Contents

Introduction...........................................................................................................................................2
Question 1.............................................................................................................................................2
1.1 Stake............................................................................................................................................2
1.2 Stakeholder..................................................................................................................................2
1.3 Production view of the firm.........................................................................................................3
1.4 Managerial view of the firm........................................................................................................3
1.5 Stakeholder view of the firm.......................................................................................................3
Question 3.............................................................................................................................................4
3.1 Stakeholders analysis...................................................................................................................4
3.2 Stakeholder engagement.............................................................................................................5
3.3 Importance of keeping the community happy through CSR initiatives........................................6
Question 4.............................................................................................................................................7
4.1 Stakeholder management...........................................................................................................7
4.2 Sustainability...............................................................................................................................7
4.3 Relationship between effective stakeholder management and sustainability.............................8
Question 5.............................................................................................................................................9
5.1 Social entrepreneurship...............................................................................................................9
5.2 Bottom of the pyramid (POD)....................................................................................................10
5.3 The relationship between social entrepreneurship and the bottom of the pyramid.................10
Conclusion...........................................................................................................................................11
References...........................................................................................................................................12

1
Introduction
According to Durnev & Kim (2015) management has a fiduciary responsibility to its

stakeholders. Organisational leaders in the 21 st century have made stakeholder

management a priority as the stakeholders increasingly expect more from the

organisations. Stakeholder management plans have therefore gained popularity as

they serve as blue prints guiding organisational leaders in their stakeholder

management activities. By definition, a stakeholder management plan is a formal

document outlining how stakeholders will be engaged in the organisation. An

organisation is successful when it meets its objectives at the same time exceeding

the expectations of the stakeholders.

Question 1
1.1 Stake
As described by Bucholtz and Carroll (2012) a stake is an interest or a share in a

particular undertaking. There are three types of stakes and they are Interest, Right

and Claim. Interest is when a person is affected by a decision. Examples of Interest

can be households under the flight path of a proposed runway or people living close

to a construction site or proposed business. A right can either be moral or legal. A

moral right can refer to respectful treatment or a sense of fairness. A legal right on

the other hand can refer to consumer rights or rights to legal advice when sued. A

claim can refer to employee’s rights to safe workplace or the shareholders’ fiduciary

rights.

1.2 Stakeholder
A stakeholder is defined by Donaldson & Dunfee (2014) as an agency, organisation,

group or individual who has either a direct or indirect interest in what an organisation

does. Primary stakeholders as described by Cleland (2015) refer to the stakeholders

2
who have a direct stake in the organisation and its success. Examples of primary

stakeholders include the shareholders, investors, customers, local communities,

suppliers and key business partners. Secondary stakeholders on the other hand are

described by Donaldson & Dunfee (2014) as those stakeholders who have a public

or special interest in the firm. Examples of secondary stakeholders include

Government and regulators, civic institutions, social pressure groups, media,

academic commentators, trade bodies and competitors.

1.3 Production view of the firm

individuals or groups that supply resources to the firm or buy products or services

from the firm (Carroll, 2017). Therefore suppliers and customers were the only

groups considered as stakeholders

1.4 Managerial view of the firm

responsibilities towards other major constituent groups to be important if the

company was to be successful (Buysse, 2013). Owners and employees were then

added to the list of the stakeholders which initially only had suppliers and customers.

1.5 Stakeholder view of the firm

or individuals that management thinks have some stake in the firm but also those

that themselves think or perceive they have a stake in the firm (Buysse, 2013). The

list of stakeholders therefore increased to include all those individuals and groups

who are affected and affect the activities of the organisation.

3
Question 3
3.1 Stakeholders analysis
According to Berman and Jones, (2010), in order for an organisation to be able to

manage its stakeholders, it has to know and understand them first. A stakeholder

register is used in order to collect information about the different stakeholders.

