Managing External Stakeholders - Essay Example

Managing External Stakeholders With reference to one or more of the mentioned organisations Identify what you think are the key stakeholder groups relating to their core business(es), and analyse how far the organisations concerned are engaging with them, evaluating their activity. Any businesses enterprise operates within a complex system of interests and influences. Stakeholders can be direct stakeholders like shareholders or indirect one's like environmentalists. While identifying the stakeholders the company must look beyond the formal structure of the organization. Therefore it is required to have a look at informal and indirect relationships as well. The company management has to make a balancing assessment and evaluate all such external forces in order to adjust them with company's objectives. While taking crucial corporate decisions, it is necessary to know about the expectations of different stakeholders and to determine the extent to which they could and would exert their influence. Johnson & Scholes (1999) define stakeholder as, "Stakeholders are groups or individuals who have a stake in, or expectation of, the organisation's performance." For any organization to work, all the stakeholders have to pool their efforts. Terry & Franklin (1994) define management as 'a distinct process consisting of activities of planning, organizing, actuating and controlling performed to determine and accomplish stated objectives with the use of human beings and other resources'. Different organisations have different sets of stakeholders, whose nature and composition varies depending upon the nature of business. For example the Arsenal Football Club, besides being a soccer club is a public limited company in itself. As football club, its main stakeholders are, the players, the spectators, football fans, the club administrators etc. But as a plc, a broader array of stakeholders comes into picture. The Arsenal Holdings plc manages stadiums, matches, football teams, online TV channel, credit card business, sports academies, strategic partnerships with host of other organizations etc. Therefore the company has stakeholders from different corners of the society in general. The Arsenal Football Club started off when a group of workers at the Woolwich Arsenal Armament Factory decided to form a football team in late 1886. The club has now transformed into a full fledged company organizing different types of activities. The recent half yearly financial results for the company indicate an impressive growth rate with group turnover increasing to GBP100.8 million (2005: GBP57.0 million) as a result of higher gate and match day revenues at Emirates Stadium and sale of a property development site at Drayton Park1. Similarly, British Petroleum (BP) is a leading oil and gas company. The company's operations include the exploration and production of gas and crude oil, construction and mining, manufacturing and transportation. Besides this the company also has a network of subsidiaries engaged in the chemicals, power and renewable energy sectors. The company maintains leading brands like BP, AM/PM, Aral, ARCO, Castrol etc. With operations spread over six continents in about 100 countries, the company maintains stakeholders in many forms and profiles. The humble beginning of BP can be traced back to 1901 when William Know tried to explore oil in Persia. But it was not before 1908 that the first commercial oil discovery was made in the Middle East by BP (Datamonitor, 2006). In 1935, the company prospered and was renamed the Anglo-Iranian Oil Company. Similarly, exploration expanded into North America (mainly Alaska), South America, Africa, and Europe. The war effort resulted in the British government becoming a shareholder in the company, an association which went on till 1987. Any organization is managed by soliciting crucial support and guidance from respective stakeholders and by taking care of different factors affecting the functioning of an organization. A coordinated approach is required for taking care of all the factors affecting the business operations. Functioning of an organisation is mainly affected by two types of factors; Internal: These are the factors like the strengths of the organisation, in terms of its finances, human resources, management, strategies etc. These factors can be controlled well by the organisation. Mullins (2005) contends that organisations comprise 'people, objectives, structures' and 'management'. External: These are the factors which on which an organisation may not be able to exert much of its control. These include, the legal and political scene prevailing within the state/ country of its operations, number and types of competitors, suppliers in the market, terms and conditions from financial institutions, alternative products available in the market, newer technological innovations etc. Worthington (2006) places greater importance on political developments occurring at different levels - local, national and international. Stakeholders all have power, someone has a formal power invested in a position of authority