CHAPTER 2:

STRATEGIC MANAGEMENT
OF STAKEHOLDERS
RELATIONSHIPS
 “Building effective relationships is
considered one of the more important
practice of business today.”
 STAKEHOLDERS

Those people and groups to which an

organization is responsible

Those with stake, or claim, in some aspect of a

company’s products, operations, markets, industry or
outcomes
 PRIMARY
STAKEHOLDERS

Are those whose continued association is

absolutely necessary for a firm’s survival
These includes:

Employees Customers Investors Shareholders

Shareholders are stakeholders in a corporation, but stakeholders are
not always shareholders. A shareholder owns part of a company
through stock ownership, while a stakeholder is interested in the
performance of a company for reasons other than just stock
appreciation.
 SECONDARY
STAKEHOLDERS
Do not typically engage in transactions with
company and thus are not essentials for its survival
These includes:

Media Trade Special-

Association Interest
Groups
 STAKEHOLDERS
ORIENTATION
 There are two-way relationships between the firm
and a host of stakeholders

This approach recognizes other stakeholders and

explicitly acknowledges the dialog that exists
between a firm’s internal and external environments.
 Interactions Between Organizational and
Stakeholder Ethical Values and Norms

Ethical Values and Ethical Values and

norms of a customer Norms of an
group Employee Group

Ethical Values and Ethical Values and

Norms of a Ethical Values and
Norms of an norms of a
Government
Organization shareholder group
Regulatory Body

Ethical values and Ethical values and

norms of a local norms of a large
community supplier

PRIMARY STAKEHOLDERS
SECONDARY STAKEHOLDERS
SOCIETY AT LARGE
 The degree to which a firm understands and
addresses stakeholder demands.
Comprises three sets of activities:

1. The organization-wide generation of data

about stakeholder groups and assessment
of the firm’s effects on these groups.
2. The distribution of this information throughout
the firm.
3. The organization’s responsiveness as a whole
to this intelligence.
 STAKEHOLDERS
ATTRIBUTES
POWER LEGITIMACY URGENCY
Stakeholder has power to
The perception or belief that a The perception or belief that a
extent that it can gain access
to coercive (physical means), stakeholders actions are proper, stakeholders actions are proper,
utilitarian (material means) or desirable, or appropriate within a desirable, or appropriate within a
normative (prestige, esteem given context. given context.
and social) means to impose
or communicate its views to
an organization.
 POWER

Dormant LEGITIMACY
Stakeholder
Dominant
Stakeholder

Dangerous
Stakeholder Discretionary
Definitive stakeholder
Stakeholder

Dependent
Stakeholder
Demanding
Stakeholder

URGENCY
 REPUTATION
MANAGEMENT

The process of building and sustaining

a company’s good name and generating positive
feedback from stakeholders.
 REPUTATION
MANAGEMENT PROCESS
Identify how the organization wants to be viewed by stakeholders.

Determine how stakeholders evaluate the company and their

impressions of its image.

Evaluate others’ impressions of organizational performance.

Understand the company’s reputation.

 CRISIS
MANAGEMENT

The process of handling a high-impact

event characterized by ambiguity
and the need for swift action.
 CRISIS
MANAGEMENT PROCESS
PRODROMAL STAGE ACUTE STAGE CHRONIC STAGE PRODROMAL STAGE

Warning signs and Crisis occurs. Ongoing Crisis Success and failure
symptoms may occur. requires explanation outcomes for firms and
and decision making. stakeholders.
 Development Stakeholders
RELATIONSHIPS
Relationships are founded on principles of:

Trust Commitment

Communication
 SOCIAL
CAPITAL

An asset, which resides in relationships, that is

characterized by mutual goals and trust.
 Implementing Stakeholder
Perspective in Social Responsibility
1. Assessing the corporate culture
2. Identifying stakeholder groups
3. Identifying stakeholder issues
4. Assessing the organization’s commitment to social
responsibility
5. Identifying resources and determining urgency
6. Gaining stakeholder feedback
 Link Between Stakeholder
Relationships and Social Responsibility
RATING STRATEGY PERFORMANCE
Reactive Deny Responsibility Doing less than required

Defensive Admit responsibility bur Doing the least that is

fight it required

Accommodative Accept Responsibility Doing all that is required

Proactive Anticipate Responsibility Doing more than is

required