Topic 4 (a) Stakeholder theory
Stakeholder
Introduction to strategy
theory
Vision/Mission CSR
Ethics
The Resource Based View of Strategy
Management By Objectives Expectation and Power
D I S C U S S I O N
Governance
Strategic Analysis
External Analysis
PESTEL
Industry
Competitor
Internal Analysis Generic Strategy
Value Chain
Financial Analysis
Portfolio Analysis Scale and experience
Position Audit/Situational Analysis Strengths
Weaknesses
Opportunities
Threats
Balanced Scorecard
Critical Success Factors
R E A D I N G S
Stakeholder theory and Corporate Social Responsibility Learning outcomes After completing this topic you should be able to;
• Identify the key stakeholders of a firm and their claims against the organisation • That different stakeholders have different bargaining strength and the nature of the bargaining power the various stakeholders have • Know Mendelow’s grid and be able to understand the usefulness of the model in the management of stakeholders • Understand the nature of Corporate Social Responsibility (CSR) and the challenges it poses for management.
The Stakeholder Model Stakeholder theory: corporations should be socially responsible institutions managed in the public interest. Many organizational constituencies have interests other than maximizing firm profits. Governments
Suppliers
Trade Associations
Investors
FIRM
Employees
Political Groups
Customers
Communities
(SOURCE: Donaldson, T. and L.E. Preston. 1995. “The Stakeholder Theory of the Corporation: Concepts, Evidence, and Implications.” Academy of Management Review 20:65-91.)
Stakeholder groups • Internal
Connected
External
Stakeholder management • Multiple groups and interests may be considered ‘stakeholders’ – Local communities, customers, employees, government regulators etc
• Stakeholders may exert power – Shell and the Brent Spar – ‘Dangerous’ radio masts, ‘ugly’ cables
• Enlightened approach can – Minimise costly errors – Serve the interests of both sides
Claims of stakeholders Stakeholder
Claims against organisation
Stakeholder
Claims against organisation
Suppliers
Payment for product inputs
Government
Taxes, Legal compliance
Stakeholder bargaining strength Command dictated by the company Consultation and consideration of stakeholder views
Negotiation
Participation and acceptance of stakeholder views Democratic voting by stakeholders
Command dictated by stakeholders
Stakeholder mapping: the power/interest matrix - Source Johnson,Scholes and Whittington LEVEL OF INTEREST
Mendelow’s Grid
Low
A
High
B
Low
Minimal effort
Keep informed
POWER C
High
Source: Adapted from A. Mendelow,.
Keep satisfied
D
Key players