or it could be the social power of being able to persuade others to support or oppose the policies of the company. People with higher power could be the company's most useful supporters or most dangerous opponents, depending upon the prevailing dynamics. In case of Arsenal Holdings plc we can do the power analysis to help us in prioritising our focus on stakeholders. To start with a comprehensive listing of stakeholders is prepared as the starting point for stakeholder mapping and analysis; Fig: Power-Interest Matrix in case of Arsenal Holdings plc High Power Low Low Level of Interest High As is apparent from the above matrix the key players include Shareholders (small/ individual): He is more interested in having the higher rates of dividends or better price of its share in short-term Shareholders (medium and big): This type of shareholder is interested in better dividend rates as well as better performance and public relations of the company. He keeps an eye on macro as well as micro level factors. Banks and Financial Institutions: Banks and Institutions are not only interested in better showing, but they also wish the company to diversify in more areas, open more facilities as that involves more business for banks and FIs. Football fans/ Game Lovers: Game lovers want value for their money. They want to see a good competitive game, they can wield pressure by way of asking for better quality as well as reasonable prices. They need to be pampered by the company. Lower level Employees: These stakeholders are interested in their salaries at the end of the month, not involving themselves in the strategic decisions. They prefer to take orders from managers and keep working towards achieving the targets. Managers: This segment wishes to see better finances as well as better prospects for themselves in minimal time. Government bodies: Government bodies like Department of Enterprise, Trade and Employment, Department of Environment, Heritage and Local Government etc. who are responsible for implementing the law of the land. Stock exchange/s: Stock exchanges play an important role in regulating and implementing fair practices by the company Equipment and Material suppliers: A company in sports business requires all sorts of sports material, hospitality material etc. Such suppliers too are on the lookout for good clients but at time they can wield pressure as well on the company. Outsourcing agencies (supplying part time workers): A company in organizing big games does not prefer to have everybody on its permanent payroll. They require huge manpower during peak game season and minimal workforce when they don't have many games around. Non Governmental/ Environmental agencies: Such agencies are always on the lookout for some aberration by the company on issues like not complying with environmental issues, employees issues etc. Competitors: Competitors can always affect the running of an organisation and they would try all possible means to put Arsenal Holdings plc on mat. 2. Consider how, and to what extent, such consumer demand can be increased or even created through the use of marketing tools and approaches. Traditional marketing mix concept, first proposed by McCarthy in 1960, consists of Product, Price, Place and Promotion (better known as the 4Ps). Each particular marketing mix adds up to a certain amount of effort the company is making for the purpose of generating sales. Any plan to develop a competitive advantage must be based on a sound analysis of the company's competitors. Communication forms a crucial part of managerial activities. Marketing communication in turn helps a company in building a brand, creating brand loyalties, increase in sales, cutting costs, etc. Marketing in itself is not an isolated task; it involves support from almost everybody in the company. A satisfied customer can become a good brand ambassador for a company. Similarly, well paid and satisfied workers can also prove to be an effective way of marketing the company and the product, by showing to the world the kind of reputation the company holds. Such marketing efforts help in taking on the competitors. Williams & Curtis (2006) argue that marketing as a management philosophy cannot be segregated from the other components of management. Customer focus must be apparent in the entire production chain and quality assurance, besides the marketing team. Then only the company will be able to come out with products which are preferred by the customer. In general Effective marketing involves; Carrying out an extensive marketing research: Carrying out the marketing research involves studying and analyzing the market as regard to the customer base, existing competitor products/ alternatives, strength of existing companies, marketing efforts for competitor products, potential of the market etc. In effect it involves, studying the macro/ micro environments and using the planning tools like PESTEL analysis. Undertaking the marketing planning activity: Marketing planning is a very comprehensive exercise involving carrying out an internal audit using tools like BCG Matrix, SWOT analysis etc. Such a planning i Marketing