Stakeholders

Stakeholders Stakeholders are the ones who have a stake in the organization and thus in some way or the other are related to the organization. This broad definition of stakeholders often leads to confusion; hence a more narrow definition was derived that explains “group who are vital for the organization or groups that help to define the organization, its mission, purpose and goals, and or are most affected by the activities of the organization” (Lebeer, 2002, p. 181). Considering the above given definition, the stakeholders of Verizon can be segregated as internal as well as external stakeholders.

Everybody who works for the organization can be considered as the internal stakeholder (Banhegyi, 2009, p. 395). The employees of Verizon are the internal stakeholders of the company; however the families of these employees are also considered to be a part of internal shareholders. The external stakeholders are the ones who are not a part of the organization, but have interest in the company (McManus, 2005, p. 147). In Verizon, the customers are considered as one of the most important external stakeholders. Apart from customers, the shareholders and the investors are also of great importance.

Other external stakeholders are the government, the public, and the environment. According to stakeholders’ theory, the stakeholders should be identified and segregated into different groups depending upon the power and interest the exercise on the organization. This segregation is often called power grid. According to it, the stakeholders can be segregated into four different groups, these are: High power-High interest:These stakeholders have active interest in the day to day functioning of the firm, so they should actively participate in managing the organization.

Interest coupled with power gives them the authority to take decision and set policies. Example: The management High interest-Low power: These stakeholders are interested in participating in the activities related to the organization but due to lack of power they cannot actively participate in the decision making process. The organization should keep them informed regarding the decision taken. Example: The employees High power-Low interest:The stakeholders who possess the power but are unwilling to participate in different organizational activities belong to this group.

The management tries to appease this section of the stakeholders as far as possible. Example: Investors Lower interest-Low power:This set of stakeholder neither have the power to participate in the decision making activities nor do they have the interest to participate in any kind of activity related to the organization. Therefore, the organization should not pay much attention to them but their activities should be monitored on time to time basis. Example: Government, social interest groups, suppliers, etc. Figure 1: Power Grid (Source: Davies, 2007, p. 36)

D1: Evaluate the influence that different stakeholders exert in one of the organisations. Apple Inc.

As Apples owners, they believe to have the most responsibility in the business. The owners are the people in charge, the people at the top of the hierarchy chart of the company. These are the people who make the decisions in the business and also the people who come up with the great ideas. We are reminded again by Apples aims, to make as much profit as they can and to create innovative and advanced consumer electronics. The stakeholders, in this case the owners need to have individual objectives, such as creating the next big thing. In apple this would be to create the next Iphone or Ipod. However they also have to make sure that everything in the production of the product and the marketing is running as planned. Another individual objective for the owner will be to convince the public of their products, this links in with the marketing department but in the end, the owner gives the final decision. At the launch event of a new apple product.

The owners’ objectives would be to deliver an engaging and convincing speech to the public. This will link in with the great aim of increasing the profit of the company because if you convince the public of the product, they will buy more of it and even recommend it to more people. The producers in Apple influence the company to seek the aims and objectives. The producers have the responsibility for making the products. This means that they are also responsible if anything goes wrong with the design itself or the software. One of their objectives is to create a product with as little problems and possible. If they are successful, then the company’s revenue will increase which will indeed mean that the people in production could potentially be paid more.

The producers have different individual objectives to the owner’s. For the producers, a personal objective for them would be to finish the design at the given time and to complete it with no kinds of problems. It is in the producers benefit to create great products. If they create better products, then the company is more likely to have a profit maximisation. Like the owners, the producers also work as a team. All the departments in the company have team objectives, these team objectives link in with the functional objectives which will then help complete their aim. Read about FedEx Stakeholders

However not all decisions are made as a team.

