ENVIRONMENT OF BUSINESS.

Running Head: ENVIRONMENT OF BUSINESS
Environment of Business

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Stakeholder can be defined as the organization, person or group who has concern or interest in an
organization. Stakeholders affect and get affected by the objectives, actions and policies of an
organization. Examples of key stakeholders of an organization include directors, creditors,
government (and its agencies), employees, suppliers, owners (shareholders), unions and the
community from which the resources of the business are drawn. Stakeholders can place a claim
on the resources or output of the organization (Eskerod, Huemann and Ringhofer, 2015). This
essay is focused on how different stakeholders are managed by the firms for the purpose of
ensuring sustainability of their business.
A number of threats and opportunities are faced by the firms that arise from the variety of
stakeholders such as bondholders, shareholders, suppliers, employee, labor unions, joint venture,
advocacy groups, regulatory agencies, etc. The implementation of organizational practices and
policies are included in stakeholder management which take into account the concerns and goals
of relevant stakeholders, in a manner which is consistent with the enterprise level strategy of the
firm along with its profit making purpose. The failure of half of the business decisions is the
result of non- assessment of the interests of the key stakeholders. Various companies are aligning
their contributions with the areas which best reflect the interest of the stakeholders such that they
can also use their expertise of business. For example, technological firms, like Intel, are
supporting education as it considers talent to be critical for the survival of the company. In other
words, future employees can be trained and groomed with the help of educational initiatives of
such companies. Education is targeted in its philanthropy by Intel. The importance of stakeholder
management is increasing due to the interconnected nature of the world.
Stakeholders are of two types i.e. internal and external. Internal stakeholders include managers,
employees and shareholders. On the other hand, external stakeholders include customers,
suppliers, national/ local governments along with other organization such as World Trade
Organization, European Union, etc. The satisfaction of the stakeholders can be defined as the
main driver behind the creation of sustainable value in the firm. For the purpose of ensuring the
sustainability of their business, the firms manage different stakeholders by following a specific
series of steps.
The first step in the process is the identification of project stakeholders. This involves identifying
the key stakeholders of the company along with duly identifying their needs in order to ensure

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that the process is effective and well targeted. This step further aims at ensuring the reduction of
discrepancies and conflicts and perform the function of boosting the decision support by the
stakeholders. The firms also implement the sustainable construction and the value management
principles and this allows them to achieve value for money and the support of the key
stakeholders at every stage of the project.
The next step is about the identification of the needs and expectations of the stakeholders.
Quality Function Deployment (QFD) is often adopted by the firms as a series of matrices for the
collection, understanding and deployment of the requirements of the users or clients throughout
the projects. This requires the companies to consider the expectations of the stakeholders from
different projects and the entire firm (Rowley, 2017). The stakeholder needs are required to be
transformed into a defined set of stakeholder requirements which can be documented in the form
of a document or model that contains textual requirement statements or both. Proper
identification of stakeholder requirements assists the companies in stakeholder acceptance,
system validation, integration and verification activities, etc.
The third step in the effective management of stakeholders is prioritizing them. The stakeholders
which are identified in the previous step are prioritized at this stage for the purpose of classifying
them into four groups namely potentially influential, key players, marginal and affected
(Mitchell, Lee and Agle, 2017). The prioritization of each and every stakeholder associated with
the organization depends on their importance and influence in addition to the objectives of the
company and the projects undertaken by such company. Influence can be defined as the extent to
which organizations, groups or people are capable of persuading others for making decisions and
following specific courses of action that are associated with sustainability (Al- Yami and Price,
2008).

