Table of Contents
Stakeholders are persons or groups with legitimate interests in procedural and/or substantive aspects of the company’s activities. Stakeholder analysis reveals the pressures that a company faces from these stakeholders and the degrees of freedom that are available to it in determining strategic direction. It is used to identify which stakeholders are the most important ones in terms of power, which are most interested in the issues at hand, and which are most predictable in their behavior. This helps prioritize “political energies” towards stakeholders. The key is to identify a company’s stakeholders, their objectives, relative power and constraints to the business unit strategy. Identified stakeholders and their objectives are used as a part of company specific criteria to evaluate a strategic option.
Methodology
- Identify the stakeholders. Based on an evaluation of the input data and a review of the potential stakeholder groups, compile a complete list of stakeholders.
- Determine the stakeholders’ objectives. Determine the underlying interests that each stakeholder group has in the company, and identify the important issues for each stakeholder group.
- Assess the importance of each stakeholder. Assess the potential importance of the stakeholder groups in terms of their influence, interest, and power. Plot the stakeholders in power/interest, power/dynamism, or other matrices, as relevant. Assess the anticipated reactions of stakeholders to strategic initiatives. Compare the company’s stakeholders to those of competitors.
Notes
While performing the stakeholder analysis, be aware that:
- Stakeholders cannot be viewed in isolation (stakeholder interests might be linked)
- Stakeholders reactions might vary depending on the specific context and timeframe of the strategic initiative
- The position of stakeholders might change over time
Strengths
- Reveals the pressures faced by a company
- Reflects degrees of freedom available to a company in pursuing certain strategies
Weaknesses
- Mapping stakeholders incorrectly can result in significant negative consequences
- Generic categories provided may not be useful for every organization (e.g., nonprofit organizations)