Question

Write a short essay on the primary stakeholders in the Stakeholder Model and apply it on a company of your choice. Your discussion should include a theoretical background as well as relevant examples of the primary stakeholders impacting it.

Answer 1

Answer:

Stakeholder theory is based on the assumption that businesses can only be considered successful when they deliver value to the majority of their stakeholders. That means that profit alone cannot be considered the only measure of business success.

Applying the stakeholder theory to your business

Step 1: Define your stakeholders - Shareholders, employees, customers,community, friends and family, competitors etc.

Step 2: Analyze your activities

Step 3: Understand your gaps

Step 4: 'Do something different'.

Benefits of applying stakeholder theory

• Higher productivity through employee satisfaction
• Improved retention / referrals from happy customers
• Increased investment from happy financiers
• Improved talent acquisition from a positive image in the community
• Increased mental health of the workforce through job satisfaction
• Scientific progression which benefits all
• Elevation of the socio-economic status of the local community
• Contribution towards a healthy competitive ecosystem where other companies can also thrive and bring benefits to their own stakeholders in turn
• The opportunity to work with like-minded awesome people who believe in making a difference
• The sense of pleasure one derives from being part of positive change in your own little corner of the world

Example :

Let’s consider a hypothetical company that builds condos in an American city. That company has gone public, so its shareholders are eager to see a rise in the value of their stock. Under stakeholder theory, however, those shareholders could be joined by several other types of stakeholders, each with its own interests relative to the company. Here are a few possible stakeholders with interest in this company and its projects:

1. Suppliers: Suppliers for this condo project also want to be treated and compensated fairly, or similar results as those with employees could be seen. However, under stakeholder theory, suppliers should also be operating their own businesses ethically, fairly, and equitably. If the condo company truly wants long-term success, stakeholder theory holds, it should treat suppliers and vendors well, but also do due diligence on how the supplier companies themselves do business.
2. Employees: The employees want to be treated and compensated fairly, and work reasonable hours. If the company underpays the employees, or gives them lengthy and difficult work shifts, the employee attitude and buy-in in the company is going to erode. There will be turnover, bad word-of-mouth among the potential workforce in the area, and a weakened company.
3. Manufacturers: In a global economy, sometimes parts or even whole products are manufactured in other countries, far away from the main marketplace or the location of the project. But for this condo company to do well, it must think of its manufacturers - and their employees - as stakeholders too. So, working conditions and wages must be fair and equitable for them as well.
4. Environmentalists: People who live in the city and neighborhood where the housing development is being constructed want to be assured that the environment, water system, power sources, and other things potentially affected by the project, are protected in as transparent a way as possible. These people who care about the local ecology would, under stakeholder theory, be considered stakeholders in the project, and should be kept apprised of plans and developments so they can have a chance to review them and weigh in with their thoughts.
5. Housing activists: As more and more housing projects are built in increasingly dense cities, many local activists have a political voice and stake in how new developments are handled. Will there be enough parking for every resident? What kind of services will the residents need and have these been taken into account? Does the project displace long-time residents of the area, and, if so, would they be considered as tenants in the new structure? If the construction company is truly subscribing to stakeholder theory, it will want to get buy-in from these activists. It’s good public relations, but more than that, it’s truly satisfying real stakeholders.
6. Governmental bodies: The city, county, and state likely have density, environmental, and other concerns. Even with governmental approval, a construction project needs regular check-ins with governmental bodies, regulated agencies like gas and electric companies, and more. For instance, there may be design restrictions in a historic part of town, or height restrictions in a mostly single-family-home area. All of the aforementioned are valid concerns to these stakeholders.
7. Neighbors: These stakeholders are going to be stakeholders for a long time, living alongside the new condo development. If the construction company wants to please these stakeholders, it should consider parking, greenspace and parks, and perhaps create a space that can be used and shared by all the neighbors (not just the condo residents). Neighbors should feel as though their quality of life is being maintained or enhanced - but not reduced because of the project.

This is by no means a complete list, but as you start to think of your company and its projects in terms of the full ecosystem of potential stakeholders, you can see how far-reaching your impact can be. Some will have a financial interest in your project. Some will have an emotional interest. Many may have both. And stakeholder theory holds that all these stakeholders, as well as their interests, are critical to your project’s success.