The final decision will always come down to the owner of the company. On the other hand there are sometimes where they have to make decisions democratically. An example of this is deciding which way they want their business to go, how it is run and their unique selling point. All the stakeholders in the business connect with each other to try and influence the company in a positive way. Each of them has to accomplish their own individual objectives in order to complete the company’s aims. Apple completes their wide objectives by having a cascading of objectives. However this doesn’t apply to all stakeholders. Most stakeholders in Apple have a common interest, this is to increase revenue. However the consumers have an influence in the aims of the business in another way, by buying the products and by convincing other people of them. This influences the aims either in a bad way or in a positive way. If the consumers think the products are too expensive or not that great a quality, sales will go down; which will then neglect the company’s aims. On the other hand if the products are a success, sales will rise drastically. In conclusion, all of the stakeholders have an influence on the business. What’s different is that different stakeholders influence the company in a different way. The stakeholders influence is a measure of the company’s success.

Customers;

Customers for the NHS are the patients to the hospital, whether they have broken a bone or have a serious illness, they are all patients. The influence that they hold to the business is that if it wasn’t for the patients there would be no NHS, and also if there were no patients or people getting ill or sick they would not have discovered any of the diseases that are around today, which means there wouldn’t be as much medication and antibiotics around as there are today.

Customers for Cadburys are the ones that have kept them running and helped them make a profit in there business, by buying Cadburys chocolate confectionary and their merchandise.

Employees;

The employees within the NHS are the ones that are helping their patients get better, such as; doctors, nurses and surgeons. These employees help the NHS because if it wasn’t for them there would be no point of having the patients come and a hospital being run.

For Cadburys, there employees are the ones that produce their stock and their merchandise that they sell that has ensured the business to succeed in profit making. Also the staff that they have in foreign countries that work on the farms collecting the cocoa beans that are then sent to the factory to be produced into the chocolate, which is also done by their staff who operate the machinery within the factory.

Suppliers;

Suppliers are the people who provide other businesses with apparatus and machinery to help them to run their business. Suppliers of the NHS are the people/business that supplies the NHS with items such as patient’s beds, x-ray machines, drug trolleys etc…

For Cadburys the items that the suppliers give them are items such as the machinery, conveyer belts and also the cargo trolleys to transport the boxes of goods from the factory to the Lorries that will then be distributed to where they need to be dropped off.

Owners;

Owners are the people or group of people who own the business and are in charge of the business. The NHS is a government run business and is funded by the public taxes. Therefore because it is government ran the money will be spent wisely and appropriately only on what they need and not what they want, and also it means that they will always stick to their budgets so they don’t waste their budget. And also because this business is government run they will only hire the best staff to ensure every patient gets everything they need. Read about FedEx Stakeholders

Cadburys owners are dividend between the people who own it therefore the value of Pressure Groups;

Pressure groups are people who are doing it for Non-profit and are generally voluntary organization, and they seek to influence political or corporate decision making groups. The NHS has had quite a few pressure groups since the 2010 elections had influenced the media exposure of a variety of pressure groups hoping to shape and influence the political debate.

Cadburys had received a lot of pressure from network groups because of their Wispa™ chocolate bar as it was a discontinued good as it was not selling as well as they had hoped it would but after many network pressure groups they had then decided to restart this product and it was back on the shelves in 2007.

Trade Unions;

A trade union is an organization whose membership consists of workers and union leaders, united to protect and promote their common interests, and also if you feel that they have done something to you that is not fair, for example unlawful dismissal then you would contact your trade union and they would tell you your rights etc… and try to help you with the problems. The NHS have many different trade unions as they have trade unions for nurses, doctors, receptionists, directors, managers and many other’s…. Cadburys would also be the same as there would be trade unions for factory workers, distributers (the people who deliver the goods by lorry) etc… and these trade unions would also work the same for issues such as unlawful dismissal.

Employer associations;

An employer association is a body of employers, usually from the same sector of the economy, associated to further the interests of member companies by conducting negotiations with trade unions, providing advice, making representations to other bodies, etc… the NHS have a few Employer associations, as the NHS European Office is a member, on behalf of the NHS, of two social partner organisations, the European Hospital and Healthcare Employers’ Association (HOSPEEM) and the European Centre of Enterprises with Public Participation (CEEP). We are also members of the Partnership of Public Employers (PPE), the UK section of CEEP.

Local and national communities;

Local and national communities are a group or people in either a small area such as Wolverhampton (local) and a national group is a larger group of people who live nationally fro example west midlands.

