CSR Presentation by Group 3 - Stakeholder theory
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Transcript of CSR Presentation by Group 3 - Stakeholder theory
A THEORY OF STAKEHOLDER IDENTIFICATION AND
SALIENCE
PRESENTED BY: GROUP 3 SEC B
ANKIT AGGARWAL 13P063 GAUTAM MAHESH
13P081MONIKA KHETAN
13P088GOPESH NAKRA
13P104SATYAJIT TRIPATHY
13P109SUYASH NIGOTIA
13P116
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
Stakeholders
Defining Stakeholders - Broad Vs Narrow View
Narrow viewConcerned with only the risk factor and includes:
Voluntary Stakeholders & Involuntary Stakeholders
Broad ViewTakes 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
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. LegitimacySocially accepted and expected structures or behavior under a socially constructed system of norms, values, beliefs and definitions
LEGITIMACY
INDIVIDUAL ORGANIZATIONAL SOCEITAL
Stakeholder Attributes
3. UrgencyExists when 2 conditions are met –
When a relationship or claim is of a time-sensitive nature
When it is critical to the stakeholder
Stakeholder Classes
Dormant
Discretionary
Demanding
Power
Legitimacy
Urgency
DominantDangerous
Depend
ent
Definitive
Stakeholder Classes
Class 1 - Latent Stakeholders• One Attribute & Low Salience• Managers may choose to do nothing • Consists of – Dormant,
Demanding and Discretionary shareholders
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
Dormant
Discretionary
Demanding
Power
Urgency Legitimacy
Class 1 - Latent Stakeholders (Continued)
Discretionary Stakeholders• Likely to be recipients of corporate
philanthropy• Examples – Beneficiaries of charity,
Non-profit organizations such as schools & hospitals
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
Dormant
Discretionar
y
Demanding
Power
Urgency
Legitimacy
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
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.
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
DYNAMISM in RELATIONS
A stakeholder can increase/decrease their salience by acquiring or losing one of the attributes: power, legitimacy or urgency
Example: When SEBI/IRDA receives a complaint, it moves from being a expectant to a definitive stakeholder
Non-stakehold
erLatent Expectan
t Definitive
POWER-DYNAMISM MATRIX
Stakeholders in groups A & B:
Are the easiest to deal with
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 predictable and expectations can be managed
Dynamism
Power
Low High
Low Fewer Problems
(A)
Unpredictable but Manageable (B)
High Powerful but Predictable (C)
Greatest Danger or Opportunities (D)
British Petroleum
Shareholder-driven company(bottom-line)
Attempted to gain higher stock values through higher profits at the expense of safety concerns
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
• Environmental Disaster: ignited public antagonism
• Most importantly, it was not the first disaster linked to the BP brand.
Date: 20th April, 2010
Place: Gulf of Mexico
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
Stakeholders and their Classes for BP
Stakeholders Attributes Power Legitimacy Urgency
Shareholder class
Government Definitive
Employees Expectant (Dependent)
Shareholders Expectant (Dominant)
Environmentalists Expectant (Dangerous)
Businesses along the coast
Expectant (Dependent)
Coastal Residents Expectant(Dependent)
Customers Latent (Discretionary)
* * *- * ** * -* - *- * *- * *- * -
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!
What BP should have done?
1. Be more alert to the significance of the company’s identity in the minds of the public
2. React quickly
3. Be present on the ground to build an emotional connect with those affected
4. Balance legal/economic language with emotional/empathic tones in their public statements
5. Acknowledged the company’s moral responsibility before dealing with legal liabilities
6. Put the interests of the company’s shareholders and managers after those of the environment and the communities affected by the spill
References
http://citizenpolity.com/2010/09/07/defining-shareholders-stakeholders/
http://www.lawyersandsettlements.com/blog/bp-oil-spill-fallout-whos-affected-03758.html
http://www.nytimes.com/2010/07/13/business/energy-environment/13bprisk.html?_r=2&src=twt&twt=nytimes&
http://taprootcreative.com/2011/04/lessons-in-crisis-communication-an-analysis-of-bp%E2%80%99s-response-to-the-gulf-oil-disaster/
Questions