MGT Notes

Reference: Strategic Management (5e) – Frank T. Rothaermel (Pg 15)

To implement a successful strategy, an entity must balance the needs of various stakeholders. We can divide them up into two groups:

• Primary stakeholders: ex. shareholders and other investors
• Other stakeholders: ex. employees, suppliers and customers

Effective stakeholder management leads to a sustained competitive advantage and positions the entity as a good corporate citizen.

Here are some attributes of stakeholders:

• Power: Can a stakeholder get an entity to do what it would otherwise not do?
• Legitimacy: Is the stakeholder”s claim legally valid?
• Urgency: Does this stakeholder’s claim require immediate attention?

Here are the key steps an entity can take for effective stakeholder management:

• Identify Stakeholders: Any entity that can have a material effect on the company can be classified as a stakeholder. The most powerful internal and external stakeholders must be identified.
• Identify Stakeholders interests: What are their interests and claims ?
• Stakeholder Analysis: What opportunities and threats do the stakeholders represent?
• Social responsibilities: What economic, legal, ethical and philanthropic responsibilities do we have to our stakeholders? [Corporate Social Responsibility]
• Stakeholder Concerns: How do we address stakeholder concerns ?

These steps form an important part of implementing and effective strategy.