Assignment 4 Solution

1.1 Differentiate between organization customer and organizational stakeholder Answer Organizational customer The organizational buyer purchases several products. These can be categorized into three major groups. 1. Capital goods like plant and machinery, office products, etc. 2. Spare parts and components. 3. Consumables like raw material, packaging material, lubricants, etc. We need to appreciate that the cost and risks involved varies across these product groups. It is the maximum in capital goods and minimum in consumables. Besides, consumables are repeat purchase and are often bought on a regular interval. But, spare parts and components are bought less regularly and are generally ordered only when the minimum re-order level has been reached in the store. Capital goods are bought less frequently and generally they are purchased following an expansion or diversification, or upgrading decision. Following this pattern of purchases, one may anticipate a higher degree of vendor loyalty in the case of consumables than in capital gods, where vendor credibility in completing a project in specified time period becomes a determining factor. The Marketer needs to be aware of the fact that in consumable purchases, the customer will always look for substitutes that can help him reduce his costs. Consider the case of a soft drink company where packaging cost is high because of the usage of glass bottles. The cost of the glass bottles is also high if one were to consider breakages. This soft drink firm will always favorably look at alternatives that will help it to reduce its packaging cost. So, plastic bottles, tetra packs and even composite cans for the juices may be considered by the company. The glass bottle manufacturer will have to continuously look at ways or means by which he could reduce the cost and pass on the benefit to the soft drink firm and other brewery firms. Organizational stakeholder A stakeholder is any individual or organization that is affected by the activities of a business. They may have a direct or indirect interest in the business, and may be in contact with the business on a daily basis, or may just occasionally. The main stakeholders are: Shareholders (not for a sole trader or partnership though) they will be interested in their dividends and capital growth of their shares. Management and employees they may also be shareholders they will be interested in their job security, prospects and pay. Customers and suppliers Banks and other financial organizations: lending money to the business. Government especially the Inland Revenue and the Customs and Excise who will be collecting tax from them.

Trade Unions who will represent the interests of the workers. Pressure Groups who are interested in whether the business is acting appropriately towards their area of interest. Stakeholders versus Shareholders It is important to distinguish between a STAKEHOLDER and a SHAREHOLDER. They sound the same but the difference is crucial! Shareholders hold shares in the company that is they own part of it. Stakeholders have an interest in the company but do not own it (unless they are shareholders). Often the aims and objectives of the stakeholders are not the same as shareholders and they come into conflict. The conflict often arises because while shareholders want short-term profits, the other stakeholders desires tend to cost money and reduce profits. The owners often have to balance their own wishes against those of the other stakeholders or risk losing their ability to generate future profits (e.g. the workers may go on strike or the customers refuse to buy the companys products). 1.2 Distinguish primary and secondary organizational stakeholders Answer Primary stakeholders have a vested interest in how the organization performs and the actions it engages in to conduct business. Examples of these types of stakeholders are customers, employees, suppliers, board of directors, owners, and shareholders. Primary stakeholders benefit from a well-run company but are also harmed by the organizations mishaps. Primary stakeholders directly affect the success and failure ofthe company. Secondary stakeholders can influence, both positively and negatively, the actions of then organization. They indirectly affect the organization by taking actions to make it difficult for the organization to succeed or by supporting the organizations efforts. Examples of secondary stakeholders are government agencies, regulation agencies, trade unions, labor unions, political groups, social groups, and the media. One of the primary functions of a business is to serve the needs of its stakeholders, also known as stakeholder responsibility. However, more and more businesses are taking this responsibility one step further by seeking out ways to address global issues to ultimately make the world a

better place. These actions are referred to as Corporate

2.1 Differentiate between the expectations of primary and secondary organizational stakeholders Answer While an interest in an effort or organization could be just that intellectually, academically, philosophically, or politically motivated attention stakeholders are generally said to have an interest in an effort or organization based on whether they can affect or be affected by it. The more they stand to benefit or lose by it, the stronger their interest is likely to be. The more heavily involved they are in the effort or organization, the stronger their interest as well. Stakeholders interests can be many and varied. A few of the more common:

Economics. An employment training program might improve economic prospects for lowincome people, for example. Zoning regulations may also have economic consequences for various groups. Social change. An effort to improve racial harmony could alter the social climate for members of both the racial or ethnic minority and the majority. Work. Involving workers in decision-making can enhance work life and make people more satisfied with their jobs. Time. Flexible work hours, relief programs for caregivers, parental leave, and other efforts that provide people with time for leisure or taking care of the business of life can relieve stress and increase productivity.

