ENVIRONMENT OF BUSINESS.

Running Head: ENVIRONMENT OF BUSINESS
Environment of Business

ENVIRONMENT OF BUSINESS 1
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

ENVIRONMENT OF BUSINESS 2
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).

ENVIRONMENT OF BUSINESS 3
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)