Stakeholder: Corporate Governance and Stakeholders

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There are various ways in which stakeholder analysis is performed to measurer the relative power of different groups and individuals. These techniques typically utilize a mapping or matrix approach. 1.Relative power matrix - The relative interests on the part of each group in the organization’s proposed activity are given numerical values. The total for each group is then analyzed to assess their power. 2.Power/interest matrix - The power/interest matrix seeks to describe the political context within which an individual strategy would be pursued by classifying stakeholders in relation to the power they hold and the extent to which they are likely to show interest in supporting or opposing a particular strategy.

The matrix indicates the type of relationship which organizations typically might establish with stakeholder groups in the different quadrants. Level of Interest

Power LowHigh
LowA Minimal effortB Keep informed
HighC Keep satisfiedD Key players
Source: Adapted from A. Mendelow, Proceedings of the Second International Conference on Information Systems, Cambridge, MA, 1991.
Clearly, the acceptability of strategies to key players (segment D) is of major importance. Often the most difficult issues relate to stakeholders in segment C (institutional shareholders often fall into this category). Although these stakeholders might, in general, be relatively passive, a disastrous situation can arise when their level of interest is underrated and they suddenly reposition to Segment D and frustrate the adoption of a new strategy. A view might be taken that it is a responsibility of strategists or managers to raise the level of interest of powerful stakeholders (such as institutional shareholders), so that they can better fulfill their expected role within the corporate governance framework. Also, this could be concerned with how non-executive directors could be assisted in fulfilling their role, say, through food...
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