Environment. Protection of open space, conservation of resources, attention to climate change, and other environmental efforts can add to everyday life. These can also be seen as harmful to business and private ownership. Physical health. Free or sliding-scale medical facilities and other similar programs provide a clear benefit for low-income people and can improve community health. Safety and security. Neighborhood watch or patrol programs, better policing in high-crime neighborhoods, work safety initiatives all of these and many other efforts can improve safety for specific populations or for the community as a whole. Mental health. Community mental health centers and adult day care can be extremely important not only to people with mental health issues, but also to their families and to the community as a whole.

2.2 Discuss monitoring systems for analyzing the achievement of primary and secondary organizational stakeholders expectations Answer
In order to monitor and evaluate stakeholder participation in development projects and programmes, it is necessary to identify the stakeholders, i.e. those who are affected by the outcome, negatively or positively, or those who can affect the outcomes of a proposed intervention. Primary stakeholders are those people and groups who are ultimately affected by the project. Secondary stakeholders are intermediaries in the process of delivering aid to primary stakeholders. External stakeholders are those not formally involved in a project, but who may impact or be impacted by it. In development projects and programmes, stakeholders usually include donor agencies, government, civil society organizations and the local community and beneficiaries. Stakeholder analysis is one of the major methods used for identifying the relevant stakeholders of a particular project or programme. Experiences in monitoring and evaluation of participation are still limited. Attention has been focused more on identifying stakeholders and assessing the extent and quality of stakeholder participation than on assessing the costs and benefits of participation to the different stakeholder groups or the impact of stakeholder participation. However, there is not always a clear separation among the approaches and methods for assessing these different aspects of participation. Assessing the extent and quality of participation requires both quantitative and qualitative indicators. Quantifiable indicators can be used to measure the economic aspects of participation, the extent of participation in organizations and project activities, and the development momentum. Qualitative indicators measure processes such as organizational growth, group behaviour and self-reliance. These indicators may evolve over the life of a project as participation changes. Monitoring is a crucial element in assessing the extent and quality of participation, as is interpretation of the qualitative indicators. Understanding gender differences is also essential. While different methods can be used, participatory monitoring and evaluation and involvement of the primary stakeholders wherever possible is generally recommended.

The Power Grid is a useful tool for prioritizing stakeholders based upon their influence and importance. An Involvement Matrix is a practical aid for identifying actions to increase stakeholder commitment and engagement. The Power Grid, highlighted in Figure 1, is the second step in stakeholder analysis and is a useful tool for analyzing the influence and importance of stakeholders. Step 2 helps you assess the amount of influence and importance a stakeholder has in relation to your program.

Influence Influence is defined as the extent to which a stakeholder is able to act on project/program planning or operations and therefore affect project/program outcomes. A simple scoring system is used with thePower Grid to compare stakeholder influence. Low influence is mapped on the left side of the diagramand high influence on the right. Factors likely to lead to higher influence include extent of control overfunding and decision making. The more influence the stakeholder has, the higher their placement willbe on the Power Grid.

Importance Importance is defined as the extent to which a stakeholders interests, expectations and requirements are affected by project/program outcomes. If stakeholders of higher importance are not positivelyaffected then project/program cannot be considered successful. Stakeholder importance is alsomapped on the Power Grid as either low or high.

Involvement Matrix The Involvement Matrix, figure 3,the third step in stakeholder analysis, focuses on assessing theamount of engagement and commitment that a stakeholder has in relation to our program or project. The four quadrants of the Involvement Matrix are labelled Advocate (green), Adopting, and Aware andApathetic (yellow).

