4 Stakeholders
What Are Stakeholders and Why Do They Matter?
• Stakeholder is any group or individual that can affect or is affected by the achievement of
an organization’s objectives.
• Why should a company be concerned about properly managing relationships with
stakeholders?
Stakeholder Categorization and Attributes
• Primary stakeholders are typically directly linked to a company’s survival and are either
impacted or impact companies directly.
o Examples of primary stakeholders include customers, suppliers, employees, and
shareholders.
• Companies also have to contend with nonmarket stakeholders whereby such entities have
a direct impact on companies, although they do have direct economic transaction with the
company. Examples of nonmarket stakeholders include the community, the government,
competitors, the public, and any other groups that have an impact on any company.
Shareholder Attributes: Power, Legitimacy, and Urgency
• Stakeholder power refers to the ability of a stakeholder to exert pressures to force a
company to make changes to accommodate such pressures.
▪ Use of money or boycott.
o Normative power refers to the use of symbolic and other resources to force a
company to accommodate stakeholder needs.
▪ Actions such as letter writing campaigns and other advertising messages.
Stakeholder Management
• Stakeholder management refers to the deliberate and purposeful process a company has
devised to work with its stakeholders.
• Why is stakeholder management critical?
Steps of the Stakeholder Management Process
• Step 1—Stakeholder identification: a company needs to determine and understand which
stakeholders have the ability to affect the organization.
• Step 2—Stakeholder prioritization
o Salience: influence any stakeholder can have on a company’s operations.
o Expectant stakeholders are those that possess two of the attributes.
▪ Dominant stakeholders represent stakeholders that are both powerful and
legitimate.
o Definitive stakeholders have power, urgency, and are legitimate.
• Step 3—Stakeholder visualization and mapping: a simple way to visualize stakeholders
to determine appropriate responses is to construct the power and urgency matrix.
Stakeholder Importance Worldwide
• Which stakeholders are considered most important?
o Customers: a better way to benefit the company and shareholders is to put