communication: Marketing communication helps a company in building a brand, creating brand loyalties, increase in sales, cutting costs, etc. UK market is a very diverse market in general which caters to customers/ consumers from different walks of life, different cultures, ethnic groups and age groups. In today's market driven economy concept, the art of communication to existing consumers as well as prospective consumers takes a great deal out of the managerial brain storming sessions. In today's highly competitive world marketing communication holds an important place towards marketing efforts. Such a communication involves being seen and heard all over the media, organizing a good game, organizing social events, making a well known celebrity figure as brand ambassadors, sponsoring charity events, hosting charity matches etc. For example both Arsenal holdings and BP prefer to be seen in the media, organizing charity events, making brand ambassadors and adhering to their corporate social responsibility. Pricing decisions: Pricing forms a crucial component of marketing efforts. Appropriate pricing for the target markets, quality considerations depending upon the pricing and an attacking pricing (e.g. penetration) or a defensive pricing. For example how Arsenal prices the match tickets depends upon the level of excitement and ferocity of rivalry in the game. Similarly, BP2 is also carrying out extensive researches on bio-fuels and alternative sources of energy. How the company prices such products and services depends upon the demand and acceptability in the market. Target marketing: Segmenting the market depending upon the social profile, paying capacity, levels of interest etc. can help a company in devising appropriate strategies for that particular segment. For example a die hard fan of Man United will see the match at any cost, but an enthusiast will see his pocket as well. Similarly, the fanatic following of the game will be more seen amongst the youth segment, while the elder one's are more busy in fulfilling their other responsibilities as well. Therefore, the youth will most probably see the match live in the stadium but the elder one's might prefer to watch it on their television screens or online. Soccer has a good fan following in most of the European nations, but the South Asian countries prefer cricket instead. Therefore, the online ventures of arsenal must be better targeted towards the European consumers. Branding: Today we are living in a media-savvy world. The power of being seen in print or TV or being heard on radio can make or break a brand. Integrating the promotion publicity campaign with the marketing mix therefore becomes very crucial for gaining loyal customers. Celebrity endorsement of some particular brand also helps in attracting the youth/ targeted segment towards the brand. Customer relationship management: Customers are the central characters in the entire marketing efforts. Therefore sincere efforts are required to maintain healthy relationship with customers. This involves, understanding and managing the customers, taking care of their sensibilities and molding the products according to the changing needs of the customers. Internet marketing i.e. exploring the e-business opportunities is a revolutionary and evolutionary concept in the marketing efforts. As internet is gradually maturing and presenting a paradigm shift in its very ideation, the infrastructure has acquired a business character, a transcontinental personality and a vending framework of wide-ranging, business, educational, scientific and personal data. Now the use of internet covers real-time computer conferencing, audio broadcasting, video broadcasting, real time telephony and of course real-time business. E-business in its simplest form can be described as doing business in electronic form. Arsenal holding makes fullest use of internet for the sale of tickets, merchandise, credit cards, managing loyalty programs, advertisements etc. Internet is also used to gather the all important feedback from customers. References: 1. Arsenal Plc. (2007). Arsenal Holdings Plc. available online at http://www.arsenal.com/article.aspthisNav=the+club&article=344290&lid=Corporate+Info&Title=Arsenal+Holdings+plc+half-year+financial+results (August 27, 2007) 2. BP (2007). British Petroleum. Available online at http://www.bp.com/home.docategoryId=1 (August 27, 2007) 3. Datamonitor (2006). Company Profile-British Petroleum, Datamonitor USA, NY. 4. Johnson, G. & Scholes, K. 1999. Exploring Corporate Strategy. London: Prentice Hall. 5. Mullins, L. (2005) Management and organisational behaviour 7th edition. Harlow, Pearson Education. 6. Terry, George R. & Franklin, Stephen G. (1994), Principles of Management, US, Richard D Irwin Inc. 7. William, John and Curtis, Tony (2006). Marketing Management in Practice. Published: Butterworth-Heinemann, Oxford, UK. 8. Worthington, I. and Cumberpatch, Z. (2006) 'Business organisations: the internal environment' in Worthington, I. and Britton, C. The Business Environment 5th edition. Harlow, Pearson Education. 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