1. A THEORY OF
STAKEHOLDER
IDENTIFICATION AND
SALIENCE
PRESENTED BY: GROUP 3 SEC B
ANKIT AGGARWAL
GAUTAM MAHESH
13P081
MONIKA KHETAN
13P088
GOPESH NAKRA
13P104
SATYAJIT TRIPATHY
13P109
SUYASH NIGOTIA
13P116
13P063
2. Stakeholder Theory Overview
This article of Stakeholder theory deals with two
prominent concepts:
Identifying who the stakeholders are
Salience of the various Stakeholder classes and their
claims to the organization
Who is a Stakeholder?
“Any group or individual who can affect or is
affected by the achievement of the organization‟s
objectives” ~ Freeman
4. Defining Stakeholders - Broad Vs Narrow
View
Narrow view
Concerned with only the risk factor and includes:
Voluntary Stakeholders & Involuntary
Stakeholders
Broad View
Takes into account all those groups who can
affect or are affected by the achievement of the
organization‟s objectives.
who can affect the organization – Influencers
who are affected by the organization – Claimants
5. Stakeholder Attributes
1. Power
A relationship among social actors, in which A can get
B to do something which B would not have otherwise done
Categorization of power – Coercive, Utilitarian &
Normative
2. Legitimacy
Socially accepted and expected structures or behavior under
a socially constructed system of norms, values, beliefs and
LEGITIMACY
definitions
INDIVIDUAL
ORGANIZATIONAL
SOCEITAL
6. Stakeholder Attributes
3. Urgency
Exists when 2 conditions are met –
When a relationship or claim is of a time-sensitive
nature
When it is critical to the stakeholder
8. Stakeholder Classes
Class 1 - Latent Stakeholders
•
•
•
Powe
r
One Attribute & Low Salience
Dormant
Managers may choose to do nothing
Consists of – Dormant,
Legitimacy
Urgency
Demanding and
Deman
Discreti
onary
Discretionary shareholders
ding
Dormant Stakeholders
• Possess power to impose their will but little or no
interaction as they lack legitimacy or urgency
• Examples – Those who have a loaded gun, those who
can spend a lot of money
9. Class 1 - Latent Stakeholders (Continued)
•
•
Discretionary Stakeholders
Powe
Likely to be recipients of corporate
r
philanthropy
Dormant
Examples – Beneficiaries of charity,
Non-profit organizations
Legitimacy
such as schools & hospitals
Deman
Discreti
ding
onary
Urgency
•
•
•
Demanding Stakeholders
Those with urgent claims but no legitimacy or power
Irritants for management but not worth considering
Examples – People with unjustified grudges, serial
complainers
10. Class 2 - Expectant
Stakeholders
•
•
•
2 Attributes & Moderate Salience
Active rather than Passive
Consists of – Dominant, Dependent
and Dangerous Stakeholders
Dominant Stakeholders
Many theories position them as the
only stakeholders of an organisation
Possess Power + Legitimacy
Examples – Board of Directors, Public relations
11. Class 2 - Expectant Stakeholders
(Continued)
Dangerous
•
Stakeholders
Those with powerful and urgent
claims and can be coercive and
possibly violent
Dependent
•
•
Stakeholders
Stakeholders who are dependent
on other bodies to carry out their will,
because they lack the power to enforce their
stake
Examples – Residents & animals impacted by incidents
like Oil Spill, Mining etc.
12. Class 3 - Definitive Stakeholders
•
•
•
Often dominant stakeholders
with an urgent issue
Dependent groups with
powerful legal support
Examples –
Democratic legitimacy achieved by a „Dangerous‟
nationalist party by winning national elections
13. DYNAMISM in RELATIONS
A stakeholder can increase/decrease their
salience by acquiring or losing one of the
attributes: power, legitimacy or urgency
Nonstakeholder
Latent
Expectant
Definitive
Example: When SEBI/IRDA receives a
complaint, it moves from being a expectant to
a definitive stakeholder
14. POWER-DYNAMISM MATRIX
Stakeholders in groups A &
B:
Are the easiest to deal with
Dynamism
Stakeholders in group C:
Are important because they are
powerful. But low dynamism
means their reaction is
predictable and expectations
can be managed
Stakeholders in group D: Are
important because thy are
powerful. But low dynamism
means their reaction is
High
Low
Power Low
Fewer
Problems
(A)
Unpredictabl
e but
Manageable
(B)
High
Powerful but
Predictable
(C)
Greatest
Danger or
Opportunitie
s (D)
16. Deepwater Horizon Oil Spill
Biggest hit for BP and its public
relations that had a direct impact on its
share prices
•
Killed 11 people and injured many
others
•
Date:
Environmental Disaster: ignited public
antagonism
•
Most importantly, it was not the first
disaster linked to the BP brand.
•
20th April, 2010
Place:
Gulf of Mexico
17.
