or stock price.
 You have probably heard the saying, “what gets measured,
gets done.”
 Measurement is critical to today’s organizations.
Goals and Objectives…Cont’d
 Goals and objectives are an essential part of
planning.
 They also have cascading implications for all the
aspects of organizing, leading, and controlling.
 Broadly speaking, goals and objectives serve to:
1) Gauge and report performance
2) Improve performance
3) Align effort
4) Manage accountabilities
Goals and Objectives…Cont’d
 Planning typically starts with a vision and a
mission.

 Then managers develop a strategy for realizing

the vision and mission; their success and
progress in achieving vision and mission will be
indicated by how well the underlying goals and
objectives are achieved.