Chapter 4 - An Introduction to Stakeholder Analysis
Method of Determining Relative Importance of Stakes
- Legitimacy: objectively clear entitlement to a certain outcome - Power: the amount of influence the stakeholder has on the decision maker - Urgency: how soon stakeholder needs or wants its stakes to be met
Types of Stakes
- financial stake - legal stake - rights based stake - moral stake - interest based stake
Suppliers Stake
- financial stakes in companies decision often reflected in legal stakes
4 Things to Know about Analyzing/ Prioritizing the Stakes
- fundamental goals is to solve issue - not everyone will be happy - must be clear about the issue - must analyze stakes objectively
Shortcomings of Method for Analyzing Stakes
- illegitimate stakeholder with large power - weightings
Customers Stake
- interested in the quality, innovation, and price of products
Employees Stake
- internal stakeholders hope for the continued financial success of the company because it means continued employment - legal and safety rights
Governments Stake
- legal interest that company adheres to laws an regulations - financial interest in continued tax revenue and citizen employment
Problems with Stakeholder Management
1. Can become inefficient if left to a department that is not related to operating line 2. Too much emphasis on powerful stakeholder 3. Whether theory is broad enough to allow corporation to act in a truly ethical way
Why Stakeholder Management and Analysis
1. It responds to the demands of modern society 2. It accords with emerging legal reality 3. It is morally superior 4. It may be a more effective business strategy in this century
Stakeholder Analysis
Access stakeholder perspectives and make a decision taking into account competing views
Analyzing/prioritizing the Stakes
Determining which stakes or more important/ relevant
Shareholders Stake
Expectation on a return on their investments and that their legal rights will be respected
Community and Interest Groups Stake
Interest or moral stakes in companies decisions
Environment
Moral stake for continued sustainability of the natural environment
Typical Stakeholders in Business
Shareholders, employees, customers, community and interest groups, government, environment, suppliers
Stakeholder
Someone with something at risk in the decision or who legitimately expects a certain outcome
Rights-based Stake
Stakeholder asserts that a human right is at risk in this decision
Legal Stake
Stakeholder has a specific law or legal right that entitles them to a specific outcome
Interest-based stake
Stakeholder more please with a certain outcome
Stakes
Stakeholders' statuses, costs, or rights that are at risk in the decision
Moral Stake
conviction or value-based principle and stakeholder wouldn't want violated
Financial Stake
stakeholder lose or earns money as a result of the decision
Stakeholder Management
tool for ongoing management by a moral company