Week 2: Stakeholder Management 1

1.Stakeholder Theory: >Evidence of an interrelationship between the concepts of stakeholder theory, corporate responsibility, and business ethics. The earlier stakeholder model involved corporation being involved in four groups (similar to social responsibility): suppliers employees shareholders customers 2

2&3.Stakeholder Theory: Freeman Model (continued) >Stakeholder map akin to a hub of a wheel and stakeholders are at the ends of the spokes around the rim. This matches with CSR. >Most common stakeholder model includes seven stakeholders: 1.Shareholders 2.Customers 3.Suppliers 4.Employees 5.Government 6.Communities/ Civil society 7.Competitors (refer to Figure 1, Yves Fassin, 2009) 3

2&3.Stakeholder Theory: Freeman Model (continued) >Freeman reduced stakeholders to internal and external Five Internal Stakeholder: >Financiers/ shareholders >Customers >Suppliers >Employees >Communities 4

2&3.Stakeholder Theory: Freeman Model (continued) Six external stakeholders >Governments >Environmentalists >NGO’s >Critics >Media >Others (Refer to Figure 2, p.115, Yves Fassin, , ) 5 1 See Reference List

4. Definition of stakeholder and Categorisation >Stakeholder broadens management vision of its roles to beyond profit maximisation to include interest and claims from non-shareholders groups. >Stakeholder: refers to “any individual or group that maintains a stake in an organisation in the way that a shareholder posses shares”. >Another definition refers to “ any group or individual that can affect or is affected by the achievement of an organisation’s objectives 6

4. Definition of stakeholder and Categorisation (continued) >Phillips ( ) distinguishes between 1.Normative stakeholders: moral obligation 2.Derivative stakeholders: no obligation but who can be harmed or benefit from organisation 3.Dangerous/dormant stakeholders: blackmailers or thieves 7

5.Process of Stakeholder Salience/ Selecting Stakeholder groups >Stakeholder theory mainly used to help select to whom businesses have a responsibility. Identification of these groups and who should be included in the model is driven by strategic stakeholder management. >Identifying individual stakeholders has become one of the central themes. 8

5.Process of Stakeholder Salience/ Selecting Stakeholder groups (continued) >Stakeholders have been divided in to three main categories (refer to Table II, p.212, Yves Fassin, ): Also refer to Appendix A: List Of Stakeholders Groups, p Internal constituents “stakeholders”: legitimate claim, power and influence, firm has real responsibility 2.Pressure groups “stakewatchers”: do not have a stake themselves but who protect interest of real stakeholder 3.Regulators: “stakekeepers”: outside or independent monitor with power to screen and grade. Like gatekeepers eg, courts, press and media 9

7. Yves Fassin’s refined “The Stake Model” >The hub-spoke concept of original stakeholder model remains (refer to figure 5 Fassin, , p. 124). Management of the firm is in centre, the oval represent the stakeholders and they are split into two unequal parts. The larger inner circle is where the four major stakeholders groups sit: Shareholders Employees Customers Business 10

7. Yves Fassin’s refined “The Stake Model” 1 continued The stakewatchers in the model are the oval shapes that cut the oval shapes just outside the major ring in figure 5 p.124, Yassin 1 : >Competitors >Consumer associations >Communities >NGO’s >Unions >Funds 11

7. Yves Fassin’s refined “The Stake Model ” 1 continued >The stakekeepers are represented by the ovals fully outside the ring in figure 5, p.124, Yassin 1. Most stakekeepers exert influence on the firm through multiple stakeholders. Government Civil Society Media Non stakeholders Others 12

In Summary >Figure 5, p.124, Yassin 1 provides a stake model of the firm which includes the triple bottom line issues which will be further considered in week 3. The model details the major stakeholders, stakewatchers and stakekeepers. >These help to explains how a corporation moves more towards a sustainable level by strategically managing its stakeholders, stakekeepers and stakewatchers. >A Sustainability model will be introduced next week 13

Reference List 1.Fassin, Y. (2009). The Stakeholder Model Refined. Journal of Business Ethics, 84(1), pp ANZ(2013), Stakeholder Engagement 2013 results, dd/ANZ_Stakeholder_Engagement_FY13.pdf?MOD=A JPERES&2013%20Stakeholder%20Engagement%20Table%20(P DF%20268kB) 3. Phillips, R., 2003 Stakeholder Legitimacy Business Ethics Quarterly 13(1), pp