Figure 2 Engagement The level of stakeholder engagement is mapped on the horizontal scale of the Involvement Matrix. Well-informed stakeholders are plotted on the right-hand side of the matrix, and those that are Unaware of the program or project are on the left side. Engagement is a measure of how well the Stakeholder understands the challenges the project seeks to tackle and the projects interests, Expectations and requirements. In a similar construct to the Power Grid, we will score the stakeholder with either a low or high for this variable. A low score signals therefore a lack of understanding orengagement. A high score indicates that the stakeholder is concerned in how the projects outcome willresult in effecting their future and thus is informed and understands the issues at stake in the project. Commitment The vertical scale of the Involvement Matrix is used to compare how supportive stakeholders are toprogram or project outcomes. Commitment can be measured in terms of investment of time, money, equipment, facilities or personnel. While a high score reflects strong support (Adopting), a lowcommitment score can indicate apathy (Apathetic). The stakeholder who is supportive is concerned inhow the outcome will result in effecting their future and thus is committed to an investment in theproject/program.

3.1 identify opportunities for analyzing offerings to primary and secondary organizational stakeholders Answer Identify stakeholder groups Various sets of stakeholders have been suggested by different writers. Stakeholders can be internal employees, managers, trade union members or departments, for example, or external such as customers or suppliers. A distinction can also be drawn between primary and secondary stakeholders. Primary stakeholders define the business and are vital to its continued existence. For example, the following are normally considered primary stakeholder groups: Secondary stakeholders are those who may affect relationships with primary stakeholders. For example, an environmental pressure group may influence customers by suggesting that your products fail to meet ecostandards. The list of secondary stakeholders may be long and include:business partners Competitors Inspectors and regulators Consumer groups Government central or local government bodies Various media Pressure groups Trade unions Community groups Landlords.

Stakeholder groups will vary enormously according to the nature of the business. A public sector contractor, for example, might list central or local government as a primary, rather than a secondary stakeholder. A train company or media company may list its industry regulator as a primary stakeholder. Map your stakeholders One way to map stakeholders is to construct a diagram with the organisation at the centre, show primary stakeholders round it, and secondary stakeholders in a second tier: Implementing a Stakeholder Perspective An organization that develops effective corporate governance and understands the importance of business ethics and social responsibility in achieving success should develop some processes for managing these important concerns. Although there aremany different approaches, we provide some steps that have been found effective toutilize the stakeholder framework in managing responsibility and business ethics. The steps include (1) assessing the corporate culture, (2) identifying stakeholdergroups, (3) identifying stakeholder issues, (4) assessing the organizational commitment to socialresponsibility, (5) identifying resources and determining urgency, and (6) gaining stakeholder feedback. The importance of these steps is to includefeedback from relevant stakeholders in formulating organizational strategy andimplementation.

References http://www.saylor.org/site/wp-content/uploads/2013/02/BUS208-3.3.7.1-Stakeholders-and-CSRFINAL.pdf http://ctb.ku.edu/en/tablecontents/chapter7_section8_main.aspx https://acc.dau.mil/adl/en-US/421379/file/55604/Stakeholder%20Analysis%20%20Teaching%20Note%20from%20ACQ%20452.pdf http://ctb.ku.edu/en/tablecontents/chapter7_section8_main.aspx

http://www.citeman.com/166-organizational-customer.html http://www.fta.dot.gov/3873.html http://ctb.ku.edu/en/tablecontents/chapter7_section8_main.aspx

http://www.afdb.org/fileadmin/uploads/afdb/Documents/PolicyDocuments/Handbook%20on%20Stakeholder%20Consultaion.pdf

http://www.ehow.com/info_7998291_primary-stakeholder.html http://www.fao.org/sd/ppdirect/ppre0074.htm http://www.pacificwater.org/userfiles/file/IWRM/Toolboxes/STAKEHOLDER%20Engagement/ STAKEHOLDERS_ANALYSIS.pdf http://www.tutor2u.net/business/gcse/organisation_stakeholders_ethics.htm http://www.businessdictionary.com/definition/stakeholder.html Will Broadus (ACQ 452 Course Manager), Tom Edison, Joni Forman, Steve Brown, and Bob Gustavus Stakeholder relationship management: a maturity model for organisational implementation, Lynda BourneFarnham: Gower, 2009 Managing for stakeholders: survival reputation and success, R Edward Freeman, Jeffrey S Harrison and Andrew C Wicks Newhaven Conn: Yale University Press, 2007 Stakeholders theory and practice, Andrew L. Friedman and Samantha MilesNew York NY: Oxford University Press, 2006

This is a selection of books available for loan to members from CMIs management library. More

Creating shared value, Michael E. Porter and Mark R. KramerHarvard Business Review, Jan-Feb 2011, pp62-77