3.2.3 Understanding the role and importance of stakeholders

Mendelow (1991) - measures stakeholder power against stakeholder interest.

Low power, low interest - eg shareholder with holdings worth less than £750
Low power, high interest - eg Tesco shopfloor employees
High power, low interest - eg Tesco's electricity supplier
High power, high interest - eg local authorities in Welwyn Garden City (Tesco head office)

Stakeholders sometimes take advantage of any weaknesses in others. 

Eg July 2014, Lloyds Bank fined £105m by UK's Financial Conduct Authority + ordered to pay Bank of England £7.76m. Had not only rigged markets, but had deliberalely underpaid British gov for help given to keep Lloyds afloat during tough days in 2009 + 2010. By attempting to benefit shareholders at cost of gov + taxpayer, Lloyd's executives were showing clearly where their stakeholder priorities lay

1) Personal conviction - boss may reject notion of stakeholders, believing that shareholders should be board's sole focus. If firm attempting to help local community, this would take funds away from shareholders. More rewards for owners - less rewards for employees

2) Financial pressure - if business struggling for survival, understandable to focus only on internal stakeholders who would help solve problems

3) Labour market - lots of jobs, staff demand more pay, better working conditions, occasionally job redesign - more interesting. Easily leads to conflict between managers + workers

To manage situation of plcs excessive executive pay + extent growth outstripped both staff pay rises + dividends to shareholders, directors employ financial PR experts - ability to smooth over problems essential test of usefullness.

Arguably wrong - debate between directors + shareholders/owners should be direct rather than mediate through hired PR. Directors should see company's money as separate from their own.

Generally, companies will produce websites + will generate publicity that suggests all stakeholders treated with equal respect.

Today - electronic communication (social media, email updates, website w/ 'supplier' section)

Consumer engagement - similar to employee engagement.

Key issue, whether 'communication' means two-way process of discussion or mix of propoganda + PR. If communication was open + honest:
 - Wouldn't Innocent drinks tell you it's owned + controlled by Coca-Cola?
 - Wouldn't Ben & Jerry's tell you it's owned + controlled by Unilever plc
 - Wouldn't Primark get on w/ trying to improve patchy supply record, instead of making 'Our Ethics' one of four main buttons on website?

In most cases, internal stakeholders most important. If business allowed things to slip, external may become priority.

Once identified most important stakeholders (through mapping), possinle to set up regular consultation links + groupings.

Eg, Jaguar Land Rover buys key drive-chain components from GKN + have regular discussions with them in relation to future production levels + new production plans. JLR would expect in reutrn to be given early notive of any new product GKN are planning, so they can appear first on JLR car - 1st mover advantage