8/12/2019 Assignment Stakeholders

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Stakeholders are defined in many ways, while the initial meaning referred only to thepeople who have an easily observed stake in the company such as theshareholders, the managers, the employees, stockholders, customers, suppliers,

creditors, investors and the government, the term has been extended to meananyone with an interest in the company/organisation. These can be considered asexternal stakeholders, such as the general public, communities, suppliers, activistgroups, business support groups, schools, future generation, the media etc.

Johnson & Scholes have defined stakeholders as:

Stakeholders are those individuals or groups who depend on the organisation to

fulfil their own goals (objectives) and on whom, in turn, the organisation depends.(Lecture slides)

Also: A stakeholder in an organization is any group or individual who can affect or isaffected by the achievement of the organization's objectives (Freeman, 1984, p. 46).

According to Lozano (2005) the employees and customers are the most importantstakeholders that keep a company alive, they most obviously are the ones who keepthe company afloat by providing it with necessary resources(Pfeffer and Salancik,1978). This is referred to as instrumental stakeholders theory and it provides a clearexample of how and why employees and customers can affect acompany/organisation. We can take as an example of the power of the employeesthe General Motors strike in 2007, in Canada when 73,000 workers when on strikeand the company had to reach a settlement as many of the companys operations

were shut due to the strike. Another example is the 2006 strike in Wal-Mart where200 employees when on strike protesting against the poor working conditions. As aresult of the strike, later on in 2008 the company paid $640 million to settle suits filedby employees.

An example of consumer power is the boycott of a clothes retailer Abercrombie &

Fitch Girlcott who lunched a line of T-shirts with messages such us Who needsbrains when you have these?. In response a group of teenagers protested againstthis messages and the retailer took them of the market recognising that themessages promoted a stereotype.

Of course the different types of stakeholders affect the company in different ways.According to Mendelow the easiest most efficient way of mapping stakeholders istaking in consideration the level of power and combining it with the level of interestthat they have in the company. This way we can divide stakeholders as non-activistwho dont have any power in the decision making and stakeholder power when theyhave the power to decide (Arnstein, 1969)

It has been argued weather companies should try to please their stakeholders or justact as a business, pursuing profit maximisation. As pursuing profit will help thestakeholders as well as the community as the company will pay more tax as they

make more profit.

8/12/2019 Assignment Stakeholders

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An interesting case in this category was the sustainability-driven fruit drinks companyinnocent (Brown and Grayson, 2009). When invited by McDonald's to includeinnocent's fruit smoothies as part of the happy meal menu for children, the

company was unsure how to respond. Collaborating with McDonald's could have aserious impact on the company's reputation for sustainability. To reach a decisionthe company polled our regular drinkers a few weeks ago to ask them about it, and

72% said they would actively like us to be in McD's [McDonald's], 17% said theydidn't care, and 9% said we shouldn't be there. (Innocent, 2007). After a decision

had been reached, the company opened a blog on their webpage on this issueengaging with critical customers publicly.

Nestl gave in to pressure from Greenpeace and promised a zero deforestationpolicy in its palm oil supply chain. After just 8 weeks of intense campaigning and

meetings with the company Nestle came come up with what Greenpeace describedas a comprehensive policy that will be monitored by the Forest Trust.

Nearly 1.5m saw Greenpeaces spoof Kit Kat advert, over 200,000 emails were sent

and activists demonstrated at Nestl HQs worldwide. Greenpeace said We didnt

expect Nestl to come up with this policy so quickly.

Bibliography

Freeman, R. Edward(1984). Strategic Management: A stakeholder approach. Boston: Pitman.ISBN0-273-01913-9.

http://en.wikipedia.org/wiki/R._Edward_Freemanhttp://en.wikipedia.org/wiki/R._Edward_Freemanhttp://en.wikipedia.org/wiki/International_Standard_Book_Numberhttp://en.wikipedia.org/wiki/International_Standard_Book_Numberhttp://en.wikipedia.org/wiki/Special:BookSources/0-273-01913-9http://en.wikipedia.org/wiki/Special:BookSources/0-273-01913-9http://en.wikipedia.org/wiki/Special:BookSources/0-273-01913-9http://en.wikipedia.org/wiki/Special:BookSources/0-273-01913-9http://en.wikipedia.org/wiki/Special:BookSources/0-273-01913-9http://en.wikipedia.org/wiki/Special:BookSources/0-273-01913-9http://en.wikipedia.org/wiki/International_Standard_Book_Numberhttp://en.wikipedia.org/wiki/R._Edward_Freeman