Stakeholder analysis

A stakeholder analysis will allow you to assess the relative importance of each potential stakeholder group in order to manage their impact on the strategy process.

Stakeholders attain power from:-

• Formal authority (manager, director etc)
• Organisational structures and procedures (particularly in bureaucracies)
• Control of decision processes (ability to influence the context of decision making - director's wife...)
• Control of knowledge and information (knowledge and information are sources of power as they are important to the achievement of competitive advantage)
• Boundary management (the ability to monitor and control transactions with other parties outside the organisation - brokers, secretaries, etc)
• Control of technology

Winstanley et al (1995)'s stakeholder power matrix can be used to understand where a stakeholder group might hold and seek to exercise power. It's a typical matrix with quadrants, with continuums for operational power and criteria power.

Operational power is the ability to affect the operation of the firm. Criteria power is the ability to influence decision making. The four quadrants are

• Arm's length power (power over rules of the game)
• Comprehensive Power (major shareholders of a firm)
• Operational Power (key groups of employees or suppliers of key materials/services)
• Disempowered (end customers for a niche product or staff with unmarketable skills)

Salience
...The salience of stakeholder claims. Salience == prominence, importance, significance. The interests of the most salient stakeholder feature most prominently in a manager's thoughts. A definitive stakeholder has the most salience and is the most significant stakeholder for any organisation.

Agle(1999) et al says salience results from:

1. the power the stakeholder has over the actions of the organisation - their ability to influence decisions
2. the legitimacy of their claim over the organisation, which can be based on moral or legal grounds
3. the urgency with which an organisation feels it needs to satisfy stakeholder claims or respond to their demands

Stakeholders with most authority and whose claims need to be met most urgently are the most salient to managers.

In organisations where only owners are salient, strategy will focus on shareholder value.