1. Strategic Management of Stakeholder Relationships
CHAPTER 2
Strategic Management of Stakeholder Relationships

2. Chapter Objectives
To define stakeholders and understand their importance
To distinguish between primary and secondary stakeholders
To discuss the global nature of stakeholder relationships
To consider the impact of reputation and crisis situations on social responsibility performance
To examine the development of stakeholder relationships
To explore how stakeholder relationships are integral to social responsibility

3. Building Effective Relationships
Building effective relationships is considered one of the more important practices of business today.

4. Stakeholders
Those people and groups to which an organization is responsible
Those with a stake, or claim, in some aspect of a company’s products, operations, markets, industry, or outcomes

5. Primary Stakeholders
Groups fundamental to a company’s operation and survival
Balancing the needs and perspectives of primary stakeholders is a strategic imperative

6. Secondary Stakeholders
Groups that may influence and/or be affected by the company, but are not engaged in economic exchanges with the firm
These groups are not fundamental to an organization’s daily survival
They can place significant pressure on a business and therefore, cannot be ignored

7. Stakeholder Orientation
There is a two-way relationship between the firm and a number of stakeholders.
This approach recognizes other stakeholders and explicitly acknowledges the dialog that exists between a firm’s internal and external environments.

8. Stakeholder Orientation (cont.)
The degree to which a firm understands and addresses stakeholder demands. Comprises three sets of activities:
The organization-wide generation of data about stakeholder groups and assessment of the firm’s effects on these groups
The distribution of this information throughout the firm
The organization’s responsiveness as a whole to this intelligence

9. Stakeholder Attributes
Power
Legitimacy
Urgency

10. Reputation Management
The process of building and sustaining a company’s good name and generating positive feedback from stakeholders

11. Reputation Management Process
Identify how the organization wants to be viewed by stakeholders.
Determine how stakeholders evaluate the company and their impressions of its image.
Evaluate others’ impressions of organizational performance.
Understand the company’s reputation.

12. Crisis Management
The process of handling a high-impact event characterized by ambiguity and the need for swift action

13. Crisis Management Stages
Prodromal stage
Acute stage
Chronic stage
Resolution

14. Development of Stakeholder Relationships
Relationships are founded on principles of:
Trust
Commitment
Communication

15. Social Capital
An asset, which resides in relationships, that is characterized by mutual goals and trust

16. Implementing a Stakeholder Perspective in Social Responsibility
Assessing the corporate culture
Identifying stakeholder groups
Identifying stakeholder issues
Assessing the organization’s commitment to social responsibility
Identifying resources and determining urgency
Gaining stakeholder feedback

17. Link Between Stakeholder Relationships and Social Responsibility
Reactive behavior
Defensive behavior
Accommodative behavior
Proactive behavior