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The stakeholder power/ interest matrix often utilized by the businesses for the purpose of
evaluating the relative power and influence of the stakeholders, importance to the firm and its
projects along with the possible contributions to the success of the organizations (Bourne, 2016).
Figure 1 Stakeholder mapping, the power/interest matrix
(Source: Al- Yami and Price, 2008)
Figure 2 The Power/Interest Matrix
(Source: Sharma, 2018)

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Depending on the different categories, different ways are suggested by this model relating to the
techniques that can be adopted for the purpose of dealing with these stakeholders. Stakeholders
that have high power and low interest are required to be kept satisfied. On the other hand, those
stakeholders which have low power and low interest shall be monitored only with the help of
minimum amount of efforts (Moura- Leite, Padgett and Galán, 2014). Stakeholders having high
power and high interest are required to be monitored closely along with keeping them informed
from time to time. Also, the stakeholders having high interest and low power in a project and in a
company are required to be kept informed (Sharma, 2018).
The fourth step is associated with involving the stakeholders or their engagement for the purpose
of enhancing the overall strategic briefing of the business. The interaction that take place among
the stakeholders at the time of annual general meetings and extraordinary general meeting plays
an important role in the development of strong working relationships, understanding, mutual
consensus and effective communication between various stakeholders (Eskerod and Jepsen,
2016).
The fifth step provides for synthesizing information which specifies that the success of the
development of strategic briefing is completely dependent on the obtainment of adequate
information from the stakeholders of the company. The collection of information plays an
important part in the designing of team and understanding of the objectives of the company by
the stakeholders (Eskerod and Vaagaasar, 2014). This information includes budgets,
demographics, project inclusions, requirements, needs and expectations along with the policies.
Some of the common methods which are adopted by the companies for the purpose of collecting
the information from the stakeholders include conducting face to face interviews, information
relating to similar projects along with some historical data, exchange of emails, responses of
questionnaires, telephone conversation, etc. (Bourne, 2016)
Sustainability in an organization is often misunderstood to mean financial stability. This
misconception is due to the fact that when unsustainability occurs in an organization; such
symptoms are visible in the finances. However, sustainability of the organizations is dependent
on the effective management of the finances of the company. These finances are offered to the
company by the stakeholders. Therefore, some planning is required by the businesses in
effectively dealing with and managing the stakeholders. The planning is basically concerned

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with first identifying the stakeholders along with the ways in which they are affected by the
business (Freeman, 2017). The interests of the stakeholder in the profits of the business are
commonly addressed by the businesses in their vision and mission statement. Commitments to
several stakeholder groups are also addressed by the firms through their website, in promotional
messages and in the business activities. Ethical codes are often included by the companies along
with the statements of corporate citizenship on the websites for the purpose of conveying the
value placed by them on all the stakeholders. This kind of planning is very essential for the
businesses in maintaining sustainability (de Lange, Busch and Delgado- Ceballos, 2012).
Sustainability is ensured by the businesses by way of maintaining the ethical standards. The
management of stakeholder relationships suffers from the critical point that the ethical business
practices should be the primary concern for the business beyond the owners who have invested
in the company (Eskerod, Huemann and Savage, 2015). Fair and honest treatment is generally
expected by the customers from the companies along with the transparent practices with regard
to marketing and communications. The satisfaction of the customers is the major factor in
ensuring sustainability and long term growth. Communities generally expect that the companies
will operate with integrity and will show care for its people. Moreover, it will contribute towards
the communities through a number of ways like volunteer programs and charitable giving. Fair
hiring practices and non- discrimination among the employees are also need to be emphasized by
the companies. These practices play an important role in the ensuring sustainability of the firms
(Kokemuller, 2018).
Communication is an essential part of the stakeholder management process. The management of
stakeholder relationships can be ensured by the businesses by properly understanding and
planning for the needs and communication requirements of the stakeholders. When proper
communication channels are established by the companies, it can be used by the stakeholders for
communicating their queries, grievances and suggestions (Oppong, Chan and Dansoh, 2017).
With the help of effective communication, regular updates can also be provided to the
stakeholders relating to the goals, challenges and financial situation of the company.
Sustainability of the business can be maintained with the help of ensuring the openness of the
plans and the business operations along with the promotional messaging. Important standards,
philosophies, policies and consequences to the employees can be communicated through human