Stakeholder register

Descripti Mitigati
Gro on & Impa Impa Issues, on
up # in Key ct on ct by Curre Desir Opportuni Strategi
Nam Gro attribute Proje Proje nt ed ties and es and
e up s ct ct State State Risks Actions

The Salience model that was propounded by Mitchell, Agle and Wood (1997) can be

best used for analysing the stakeholders. When using this model, stakeholders are

assessed on the basis of their power to influence the organisation, the legitimacy of

their relationship with the organisation and the urgency of their claim on the

organisation. Through assessing the power, legitimacy and urgency attributes,

seven segments of stakeholders emerge. The seven groups of stakeholders can be

classified into three groups: Latent stakeholders, Expectant stakeholders and

definitive stakeholders. Latent Stakeholders

4
Source: Goodpaster (2011)

Latent stakeholders

These stakeholders only have one attribute. Power is the most important attribute

and the other two do not have any significant impact on the project and therefore

usually not given much attention. These include Dormant, Discretionary and

Demanding stakeholders.

Expectant stakeholders

According to Goodpaster. (2011), these stakeholders have two attributes and they

are active and expect something from the firm. These include dominant, dangerous

and dependent stakeholders

Definitive stakeholders

These have all the three attributes and are very important for the organisation. They

also require much attention. An example is core stakeholders.

3.2 Stakeholder engagement

critical to first craft a stakeholder engagement plan. Barsky (2011) defines a

5
stakeholder engagement plan as a detailed blue print that outlines the stakeholder

engagement plan of the organisation. Three types of engagement exist and they

include consultation, information and participation. In order for leaders to make sure

correct level of engagement is achieved for each stakeholder, the PMBOK

stakeholder engagement assessment matrix can be used. Each stakeholder group

can be assessed in terms of their current and desired level of engagement.

Supportiv
Stakeholder Unaware Resistant Neutral Leading
e

The Unaware group has no information about the project. The Resistant group is

aware of project but resistant to the changes and impacts the project may bring. The

Neutral group is aware of the project but neither supportive nor resistant. The

Supportive group is aware of the project and the potential changes and impacts and

is supportive. The Leading group is aware of the project and actively engaged to

ensure the project’s success

3.3 Importance of keeping the community happy through CSR initiatives

that helps a company be socially accountable to itself, its stakeholders and the

public. According to the Instrumental Stakeholder Theory by Jones (1995), when

organisations act ethically and responsibly to the community, their competitiveness is

enhanced. According to the theory, there are three assumptions that exist about the

firm-stakeholder relationship. The first one is that firms and stakeholders have

relationships called contracts and the managers are the contracting agents. The

second one is that firms operate in competitive markets where pressure by

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competitors influence behavior but not always penalising moderately inefficient

behavior. The last one is that firms through managers create good relations with

stakeholders based on mutual trust and cooperation and these relationships create

competitiveness.

Question 4
4.1 Stakeholder management
Stakeholder management is defined by Bandura (2015) as how an organisation

deals with as well as categorise its stakeholders. This usually is the role of strategic

management. The Clarkson principles of stakeholder management encourage

management to acknowledge concerns, monitor concerns, listen, communicate,

adopt processes, recognize interdependence, work cooperatively with all entities,

avoid activities that threaten progress, as well as to acknowledge conflict/potential

conflict between role as corporate stakeholder and legal and moral responsibilities.

4.2 Sustainability
According to Buysse (2013), sustainability refers to the ability of the organisation to

conduct its operations in a manner that enables it to meet the needs of the present

generation without compromising the needs of future generations. Carroll (2017)

asserts that traditionally, sustainable business development was described as the

realistic attainable growth that a company can maintain without running to many

problems but recently, it is defined by environmentalists as economic growth that can

continue over the long run without creating intolerable pollution or finishing up all the

non-renewable resources.

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4.3 Relationship between effective stakeholder management and
sustainability
Effective stakeholders management, as postulated by McWilliams & Siegel (2011).

has a direct impact on the sustainability of the organisation. Stakeholders are directly

or indirectly affected by the organisation, hence failure by the company to properly

manage them will result in lack of support to the company and without stakeholders’

support, and the company can crumble. Organisations therefore need to pay

attention to the needs of the stakeholders in order to make the stakeholders

supportive and collaborative

Organisations are encouraged by Bucholtz and Carroll (2012) to draw out the

interests of stakeholders in relation to the organisational objectives and also try by all

means necessary to resolve conflicts of interest between the stakeholders.

Organisations should also improve relations with stakeholders so as to improve

chances of organisational success and sustainability.

