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DA4. Stakeholders

Statement

The text defines stakeholders as: “Individuals and organizations who are actively involved in the organization or whose interests may be positively or negatively affected as a result of what the organization does” (Carpenter et. al., 2010). Every organization has stakeholders.

  • Choose one of the companies below and identify three key stakeholders.
    • A water utility company
    • A multinational food company
    • A local airport
  • Then discuss how the company caters to their interests and what may happen if their expectations are not met.

Answer

This text chooses a water utility company as the company to analyze. The main purpose of such companies is to provide clean water to the public as they need whenever they need it. The nature of the business is highly regulated by governments and it affects every person in the community, prices are usually capped, and there is less competition and creativity in the market.

To identify the stakeholders, the text will follow the steps described by Carpenter et. al. (2010) for doing stakeholder analysis:

  • Identifying stakeholders and putting them into 4 four categories: organizational, capital-market, product-market, and social; and defining their interests.
  • Determining influences on mission, vision, and strategy.
  • Determining the effects of key decisions on stakeholders.
  • Determining stakeholders’ power and influence over decisions.

Chapter 4 from the text by Carpenter et. al. (2010) also discusses evaluating the importance and influence of stakeholders; “importance is the degree to which the organization cannot be considered successful if a stakeholder’s needs, expectations, and issues are not addressed”; while “influence is the stakeholder’s relative power over and within an organization”(Carpenter et. al., 2010).

The are many stakeholders in a water utility company; the list includes governments, the public, regulating bodies, government, employees, suppliers, competitors, environmental groups, and the media. The text will focus on three key stakeholders: the public, the government, and the competitors.

The public represents the final customer of the product that the company supplies (water); they belong to the product-market category; they have very little influence and importance over the company’s decisions, but serving them is the only reason the company exists. Their interests are to have constant clean water at the lowest price; the company should guarantee the first interest by investing in infrastructure and deploying maintenance teams as soon as a problem occurs; the second interest is usually regulated by the government, and public dissatisfaction is usually handled by the government rather than the company.

The second stakeholder is the government; they belong to the social category; they have a high influence and importance over the company’s decisions; their interests are to have the company comply with regulations and keep the public happy by providing a high-quality service. The company must comply with the regulations and try its best to provide a high-quality service. If the company fails to meet the expectations of the government, it may face fines, penalties, or even cease to exist.

The third stakeholder is the competitors; they belong to the product-market category; they have high importance but low influence over the company’s decisions; the utility market is more of a collaboration than a competition, there is little room for creativity and innovation as standards, prices, and even users expectations are set by the government; however, there is still room to stand out by providing better customer service, mobile applications, e-bills, and other services that are a bit far from the core business. The competitors’ interests are to find collaboration when they need it and to have a fair market; the company should collaborate in case of emergencies, giving equipment and personnel to help the competitor. If the company fails to meet the expectations of the competitors, they may not collaborate in the future when the company needs them and have a bad market reputation.

The table below summarizes the analysis:

Stakeholder Category Importance Influence Interests
Public Product-market Low Low Constant clean water at the lowest price
Government Social High High Compliance with regulations and keep the public happy
Competitors Product-market High Low Collaboration and fair market

To conclude, the market of public utilities does not play the same way as other markets in the private sector; it is almost exclusively run by the government and the company is just a tool to provide a public service for a little profit. The relationships with competitors are also unique, as they are more of a collaboration than a competition. The text did the analysis assuming the company is a private company that provides its service within the United Kingdom, thus, the analysis may not be accurate for other countries.

References