18. Stakeholders of BP Identified
Government(federal and state)
Employees(current and the ones killed)
Shareholders(majority and minority)
Environmentalists
Businesses along the coast(Tourism, Seafood)
Coastal Residents
Customers
19. Stakeholders and their Classes for
BP
Stakeholders
Power
Government
Employees
Shareholders
Environmentalists
Businesses along the
coast
Coastal Residents
Customers
*
*
*
-
Attributes
Legitimacy Urgency
*
*
*
*
*
*
*
*
*
*
*
-
Shareholder
class
Definitive
Expectant
(Dependent)
Expectant
(Dominant)
Expectant
(Dangerous)
Expectant
(Dependent)
Expectant
(Dependent)
Latent
(Discretionary)
20. What the company did?
Undermined the extent of the damage
Denied various claims made by researchers
Use of unethical practices
No empathy with those affected
No consistency between the image
it was trying to portray and
what it really was!
21. What BP should have done?
1.
2.
3.
4.
5.
6.
Be more alert to the significance of the company‟s
identity in the minds of the public
React quickly
Be present on the ground to build an emotional connect
with those affected
Balance legal/economic language with
emotional/empathic tones in their public statements
Acknowledged the company‟s moral responsibility
before dealing with legal liabilities
Put the interests of the company‟s shareholders and
managers after those of the environment and the
communities affected by the spill
AnkitIntroduction and that we are going to present an exhaustive example of BP at the end
AnkitSay that this definition of stakeholder is in layman terms.Some questions answered in the article:Who is a stakeholder? What is at stake?What types of Shareholders exist?The theory explains why managers pay certain kinds of attention to certain stakeholders and why they respond to them the way they do
AnkitVarious possible shareholders for a company in an eg. Not much time to be spent on this slide
AnkitExplain Voluntary and Involuntary shareholdersExplain Influencers and claimantsInfluencers: Those who have the power to influence the firm’s behaviour, direction, process and outcomesClaimants: Those who have a legal, moral or presumed claim on the firm but not the ability to influence its functioning
GautamExplain the three categorizations of power (check from booklet)Explain the three types of legitimacyAdditional points on Power - A party to a relationship has power to the extent it has or can gain access to coercive, utilitarian or normative means, to impose its will in the relationship- Power is transitory – it can be acquired as well as lost
GautamUrgency - Stakeholder attribute of urgency helps move the model from static to dynamic
GautamNotin detail
SatyajitLatent stakeholdersstakeholders & may not even recognize them as stakeholders
SatyajitDiscretionary stakeholdersNo pressures on managers to engage with this group, but they may choose to do so
SatyajitExpectant - Seen by mangers as ‘expecting something’ Dominant - Likely to have a formal mechanism in place acknowledging the relationship with the organisation
SatyajitDangerous Stakeholders Examples – Strikes and Terrorist activities Employee Sabotage or coercive/unlawful tactics used by activists Religious or political terrorists using bombings, shootings
SuyashDefinitive Stakeholders Possess all three attributesAn expectant stakeholder who gains the relevant missing attributeThose classified as dangerous could gain legitimacy
Suyash
Suyash
GopeshIntroduce the case here
GopeshDeepwater Horizon was an ultra-deepwater, offshore oil drilling rig[6] owned by Transocean. Built in 2001 in South Korea by Hyundai Heavy Industries,[3] the rig was commissioned by R&B Falcon, which later became part ofTransocean,[8] registered in Majuro, Marshall Islands, and leased to BP from 2001 until September 2013.[9] In September 2009, the rig drilled the deepest oil well in history at a vertical depth of 35,050 ft (10,683 m) and measured depth of 35,055 ft (10,685 m)[10] in the Tiber Oil Field at Keathley Canyon block 102, approximately 250 miles (400 km) southeast of Houston, in 4,132 feet (1,259 m) of water.[11] On 20 April 2010, while drilling at the Macondo Prospect, an explosion on the rig caused by a blowout killed 11 crewmen and ignited a fireball visible from 35 miles (56 km) away.[12] The resulting fire could not be extinguished and, on 22 April 2010, Deepwater Horizon sank, leaving the well gushing at the seabed and causing the largest offshore oil spill in U.S. history.
Gopesh
Gopesh1. ResidentsCosts of repair, maintenance & replacement of anything on property damaged by oilCost of cleaning upLoss of enjoyment of their propertyDecline in property prices2.Seafood IndustryFishing in the area is suspended resulting in loss of jobsPrice of seafood to increase3.Tourism Industryhotel industry, the restaurant industry, tour operators and anyone who sells or rents boats or other watercraft are affected by the oil spill4.Employees11 workers lost their lifeWorkers who continue to work are with a company with a lost reputationDeclined value of retirement fund of employees5.Wildlife-affected for a long time6.ShareholdersLoss of reputation resulting in declining stock value