The entrepreneurs have a huge impact on this aim. To finish Tesco’s aim the Entrepreneurs must employ different individuals into different areas of the company so they can run properly. Shareholders Their impact is not a lot on this aim. The investors must invest cash into the company so they can eventually earn profits back, because If the company has no cash, they cannot earn profits. Managers Supervisors have a important impact on this aim. The supervisors will be the people managing the real shops (where a huge most of the revenue take place).

The administrator must co ordinate his team and creates sure they are all doing their appropriate tasks to earn profits. Employees Workers of Tesco do not have that much impact on this aim as they get compensated a set-fee. Workers will need to give your very best to get compensated, so they will also help earn profits for the company. If they are not doing what they are expected to do, they will be changed. They should perform regular shop responsibilities to help Tesco earn profits. Customers The clients have little effect on the aim.

If clients like the goods and solutions at Tesco, they will come back again and waste your cash. This is why team must act properly around clients as this is how they get compensated. Suppliers The providers also have little impact on this aim. The providers are not a part of Tesco, but they would want Tesco to earn profits so they can offer them more resources. Tesco uses providers to obtain resources which they can offer at a high cost. Post Office: To provide a postal service within the UK. Stakeholders Influence Point of view Owners The entrepreneurs have the biggest impact on the aim as they ‘own’ the organization.

The owner of the Post Office is the government, they will use money made by the business to pay for deliveries and the supplies they need to provide this. They will do what it takes to keep the Postal Service running, for example: giving the business money if they are ever in debt. Shareholders The Publish Workplace does not have any investors, so they will not have any impact. The Publish Office does not have any investors, so they will not have any perspective. Managers The supervisors have a big liability of creating sure the employees are satisfied.

The supervisors will be handling everything that goes within the mailing service, they must handle everything properly else the mailing service could get late or volatile. Employees The workers have a significant impact on this aim as they are the ones having to create sure they are created satisfied. The worker’s perspective of this aim is good as they want to be operating in a enjoyable atmosphere. The factor that their mangers want them to be pleased is a big motivation to keep operating. Customers The clients have a huge effect on this aim as if they are not satisfied with the mind-set of team they can grumble.

The clients value this aim of the Publish Workplace because if the employees that provide them are satisfied and good then they are going to experience more welcome and willing to come returning. Suppliers The suppliers don’t have a significant influence on this aim. The suppliers also value this aim because they have to communicate with staff at Post Office, if the staff is happy they are friendlier and this results in the suppliers’ job becoming easier. Overall the points of views from the stakeholders are not too different. Tesco and the Post Office are both trying to make a profit by offering services.

Relationship value: Considering customer value from the perspective of relationship marketing, or relationship value, is the most recent development in value research. However, as yet there is limited theoretical and empirical work in this area (Ravald and Gronroos, 233-543). Crosby, Evans and Cowles (89-98), in their study of relationship quality in services selling, represent one of the first pieces of work in this area.

They highlight the need to understand the elements of `quality’ in a relationship. They suggest addressing this by understanding the nature, consequences and antecedents of relationship quality as perceived by the customer in longer-term relationships. This view acknowledges that the creation and recognition of quality or `value’ in a relationship involves the customer as well as the service organization.

Wilson and Jantrania (208-292, 306-363) were the first researchers to explicitly describe the dimensions of `relationship value’; these include economic dimensions (investments quality, value engineering, concurrent engineering and cost reduction, strategic dimensions (core competencies, strategic fit, time to market and goals) and behavioural dimensions (social bonding, trust and culture). They make the fundamental point that any relationship creates some value to both partners and how this value is shared is likely to be a major issue in the life of the relationship.

Tzokas and Saren (85-98) provide a useful overview of this and other approaches to understanding value within relationships, and conclude that further research needs to be done in this area. The relationship itself can also have a major impact on the total value received by the customer (Ravald and Gronroos, 56-85). These authors emphasize that in a relational context `… value for the customer is not embedded in a transactional exchange of a product for money. Instead customer perceived value is created and delivered over time as the relationship develops’ (Gronroos, 316-373).

