Strategic Management Analysis: Fonterra's Shareholder vs Stakeholder

This report provides a detailed analysis of Fonterra's strategic management, examining the challenges the company faces in balancing shareholder and stakeholder interests. It explores the company's mission, vision, and core values, highlighting the importance of stakeholder management and the need to consider social responsibility. The report contrasts the shareholder value perspective, which emphasizes profitability, with the stakeholder value perspective, which prioritizes the interests of all stakeholders. It argues that Fonterra should shift its focus towards stakeholder value to ensure long-term growth and sustainability, emphasizing the role of stakeholder management as both a means and an end. The conclusion stresses the importance of considering the needs and interests of all stakeholders to ensure the future growth of the organization.

Strategic Management

Table of Contents
Introduction................................................................................................................................2
Main Context..............................................................................................................................2
Conclusion..................................................................................................................................3
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Introduction
Fonterra is considered to be one of the top six dairy companies in the world. The company is
situated in New Zealand which supplies bulk ingredients such as cheese, butter and milk
powder to international markets. However, the organization is facing difficulties in managing
the interests of the shareholders and stakeholders.
Main Context
Missioning and visioning
The corporate mission of Fonterra consists of a set of fundamental principles that creates the
base of identity and directs its strategic decision making. The main purpose of Fonterra is to
increase the value of the owners. However, the purpose should be to serve all the parties
involved. The organizational beliefs depicted that all the strategic choices consist of
significant assumptions which are being made for achieving the goals and objectives. The
shares of Fonterra show the financial commitment for the dairy farmers. The values of
Fonterra state that each person can have their own set of values and shaping their beliefs in
the way they want. The business rules of Fonterra assist to follow principle and
distinguishing opportunities from the diversions.
The strategic vision of Fonterra is to become the largest dairy organizations in the world. The
political, economic, socio-cultural, technological and environmental are the factor that
influences the business operations of Fonterra. The factors such as buyers, new entrants,
suppliers, rivals, complements and substitutes also influence the business operations of
Fonterra. The desired future position of Fonterra is based on the envisioned industry and
contextual environment. The organization set goals that need to be achieved within a time
period.
Emphasis on the profitability of shareholder value perspective against responsibility
over profitability of stakeholder values perspective
Fonterra should take initiatives for decreasing the impact of its activities on the environment.
Nowadays, people have become more concern about the environment and they want that the
business operations should be carried out for the welfare of society. Fonterra should also sell
its products by keeping in mind the needs of the consumers. The social responsibility is
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referred to acting in the interest of all the people which is based on trust. Trust will encourage
people to commit themselves both practically and emotionally to the organization. Fonterra
should not only focus on the profitability of the shareholders but also the responsibility
towards the stakeholders. The owners of Fonterra will also support by understanding the
importance of social responsibility and their future interests will also not be compromised.
Fonterra can convince the owners to put the focus on the values of the stakeholders because it
will not only lead to the growth of the organization but also their future interests. If the
management of Fonterra does not focus on social responsibility then it might lose its value in
the market in future. The organization should focus on the stakeholder value perspective
rather than the shareholder value perspective.
Stakeholder management – Means for shareholder perspective and End for stakeholder
value perspective
The shareholder's value perspectives of Fonterra put emphasis on profitability over the
responsibility. The value of the shareholder is measured by economic profits, dividends and
share price. The social responsibility is not considered by Fonterra and carrying out
operations for self-interest. It depicts the stakeholder management as an end rather than as
mean. On the other hand, stakeholder value perspective of Fonterra puts emphasis the
responsibility over the profitability. It is estimated by the satisfaction among all the
stakeholders. It depicts stakeholder management as a mean and as an end. Fonterra should
consider the stakeholder value perspective in order to overcome from its issues.
Conclusion
The dairy company Fonterra should consider the needs and interests of the stakeholders. The
focus on only the shareholders can affect the future growth of the organization. The
management of stakeholders will also assist in managing the owners of the organization.
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