Professional Ethics

Lecture # 5
Stakeholder Analysis
(continued)

by Khadija Ejaz

3. Assessing the nature of each

stakeholders interest
Step 3 & 4, which is assessing the nature of
each stakeholders power, overlap to some
extent. By identifying the supporters (active &
non-active) and the active opposition, we
have already begun to assess the relative
power of each stakeholders interests.

4. Assessing the nature of each

stakeholders power
This part of the analysis asks, Whats in it for
each stakeholder? and Who stands to win, lose,
or draw over certain stakes?.
Three types of power stakeholders (1) Voting
power, (2) Political power and (3) Economic
power.
For example, owners and stockholders can vote
their choices to affect the firms decisions
Federal, state, and local governments can
exercise their political power.

 Consumers can exercise their economic power

by boycotting use of products/services or
buying products/services of other organization
or companies.

5. Constructing a matrix of
stakeholder moral responsibilities
Next step is to determine the ethics,
responsibilities, and moral obligations, the
company has to each stakeholder.
This part of the analysis should continue until
you have completed matching the economic,
legal, ethical, and voluntary responsibilities for
each stakeholder, so that you can develop.

 strategies toward each stakeholder you have

identified

 The firms economic responsibility to the

investors (as stakeholders) as preventing as
many costly lawsuits as possible.
Ethically, the owner will make policies to
prevent unethical activities.
Voluntarily, resolving the crisis by offering
services and compensation to affected
communities
Legally, protecting the owners and team from
corporate as well as personal damage.

6. Developing specific strategies and

tatics
Using results from the preceding steps, we can
now proceed to outline the specific strategies
and tactics with each stakeholder.
First, we should consider whether to approach
each stakeholder directly or indirectly.
Second, we need to decide whether to do
nothing, monitor, or take offensive or defensive
position with certain stakeholders.
Third, we should determine whether to
accommodate, negotiate, manipulate, resist,
avoid, or wait & see with specific stakeholders.

 Finally, we should decide what combination of

strategies should be used with each.
A useful typology for both identifying and
deciding on strategies to employ in a complex
situation.
Stakeholders potential for threat to
organization
High
Low
Type 4
MIXED BLESSING
Strategy: Collaborative

Type 1
SUPPORTIVE
Strategy: Involve

Type 3
Nonsupportive
Strategy: Defend

Type 2
Marginal
Strategy: Monitoring

 The ideal strategic situation for the focal

corporation is type 1, the supportive
stakeholder with a low potential for threat and
high potential for cooperation. Here the
strategy of the focal company is to involve the
supportive stakeholder.
Think of both internal & external stakeholders
who might be supportive and who should be
involved in the focal organizations strategy,
such as employees & suppliers.
In contrast, there is type 3, the non-supportive
stakeholders who shows a high potential for
threat and a low potential for cooperation.

 The suggested strategy in this situation calls

for the focal organization to defend its interests
and reduce dependence on that stakeholders.
A type 4 stakeholder is a mixed blessing, with
a high potential for both threat and
cooperation.
This stakeholder calls for a collaborative
strategy. In this situation, the stakeholder could
become supportive or non-supportive.
Collaborative attempts to move the
stakeholder to the our own companys
interests is the goal.
Finally, type 2 is the marginal stakeholder. This
stakeholder has a low potential for both threat
and cooperation.

 Such stakeholders may not be interested in

the issues of concern. The recommended
strategy in this situation is to monitor the
stakeholder, to wait & see and minimize
expenditure of resources, unless and until the
stakeholder moves to a mixed blessing,
supportive, or non-supportive position.

7. Monitoring shifting coalitions

Because time and events can change the
stakes and stakeholders, we need to monitor
the evolution of the issues and actions of the
stakeholders.
Media exposure, politics, economics, legal
actions, and public reactions change
stakeholder strategies and positions on issues.