In a long-term buyer-seller relationship they suggest the need to look at `total episode value’ which they describe as a function of `episode value’ and `relationship value’ in the following equation: total episode value = episode benefits +relationship benefits/episode sacrifice + relationship sacrifice They show that a poor episode value can be balanced by a positive perception of the relationship as a whole, so it is important for the supplier to maintain a good relationship with the customer, since this could make the customer more tolerant towards occasional inferior performance.

Any relationship creates some value to both partners; thus how this value is shared is also likely to be a major issue in the life of the relationship. Further work by Gummesson (233-543) proposes a number of fundamental values in relationship marketing, the core value being the emphasis on inter-party collaboration and the creation of mutual value. This derives from other work on relationship value and on the value constellation.

Gummesson’s concept of `total relationship marketing’ emphasizes long-term win-win relationships with customers, which transcend boundaries and disciplines. Here, value is co-produced through the interaction of a number of additional stakeholders including suppliers, customers, competitors and others. This stream of research is important because understanding relationship value in long-term relationships can have a critical impact if a company is taking a relationship marketing approach to its customers.

It differs from previous streams of value research in that it acknowledges the on-going interactions over time between a company and its customers (for example, the augmented product concept (Levitt, 306-363) considers only a discrete customer episode). No longer can value be viewed as part of an individual transaction process; value is created over time and will be subject to changes and external influences, e. g. other stakeholders. It also adds dynamism to the value concept.

However, research in this stream is at an early stage of development. More conceptual and empirical research needs to be undertaken here and the role of and interaction between different stakeholders needs further consideration. One objective of this paper is to address this gap by developing a conceptual framework for relationship value management which integrates key elements from the nine core streams of the value literature within a multi-stakeholder context.

Within the core streams of value literature above, we have outlined how customer value and shareholder value need to be considered together, and also briefly discussed the role of employee value. We have also suggested it is important to recognize that customer value in the context of relationship value is a dynamic concept; value is created and changed over time as a result of an ongoing series of transactions.

However, we consider that customer value, shareholder value, employee value and relationship marketing are closely related and form part of a broader value process, In this section we consider the role of multiple stakeholders. In the following section we develop a framework for relationship value management based on a relationship marketing perspective which draws on concepts from the nine core streams within the value literature.

Introduction

The major conflict in this ethical dilemma is that between environmental protection and economic improvement. There is a need to increase domestic oil supply to decrease dependence on foreign oil, and in consequence, lowering oil prices. The proposal among some lawmakers is to allow drilling for oil in section 1002 or the 1.5 million acres of land in Alaska’s Arctic National Wildlife Refuge (ANWR), which had been set aside in 1980 for the study of petroleum production potential.

Proponents argue that current drilling technology can already minimize the environmental impact of petroleum extraction. Those against the proposal, however, say that drilling in the area would endanger the survival of a great caribou herd in the area. They argue that conservation is a better solution than expanding oil production because it is more long-term.

Who are the decision makers? The decision makers in this issue are the senators who will vote either for the ratification or for the junking of the House Energy bill. Who are the stakeholders? The stakeholders are the oil industry, the consumers, the environment, the caribou herd, the residents in the area like the Gwich’in Native Americans and the Inupiat Eskimos, and the future generations of Americans. Why is this an ethical decision? Ethics calls us to think about not just how we act toward people but also toward the natural world.

“…The natural world was often the unseen participant in many situations of ethical significance” (Warner & DeCosse, Step One section, para. 3). The effects of our actions on the environment are often overlooked because these effects are not felt or realized in the near term. Often, effects on the environment are cumulative, long-lasting and not immediately seen. We have to always think about the effects of our actions on the environment because it could produce harmful consequences for today and future generations.

The destruction of the environment would be detrimental for everyone. We should also remember “that the common good includes not only those environmental conditions that enhance the fulfillment of men’s and women’s lives but that the common good also includes the well-being of the natural world for its own sake” (Warner & DeCosse, The Common Good Includes the Goods of the Earth section, para.

Stakeholder Management – The Environment

• What are the environmental stakeholders’ interests for each ethical issue or concern you identified in the Introduction?

The interests of the environmental stakeholders are the protection of the caribou herd and the wildlife refuge area. Section 1002 is a critical calving area for the herd. Environmental stakeholders are concerned with the stability of the ecology of the area. Oil drilling could damage the environment and push the herd into the foothills where resources for their survival are scarce. They are also concerned with the long-term effects of drilling on the environment.