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resources policy manuals. Telephone, regular in- person and e- mail communication with the
business partners assists the businesses in the maintenance of valuable and trusting partnerships
(Kokemuller, 2018).
The formation of cross- organizational teams also assists the businesses in the achievement of
sustainability. For the purpose of better understanding and meeting the needs of multiple
stakeholders, a number of businesses are making the use of cross- organizational teams. Cross-
organizational teams can also be defined as the committees or groups which consist of the
employees from different business departments (Benn, Edwards and Williams, 2014). For
supporting the communities, customers and employees, firms often make the use of volunteer
teams or committees for coordinating with the philanthropy of the company. Philanthropy can be
described as the desire of the companies for the promotion of welfare of others which is
generally expressed in the form of generous donation of money for good causes (Cantrell,
Kyriazis and Noble, 2015). Philanthropy ensures the sustainability of the business by ensuring its
good image in the eyes of the stakeholders. Some firms are often engaging in providing some
days off to their employees in order to facilitate them for volunteering in social service
organizations or community non- profit organizations. Advantages of having a diverse workforce
are promoted with the help of diversity councils. The sharing of ideas and the get together of the
employees allows them to improve their diversity awareness and assists in getting the needed
support (Hespenheide, Pavlovsky and McElroy, 2010).
The perfect example of maintenance of sustainability by the firm through stakeholder
management is Primark. Primark is a fast fashion retailer of Ireland headquartered in Dublin. The
company was established in the year 1969 and is a subsidiary of Associated British Foods
(ABF). With the passage of time, the company has attained the position of one of the largest
retailers in Europe. Primark keep its prices low but maintains high standards with respect to
ethics and sustainability of the business. The major stakeholders of Primark include trade unions
and civil society groups, workers and communities, suppliers, shareholders, governments, non-
government organizations and customers. The company is known for effectively managing its
stakeholders by adopting diverse practices in accordance with the requirement of the respective
group. As far as the trade unions and civil society groups are concerned, the company engages
them by learning and listening about their concerns and establishing partnership with Better

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Work Programme of International Labor Organization and Ethical Trading Initiative. Primark’s
ethical approach provides enough importance to the workers and the communities. In countries
like Bangladesh and China, Primark has introduced projects with the purpose of bringing long
term improvements in the labor standards along with providing the workers with suitable wages.
It also identifies the labor migration trends by teaming up with Business for Social
Responsibility (BSR) which a corporate social responsibility organization. The company
manages its customers by offering them latest fashionable products at the lowest possible prices.
This assists the company in engaging its customers for a longer period of time. They adopt the
strategy of getting the customers spread the word regarding their products. Lastly, it gives due
importance to the management of shareholders as well. Shareholders are the owners of the
company and they have the power to participate in the key decisions of the organization. ABF
issues a separate corporate social sustainability (CSR) report to their shareholders which provide
the ways which are being considered by Primark for the acting upon its social and ethical
responsibilities. This type of effective management of the stakeholders has led the company to
new heights (University of Birmingham, 2018).
The major mistakes that are made by the companies in the context of stakeholder management
are related wrong identification and prioritization of the stakeholders. Another mistake is
committed by the company when they do not base their stakeholder mapping on robust analysis.
The companies often try to be unrealistic with their key stakeholders which sometimes put them
in trouble. This is done by the firms by over promising and under delivering. The firms also fail
to set a stakeholder communication plan (University of Birmingham, 2018).
Therefore, it can be concluded that stakeholder is the organization, person or group who has
concern or interest in an organization. The focus of this essay was on how different stakeholders
are managed by the firms for the purpose of ensuring sustainability of their business. The
different stakeholders of the companies include bondholders, shareholders, suppliers, employee,
labor unions, joint venture, advocacy groups, regulatory agencies, etc. The firms usually follows
a specific series of steps for the effective stakeholder management which include identification
of stakeholders, identification of their needs and expectations, prioritizing stakeholders,
involving them and synthesizing information. The needs and expectations of different
stakeholders are different and these are required to be taken into consideration by the firms. The

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firms are also required to conduct effective planning along with ensuring the maintenance of
ethical standards, effective communication plan and cross- organizational teams for the purpose
of ensuring sustainability of the business.

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