To add to that, proper stakeholder management is also a social learning process

where different stakeholders get to share a common forum, learn about each other’s

values as well as creating a shared vision and objectives. For stakeholder

management to foster sustainability, it therefore requires listening, openness,

dialogue, resources, integration and collaboration, leadership commitment,

understanding of needs, systematic thinking and the ability to deal with the VUCA

environment (Volatile, Uncertainty, Complex and Ambiguous)

Stakeholder management enhances communication across the organisation. As

asserted by Goodpaster (2011), communication is the lifeblood of any organisation

and without effective communication sustainable organisational growth cannot be

archived. Stakeholder management involves identifying stakeholders and working

8
towards understanding their preferences and expectations. When equipped with this

information, the leaders can then develop a better communication plan.

Effective stakeholder management systems are vital to the sustainable management

processes because the corporate intelligence provided by the management systems

yields a better understanding of organisational positioning (Durnev & Kim, 2015).

This leads to enhanced decision making and quick response to both the short-term

and long-term needs of the organisation. High quality decisions are enabled by the

wide consultations with the stakeholders that take place during the stakeholder

management process.

Effective stakeholder management is key to improving accountability within the

organisation and to the whole market. Transparency is a key ingredient to

sustainable development it clarifies the intended outcomes of the business

processes which enables the stakeholders each other accountable.

Question 5
5.1 Social entrepreneurship
According to Carroll (2017), social entrepreneurship is doing business for a social

cause. Some also refer to it as altruistic entrepreneurship. As alluded to by Buysse

(2013), social entrepreneurs combine commerce and social values in such for the

betterment of the all the affected stakeholders. Success in this particular case is not

assessed based on profitability only but also on the positive impacts that the

organisation will have on the society. An examples of social entrepreneurs include

the TOMS company which when it was founded, it applied the one for one concept to

shoes and for every TPOMS shoe purchased, the company donated a pair of shoes

to a needy child.

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5.2 Bottom of the pyramid (BOP)
According to Carroll (2017), the bottom of the pyramid refers to the largest but

poorest socio economic group constituting more than 2.5 billion people that live on

less than $2.50 a day. It also refers to a market based model of economic

development that promises to simultaneously alleviate widespread poverty while

providing growth and profits for multinational corporations. This notion has been

widely adopted by firms in many sectors. The UN Millennium Development Goals

identified poverty alleviation as a top priority.

5.3 The relationship between social entrepreneurship and the bottom of

world countries, issues like malnutrition, health care and sanitation seem to be

interlinked with poverty. This implies that alleviating poverty can help in resolving all

the other challenges that third world countries face. McWilliams & Siegel (2011) has

therefore identified lucrative multi-trillion dollar business potential in such areas that

entrepreneurs can take advantage of and provide the much needed goods and

services in such countries.

Social entrepreneurship is very important when it comes to poverty alleviation since

it focuses on solving the problem and not only on profit maximisation. The social

initiatives by social entrepreneurs’ intentions are producing the desired changes

even without a commercial model. Instead of just producing products for resale, they

deliver value that improves the society’s welfare.

Through providing innovative, technology-based solutions to the BOP, social

entrepreneurs enhance the quality of life in such population groups. This usually

involves bringing low-cost, lifesaving technologies to such countries (Carroll, 2017).

10
An example is that of Vestergaard, a healthcare technologies company that

developed a mosquito net that releases insecticide into the environment even after

washing it many times. This technology has resultantly been widely used and with

great success by various African places in order to fight malaria. These products are

not provided for free to the population but the prices charged for them are very

affordable for the ordinary person. The company has however crafted different

monitoring and financing techniques to make sure that these products reach the

intended targeted market. In this regard, it can be concluded that social

entrepreneurship revolutionizes the concept of philanthropy, regarding people at the

BOP not as mere recipients of charity but as business partners.

Conclusion
The above report has given an account of an overview stakeholder management. It

has defined a stake and stakeholders as well as outlining the different views of the

firm which are production view, managerial view and stakeholder views of the firm. It

also outlined how stakeholder analysis and engagement are done as well as the

importance of keeping the community happy through CSR. The report also outlined

how effective stakeholder management leads to sustainability of the company.

Finally the link between social entrepreneurship and the bottom of the pyramid was

discussed.

11
References
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