• What are the environmental stakeholder responsibilities for each ethical issue or concern you identified in the Introduction?

The environmental stakeholder responsibility is mainly for the protection of the environment. They have to make sure that the policy won’t be harmful to the environment and that it would be sustainable for the benefit of future generations.

• What are the possible decisions the corporation could make for each ethical issue or concern, and what are the possible effects on the environment?

The senators could pass the House Energy bill allowing the drilling in section 1002. If the proponents of the bill are right in saying that current drilling technology can minimize the harm on the environment, then there probably won’t be much adverse effects on the environment.  Still, the senators could include protectionist clauses on the bill so that whatever detrimental effects to the environment could further be avoided or, at least, minimized.

Or, the senators could scrap the bill altogether and let section 1002 still be a protected area.

Conclusion and Recommendation

• What is your recommendation to the corporation based on all of the facts, issues, and concerns of this case?

Whatever action is to be taken should be sustainable. Sustainable development “meets the needs of the present without compromising the ability of future generations to meet their own needs” (Partridge, Jackson, Wheeler & Zohar, 2005, page 6). Therefore, the decision should “include the simultaneous consideration of economic growth, environmental protection, and social equity” (Rondinelli & Berry, 1999, page 2). In this situation, it seems that it is impossible to ensure that the decision would allow economic growth and environmental protection at the same time. But if the lawmakers could ensure that there would be enough safeguards in the law to protect the wildlife in the area, then the proposal is not impossible.

The lawmakers should enlist an independent body composed of various sectors like the oil industry and the environmentalist groups to conduct studies on possible environmental effects of oil drilling in section 1002. The senators should draft the bill following the recommendations of the independent body. This recommendation would ensure that: 1) the senators would be able to make a decision based on empirical studies; 2) safeguards for the environment could be included in the bill; 3) expanded oil production could still be a possibility; 4) the decision would be fair for all sectors; and 5) the wildlife area would be protected.

• What are the positive implications of your recommendation?

The recommendation tries to make an acceptable compromise between competing sectors of the economy and the environment. Cost/benefit analysis would be employed. Meaning that “the value in the present [would be] weighed against the environmental health cost to the future” (Ethics module, Cost/benefit analysis section, para. 1).

• What are the negative implications of your recommendation?

The recommendation is still not conclusive in terms of whether the House Energy bill should be passed or not. The recommendation means that the senate would not be able to decide at once.

• What will critics of your recommendation argue?

The recommendation delays the decision on the bill, which could prove to be harmful for the economy in the future.

• How would you address your critics` concerns? How will you defend your recommendations?

The recommendation ensures that the senate would not make a haphazard decision. It would be based on a multi-sectoral independent study, which means that all sectors concerned could reach a compromise on the issue.

References

1. Ethics module. (n.d.). Retrieved February 18, 2007 from http://www.rsmas.miami.edu/groups/niehs/ambient/teacher/ethics/ethics.html
2. Partridge, K., Jackson, C., Wheeler, D., & Zohar, A. (2005, July). From Words to Action: The Stakeholder Engagement Manual, Volume 1: The Guide to Practitioners’ Perspectives on Stakeholder Engagement. Stakeholder Research Associates Canada Inc., United Nations Environment Programme, AccountAbility. Retrieved February 18, 2007 from http://www.stakeholderresearch.com/assets/downloads/From%20Words%20to%20Action,%20Volume%201,%20Practitioners’%20Perspectives%20on%20Stakeholder%20Engagement%20(2005).pdf
3. Rondinelli, D. ; Berry, M. (1999). Environmental Citizenship in Multinational Corporations: Social Responsibility and Sustainable Development. University of North Carolina, Kenan-Flagler Business School, Kenan Institute of Private Enterprise. Retrieved February 18, 2007 from http://www.greeningofindustry.org/gin1999/Rondinelli%20_Berry.pdf
4. Warner, K. ; DeCosse, D. (n.d.). Environmental Ethics Lesson Plan Two Who, When, Where, How, and What: The Distinctiveness of Environmental Ethics. Retrieved February 18, 2007, from Santa Clara University, Markkula Center for Applied Ethics Web site: http://www.scu.edu/ethics/practicing/focusareas/environmental_ethics/lesson2.html

We shall now analyze the stakeholder table to identify the most important stakeholders based on power, leadership, interest, knowledge and ability to form alliance. We shall analyze each stakeholder one by one for a better analysis.

