Corporation Freeman - Stakeholder Management Capability - Case Study Example

?SOUTHERN CROSS ASSIGNMENT COVER SHEET ID No Unit Unit Assignment No Assignment Due date: Date submitted: Declaration: I have read and understand the Rules relating to Awards (Rule 3.17) as contained in the University Handbook. I understand the penalties that apply for plagiarism and agree to be bound by these rules. The work I am submitting electronically is entirely my own work. Signed: (Please type your name) Date: 5th APRIL 2013 Executive summary The environment of conducting business today is not that stable and peaceful hence businesses have to find ways of penetrating so as to be successful. This turbulence is caused by the existence and emergence of different groups of people in the business arena all of whom have interest in the business. The business is therefore endowed with the responsibility of serving the interest of the so called, “stakeholders” in equal measure. This will ensure that they are all satisfied to enable the business operate profitably (Savage 1991). In dealing with the stakeholders strategic management skills come in handy to ensure the corporate objectives are also met. This report has the obligation of finding the appropriate stakeholder approach and the decisions to be made with regards to the stakeholders for the realization of the organization’s goals. Contents Executive summary I. Introduction II. Preble six step process III. Selection and discussion of two important stakeholders IV. Freeman’s Model Approach V. Conclusion References I. Introduction To catch up with the unstable environment facing many U.S. industries and businesses, business executives are required to efficiently and effectively manage all their stakeholders. Stakeholders is a wide term which is used to refer to those individuals, groups, and other organizations who have an interest in the actions of an organization and who have the ability to influence such actions either to the benefit or detriment of the organization (Post, Preston & Sachs 2002). This integrative approach assumes that an effective organization strategy requires consensus from a plurality of key stakeholders about what it should be doing and how these things should be done for the success of the organization. The case also demonstrates that executives should use an overarching strategy to change relationships with stakeholders from less favorable categories such as non-supportive that may be dangerous to the business; to more favorable ones like the mixed blessing who the business really need (Ravindra, Moray & Tom 2003). II. Preble 6-step Stakeholder Management Process Model Step 1: Stakeholder Identification Stakeholders can broadly be categorized as either primary or secondary stakeholders. Primary stakeholders are those whose continuing participation is required if an organisation is to survive and prosper (Savage 1991). They include the Shareholders, Investors, employees, customers and suppliers. Secondary stakeholders on the other hand are those who influence or affect, or are affected by, the corporation, but are not engaged in direct transactions with it and are not essential for its survival. They include the media, students and academics, unions, socially responsible investor, special interest groups (experts from social and environmental areas relevant to Nestle) and Non-governmental organizations (NGOs), activist groups, environmental organisations, human rights group. We also have Public stakeholders who provide the firm with infrastructure and legal frameworks in which to operate: Governments, community and recipients of corporate giving and so forth (Preble 2005). Step 2: general nature of stakeholder claims and power implications We start with ownership where; Shareholders have a financial equity stake in the firm, which gives them voting power, economic power in that they can sell their stake and political power which could be exercised at the company’s annual meeting as in the case of a dissident shareholder (Post, Preston & Sachs 2002). Customers on the other hand have economic power vested in their purchasing decisions and their ability to file product liability lawsuits when a product fails or endangers or injuries its members. We also have the economic claims advocated for by the external partners like in the United States through the Security and Exchange Commission, the Environmental Protection Agency, and the Occupational Safety and Health Administration (Preble 2005). Also, Consumer advocates like Ralph Nader in the United States and the UK-based group Ethical Consumer; such groups have the impact of influencing the organization by leading boycotts which can cause firms a lot of money (Preble 2005). In addition, such stakeholders also have the knowhow on how government operates and they can lobby for legislations by the government. Stakeholders in the name of influencers have the social stake in the firm through an expression of interest in its activities. They therefore, follow the activities of the firm they are following so keenly and in details (Savage 1991). Table 1: List of Nestle’s Stakeholder, Claims and Power, Objectives and Expectations Stakeholder group Power Claims and expectations Primary Shareholders Equity, economic, influencers Profitable, stable & good returns HR Department Influencers Ensuring safety, competency, sound organizational structure maintenance & satisfaction of all individuals Customer services department Influencers Communication and coordination Secondary Media Economic, influencers Advertising and prompt information Investors Economic, influencers Safety, harmony and stability of a country Competitors Economic, influencers Increase competition Bank Economic, influencers High performance and country stability Public Government Economic, influencers High operational efficiency by Nestle corporation (Nestle 2013) Step 3: determination of the performance gaps Performance gaps may vary depending on several factors. There may exists a case where the shareholders want to increase their profits while the organization, the management are more interested in upholding the quality