Understanding The Role & Importance of Stakeholders

Stakeholder Mapping:

  • 1991 - Mendelow devised a way of analysing the key stakeholders of a business.
  • Generated a grid measuring shareholder power against stakeholder interest.
  • Helps company's to consider the prioritisation of stakeholders when decision-making.

E.g. Tesco:

  • Low power, low interest: shareholders with less than £750 worth of shares in the firm.
  • Low power, high interest: shopfloor employees.
  • High power, low interest: low electricity supplier.
  • High power, high interest: local authorities at the location of Tesco Head Office.
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Incluences On Relationships With Stakeholders:

  • The boss may reject the notion of stakeholders believing that shareholders are more important.
  • Financial pressure - if the business is struggling for survival it would be understandable to focus solely on internal stakeholders (the ones who can help solve the problems).
  • The labour market - when jobs are plentiful, staff demand more pay, better working conditions and job redesign to make jobs more interesting, making conflict between workers and managers easy to conceieve.
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Managing Relationships With Different Stakeholders

  • Over the past 10 years, PLCs have been critisised for their excessive executive pay and the extent to which it has outstripped both staff pay rises and shareholder dividends.
  • To manage this situation, firms hire out financial public relations experts in order to 'smooth over' the issues.
  • Watchdog catches companies out.
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Communicating With Stakeholders:

  • Communicating with stakeholders tends to take a modern form in contemporary society.
  • A combination of social media, e-mail updates and a website with a 'supplier' section is as important as the customer one.
  • Encourages 'engagement'.
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Consulting With Stakeholders:

  • Majority of the time internal stakeholdrs are a priority to the business, however, external stakeholders may become very important.
  • E.g. Primark sees external pressure groups as a huge priority as the business is often accused of lacking ethical standards in relation to its supply chain.
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