Managers

Electrocorp’s managers have the most knowledge about proposal to outsource the production. They can also find like-minded supporters in board of directors and shareholders. They have the ultimate power to make the decision and take the leadership in implementing this change. They also have high interest and motivation to see this policy go through since outsourcing would increase profits and hence their bonuses.

Employees

They may have some knowledge about the proposal to outsource having heard about t through the grapevine. They are against this change and can put pressure on the management with the help of labor unions, local politicians and the general public of the city. However, they do not have any real power, even though the change would affect them the most as they will lose their jobs.

Labor Union

Labor Unions oppose the change as a number of workers are set to lose their jobs. Although they have no knowledge about the proposal, they have some power because of their ability to form alliance with the local politicians and the community.

Shareholders

Shareholders are unlikely to have heard about the proposed change since this is still an internal matter. Hence they have no or very limited knowledge about the proposal. They also have very limited power and resources and no leadership. However, they have substantial interest in the proposal since outsourcing would increase profits and hence the share prices.

Board of Directors

Board of directors is likely to have some knowledge about the proposed change. However, it is unlikely that the directors have detailed knowledge of the proposal and the research done on it so far. The improved profits make the proposal extremely attractive to the directors. They also have the power to make the decision to give the go ahead to the policy.

Customers

Customers probably have no or very little knowledge about the proposal. However, they will be benefited if the proposal is implemented since it will result in cost reduction of the automotive parts which will help customers bring down the cost of their product. As such, the proposal is of high interest to them and informing them about it could help Electrocorp garner some support in favor of the policy, if needed. Since automobile industry has a lot of political support, they can also exercise this power for the benefit of Electrocorp.  In fact, Electrocorp’s customer can help reduce the political pressure put by local politicians who are more interested in the local economy.

Suppliers

Electrocorp’s supplier’s are most likely situated locally. Outsourcing the firm’s production facility could make it expensive to import raw material from the US and Electrocorp may decide source this material locally, thus hurting the supplier interest. They may have heard about the proposal and could already be planning to counter this problem. However, they have little power to influence Electrocorp’s policy decisions.

US City/Community

The community is unlikely to have any knowledge about the proposal and once the proposal is made public, there will be widespread opposition since the city’s economy is heavily dependent on Electrocorp. A point over which the issue can be negotiated is the fact that shutting down of factories will result in removal of carcinogenic material from the vicinity of the city, thus making it safer for the city’s children. However, the adverse effects of outsourcing are far greater and immediate and it will be difficult to convince the city to support the proposal.

Local Politicians

Local politicians have little or no knowledge about the program but the fact the thousands of workers will be laid off, makes it a politically hot issue and local politicians may use their power to put pressure on Electrocorp to abandon the project.

 US Government

The US government has little interest in what goes on Electrocorp. However, if too many jobs get outsourced, the government may make policies to limit such outsourcing to prevent loss of revenue to exchequer. In this regard the government has very high power. However, it is unlikely that the government will interfere.

Government of Foreign Country

The government of the country where the production is outsourced will benefit from all the new jobs. Hence the country will have a very high interest in Electrocorp starting operations within its borders and may give subsidies to help make the transition easy.

Citizens of City Relocating

Any city to which Electrocorp relocates to will benefit from jobs that its citizens will get. However, there are also environmental problems to consider. The relaxed environmental standards of other countries would expose the citizens to carcinogens. Still any the city would have high interest in seeing Electrocorp open production center. But they do not have any resources or power to influence such a decision.

Environment Ministry

The environment ministry would be happy to see a polluting production facility leave the American shores. Although they do not have any power or resources to influence the decision, it would be a welcome one for them and managers could attempt to form an alliance with them

Environmental Non-Profit Groups

Their interest in Electrocorp relocating is the same as that of Environment ministry.