Strategy (Business) - Essay Example

Johnson & Scholes (1999) define stakeholder as, “Stakeholders are groups or individuals who have a stake in, or expectation of, the organisation’s performance.” 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 organization. For example NGOs and social watch groups often exert such a power on the company forcing the organization to adopt or abandon some decisions.

For example an oil producing company has to remain watchful for any pollution in the seabed, a construction company has to make sure that it doesn’t spread too much of building material on the lanes and bylanes, blocking the easy movement of general public. People with higher power could be the company’s most useful supporters or most dangerous opponents, depending upon the prevailing dynamics. Different companies have different set of stakeholders with different levels of power structures.

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 Financial Institutions (FIs). Customers: Customers want value for their money; they can wield pressure by way of asking for better quality at reasonable prices.

They need to be pampered by the company, otherwise there is an inherent danger of their opting for alternative products or the products of rival companies. Lower level Employees: These stakeholders are interested in their salaries at the end of the month, not involving themselves in the strategic decisions. They