of their supplies (Preble 2005). A standoff can arise between the Human resource department and the company employees where the HR strives to ensure safety, competency, sound organization structure and hence satisfaction of all the company employees; employees on the other hand may not be interested in what is provided but interested in equal treatment, ensured good living standards and equal treatment and competitive salaries just to mention a few (Mary 1996). Such performance gaps if not handled harmoniously can cause a very big rift among the employees and the company. The other measure that can be employed to help reduce such detrimental performance gaps are; conducting frequent performance audits and exploration of the stakeholders. This will ensure that any form of arising rift is detected in time and can be curbed within the right time (Mary 1996). Auditing will also help in the identification of weaknesses and suggest the mechanisms to cover up such weaknesses for the effective performance of the organization in general. The exploration of the stakeholders will bring to the surface any form of grudge that either of the stakeholders may be holding with the other and devise a mechanism to handle such before they go out of hand (Robert, Bella, Humphrey & Start 2011). III. Selection and discussion of two important stakeholders The two most important stakeholders for nestle are the sales department of the organization and the consumer advocates. The sales department is responsible for the profitability of the company. They must therefore be most efficient because with enough raw materials due to the business in which Nestle is involved, production will never be a problem. The profitability of the company is therefore solely if not completely dependent on the sales department who packages the products and strives to sway consumers on their side. They also have the task of going against negative images which may be created by the advocacy groups to the disadvantage of the products (Morrison 2013). The company must also try to maintain a cordial working relationship with the advocacy groups because they are influential and can taint the image of the products through negative publicity (Joep 2011). They also have the power of influencing the government to establish restrictions to the operations of the firm. These activities may not act spontaneously towards the operations of the firm but have an ultimate impact in the long run. IV. Freeman’s Model Approach For nestle to be successful it needs to apply the Freeman’s model approach in handling it’s all its stakeholders. This approach presents an equitable and sure way of making it proper that all the companies’ stakeholders will be handled without a bias (Nestle 2013). The stakeholder approach extends beyond the mere traditional production and managerial views of the firm and warrants a much broader conception of the parties involved in the organisation’s functioning and success path. Primary, secondary and public stakeholders are important in the eyes of Nestle management and operations. The strategic aspect toft is organization demands that it adopts a comprehensive stakeholder’s approach which should be embraced by all levels of the organization for it to be successful (Robert, Bella, Humphrey & Start 2011). Mangers of this organization may not fully understand all the stakeholders since Nestle is a multinational with branches in majority of the countries of the world hence an elaborate strategy only provided by the freeman’s model is available (Morrison 2013). This will work through the adoption of the stakeholder’s theory which embarks on the process of identifying the stakeholders and their expectations from the company. V. Conclusion An organisation’s survival and continued success depends on the ability of its management to create and maintain sufficient wealth, value and satisfaction for all stakeholder groups engaged with the company. In one way, stakeholders may affect the organisation through their actions which may be positive or negative and in turn be affected by the organisations actions policies, practices and decisions (Joep 2011). A group of stakeholders suggests that three attributes are especially important to identify and hence classify the Nestle stakeholders on basis of their actions for or against the organisation. Therefore, the stakeholder management processes are important and most importantly, prioritizing stakeholders demand is key (Robbins, Bergman, Stagg & Coulter 2012). The concept of stakeholder management capability illustrates how firms can grow and mature in their approach to stakeholder management hence a success in their operations. The stakeholder corporation freeman’s is a model that represents stakeholder thinking in its most advanced form (Morrison 2013). References Joep Cornelissen, 2011, Corporate Communication: A Guide to Theory and Practice, 3rd Edition, SAGE Publication Mary Tschirhart, 1996, Artful leadership: Managing Stakeholder problems in nonprofits arts organisations, Library of Congress Cataloguing-in-Publication Data. Morrison, V. 2013, MNG10716 Organizational Stakeholder Management. Southern Cross University, 1(1), 5-50. Nestle (2013), Stakeholder engagement, accessed March 24, 2013 http://www.nestle.com/csv/nestle/stakeholderengagement Post, J. E., Preston, L. E., & Sachs, S, 2002, Redefining the corporation: stakeholder management and organizational wealth, Stanford Business Books: Stanford, Calif. Preble, J, 2005, ‘Towards a comprehensive model of stakeholder management’, Business and Society Review, vol. 110, no 4, pp. 413-428 Ravindra K Dhir, Moray D Newlands & Tom D Dyer, 2003, Sustainable Waste Management, Published by Tomas Telford Ltd, London, p.368 Robert M. Grant, Bella Butler, Humphrey Hung, Start Orr, 2011, Contemporary Strategic Management, an Australasian Perspective, John Wiley & Sons Australia Ltd Robbins, S, Bergman, R, Stagg, I & Coulter, M, 2012, Management. 6th ed Pearson Australia, Frenchs Forest, NWS Savage et al., T 1991, 'Strategies for assessing and managing organizational stakeholders', The executive, vol. 5, no. 2, pp. 61-75. Read More