Stakeholder Analysis

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What is Stakeholder Analysis? Description

A Stakeholder Analysis is an approach that is frequently used to identify and investigate the Force Field formed by any group or individual who can affect or is affected by the achievement of the objectives of an organization. Stakeholder Analysis identifies the ways in which stakeholders may influence the organization or may be influenced by its activities, as well as their attitude towards the organization and its targets.

According to the Stakeholder Value Perspective of Edward Freeman (Strategic Management: a Stakeholder Approach 1984), the very purpose of the firm is to serve as a vehicle for coordinating stakeholder interests.  In this view, Stakeholder Analysis is an end in itself. But even when we take a Shareholder Value Perspective, stakeholder analysis is an important means to achieve the corporate purpose.

The role of management is to formulate and implement strategies and to make decisions that satisfy all or most of the stakeholders, or to ensure at least that no powerful and legitimate stakeholders are left too unhappy.

Here is a comprehensive list of typical stakeholders:

• Owners and stockholders, investors
• Banks and creditors

• Partners and suppliers

• Buyers, customers and prospects
• Management
• Employees, works councils and labor unions
• Competitors
• Government (local, state, national, international) and regulators
• Professional associations, Industry trade groups
• Media
• Non-governmental organizations
• Public, social, political, environmental, religious interest groups, communities

More individuals or groups may be identifiable in specific circumstances. Some individuals can be part of multiple stakeholder groups. Some stakeholders may have an explicit, formal organization, others may not. There are Internal Stakeholders (such as employees) and External Stakeholders (such as government).

The interests of all stakeholders are closely related with the general success and wealth of the organization. However, certain stakeholders interests are particularly important at times when certain issues must be addressed, for example:

• Customers are important when quality of products are discussed.
• Employees are important when circumstances or safety at work is discussed.
• Government is important when dealing with the environment or legislation.

We can also distinguish between Primary Stakeholders (such as stockholders) and Secondary Stakeholders (such as government). Where the line is drawn precisely, is a source of much debate.

Usage of Stakeholder Analysis. Applications

• Making a list of all stakeholders

• Analyzing the interest of the various stakeholders
• Analyzing potential conflicts of interest with or between stakeholders
• Basis for further Stakeholder Mapping
• Basis or major influencing factor for Strategy formulation and Decision-making
• Evaluating existing strategies
• Basis for stakeholder communication

• Can also be used in Program Management and Project Management environments

Steps in Stakeholder Analysis. Process

1. Identify stakeholders (Brainstorming)
2. Understand stakeholder needs and interests. Classify them into meaningful groups. Compare: Stakeholder Mapping
3. Prioritize, balance, reconcile or synthesize the stakeholders
4. Integrate stakeholder needs into the strategies of the organization and into its actions

Results of Stakeholder Analysis. Benefits

• Better insight can be obtained per stakeholder in:

  • The relationship with the stakeholder
  • Coalitions or organizations of which the stakeholder is a member
  • The significance of the stakeholder to the organization
  • The power of the stakeholder
  • The priorities of the stakeholder
  • Associated risk areas
• Better strategies and decisions
• Better acceptance of the strategy and decisions of the organization

Limitations of Stakeholder Analysis. Disadvantages

• Ideally, a Stakeholder Analysis should be performed regularly or even continuously, since the relevant stakeholders, their power and associations may change quickly.
• Note that the management of an organization has to assess the position of each stakeholder. It is the subjective perception of management that will ultimately decide the way in which the organization will act towards its stakeholders.
• It is normally impossible for management to satisfy all demands of all stakeholders completely. Therefore managing becomes a balancing act or even a reconciliation or synthesizing act, with the following options:
  • Focusing on one leading stakeholder group, and satisfying all others to the extent which is necessary or possible. The leading stakeholder group could be the owners or stockholders (Shareholder Value Perspective) or even the managers themselves.
  • Trying to balance or reconcile or synthesize all interests according to their weight, importance or urgency (Stakeholder Value Perspective).
• Note that quite often, a constructive cooperation with stakeholders is missing.

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Best Practices The top-rated topics about Stakeholder Analysis. Here you will find the most valuable ideas and practical suggestions. What if Key Stakeholders' Expectations are not Matching? How can organizations handle the situation where some key stakeholders expect high returns (owners, shareholders, investors, managers) while some other important stakeholders' expectation will increas... 16   4 comments Avoiding Subjectivity in Stakeholder Analysis As correctly stated in the excellent article above, any stakeholder analysis is typically the sum of the SUBJECTIVE PERCEPTIONS of the management team of the company. This means that if these percepti... 13   6 comments Consequences of not Doing a Stakeholder Analysis? First excuse my writing. Personally I like the article, it gives me a notion of what to expect from a stakeholder analysis. There is one thing that I would like to know. What is the consequence of NOT... 11   5 comments

Expert Tips Advanced insights about Stakeholder Analysis. Here you will find professional advices by experts. Multiple Perspectives of Analyzing Stakeholders Clustering Stakeholders Ian Mitroff, Emeritus Professor from the University of Southern California, identified seven categories of stakeholder p... How to Reduce Stakeholder Complexity Stakeholder Analysis Tool A useful tool to understand what is happening in a complex situation is the Black Box. It is a strategy for investigati... The Role of the CEO in Strategic Change Initiation Communicating Strategic Change In management literature the role of the CEO in formulating and implementing strategic change has often been emphasized.... The Maturity Stages of Corporate Responsibility Organizational Development, Corporate Responsibility Maturity Simon Zadek provides a useful best practice five-stage maturity model of how organizations deal with Corporate Responsib... How to Effectively Conduct a Stakeholders Meeting? Stakeholder Meetings, Best Practices Here are a few tips to effectively manage a stakeholders meeting: 1. Try to avoid getting into details and drawn into...

Information Sources Various sources of information regarding Stakeholder Analysis. Here you will find powerpoints, videos, news, etc. to use in your own lectures and workshops. Framing in the Context of Conflicts Framing, Negotiation, Collective Bargaining, Stakeholder Analysis, Force Field Analysis, Conflict Management Framing and conflicts This presentation elaborates on the extent to which framing relates to conflicts (and its resolut... Project Communication Planning Project Communications Plan, Project Management, Project Communication Plan, Project Stakeholder Analysis This presentation is about communication, specifically focusing on communciation during projects. The presentation inclu... The Strategic Role of Public Relations and Communication in Business Public Relations, Strategic Management, Corporate Responsibility, Stakeholder Management, Stakeholder Analysis Presentation about the role public relations and communications in business strategy implementation and execution. The p... Introduction to Stakeholder Management Introduction to Stakeholder Management David Butter explains what stakeholders are and their importance for organizations, distinguishing internal from externa... Stakeholder Analysis Diagrams Stakeholder Management Download and edit these 12manage PowerPoint graphics for limited personal, educational and business use. Republishing i...

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Compare with Stakeholder Analysis: Stakeholder Mapping  |  Force Field Analysis  |  Stakeholder Value Perspective  |  Shareholder Value Perspective  |  Ashridge Mission Model  |  Clarkson Principles  |  Intrinsic Stakeholder Commitment  |  Strategic Stakeholder Management  |  PEST Analysis  |  Crisis Management  |  Scenario Planning

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