Debark University

College of Business& Economics

Dept. of Management
for 4 Year regular Mgt students
th

Course, Business Ethics and CSR(MGMT

4231).

CHAPTER TWO
Management of Stakeholders

Debark, Ethiopia 1
Objective of chapter
◦ Define of Stakeholders
◦ Examine Stakeholder Management
◦ Understand the Implications for CSR

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 Introduction
Project/Business is successful when it
achieves its objectives and meets or exceeds
the expectations of the stakeholders.

They are the people who are actively involved

with the work of the Business or have
something to either gain or lose as a result of
the business.

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 Stakeholders

A stakeholder is combination of two words-„Stake‟ means a right to

do something in response to any act or attachment. And „Holder‟
denotes an entity that faces some consequences or need. A
stakeholder is someone who is affected by your performance..
A Stakeholder in an organization is any group or individual who can
affect or is affected by the achievements of the organization’s
objectives.
Stakeholder: A person, group or organization that has
interest or concern in an organization. For example: creditors,
employees, government, owners (shareholders), customers & the
community. They may be directly or indirectly affected by the
organization, operation and process. 5
 Cot, d
A stakeholder is anyone with an interest in a
business. Stakeholders are individuals, groups or
organizations that are affected by the activity of the
business.
They include:
Owners (shareholders) who are interested in how
much profit the business makes.
Employees who want to earn high wages and keep
their jobs.
Customers who want the business to produce
quality products at reasonable prices.
Suppliers who want the business to continue to buy
their products. 6
 Stakeholders can be categorized based on their level of
influence & interest in the organization's objectives.
 The level of influence refers to the extent to which
stakeholders can affect or shape the decision-making
process or outcomes.
Some examples of stakeholders are
Creditors,
Debtors,
Directors,
Employees,
Gov’t (& its Agencies),
Owners (Shareholders) & its Suppliers,
Unions & Community
Not all stakeholders are equal.
Each of the types of stakeholders in a business is
categorized in 2 ways:
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 Primary and Secondary Stakeholders
 Primary social stakeholders have a direct stake in the
organization therefore, are most influential. Include
• Shareholders and investors
• Employees and managers
• Customers
• Local communities
• Suppliers and other business partners
 Secondary social stakeholders may be extremely influential as
well, especially in affecting reputation and public standing, but
their stake in the organization is more indirect. Include
• Government and regulators
• Civic institutions
• Social pressure groups
• Media and academic commentators
• Trade bodies
• Competitors 8
 Why Stakeholders are Important?

 Expertise
 Participating in project activities
 It gives companies a positive public
image
 Increase project management
 Granting project acceptance
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 2.2. Stakeholder Management
Stakeholder management is the process by
which you organize, monitor and improve your
relationships with your stakeholders.
Is process of maintaining good relationships
with the people who have most impact on your
work .
Stakeholder management is the process of
managing the expectations and the
requirements of these stakeholders.
It involves
 identifying & analyzing stakeholders &
 systematically planning to communicate &
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Stakeholder management enables project
managers, not only to manage the project, but
also to manage the things that influence the
project.

In conclusion, stakeholder management is a

crucial aspect of project management.

It involves identifying, analyzing & engaging

with stakeholders to ensure their need &
expectations are understood and addressed.

Effective stakeholder management leads to

successful project delivery & positive
relationships with all involved parties. 1
 Stakeholder Mapping
 It is the process of drawing visual representation of various people involved or
affected by company.
 Stakeholders mapping involves four phases:

1. Identifying phase: listing all possible stakeholders and the main focus is to
brainstorm a list of stakeholders without screening, including: Owners,
Customers, Employees, Community, Government, Civil society organizations
and Environment etc.

2. The analyzing phase : understanding stakeholder perspectives and interests

-requires further analysis to better understand the needs, expectations and

relevance of the perspective provided by each stakeholder group and to prioritize
their engagement.

According to BSR (Business for Social Responsibility) the main criteria to analyze
each identified stakeholder are:
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 Continued
Contribution (value): Does the stakeholder
have information, counsel, or expertise on the
issue that could be helpful to the company?
Willingness to engage: How willing is the
stakeholder to engage?
Influence: How much influence does the
stakeholder have?
Necessity of involvement: Is this someone 1
 Cot,d
3. The Mapping phase (visualizing relationships to objectives and
other stakeholders):it is a visual exercise and analysis tool that can
be further used to determine which stakeholders are most useful to
engage with.

Mapping allows companies to see where stakeholders stand when

evaluated by the same key criteria and compared to each other and
help them visualize the complex interplay of issues and relationships.

4. The prioritizing phase (ranking stakeholder relevance and

identifying issues): is essential as it’s not practical and cost effective
to engage with all stakeholder groups with the same level of intensity
all of the time.
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 Implications for CSR
 Stakeholder identification and engagement is a key CSR
element.
 CSR has become an integral part of the business
landscape, as companies recognize the importance of
sustainable and responsible practices.
 CSR encompasses a wide range of initiatives, including
environmental sustainability, ethical business practices,
and social impact.


 Implementing CSR initiatives can have significant

implications for businesses, society, and the
environment.
 This document explores some of the key implications
of CSR and highlights its importance in today's world.
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The key implications of CSR
1. Enhanced Reputation
2. Competitive Advantage
3. Improved Employee Engagement
4. Risk Mitigation:
5. Long-term Sustainability:
6. Positive Social Impact:

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1. Enhanced Reputation: Adopting CSR practices
can enhance a company's reputation and brand
image. Consumers are increasingly conscious of the
social and environmental impact of businesses and are
more likely to support companies that demonstrate a
commitment to CSR. By engaging in responsible
practices, companies can build trust and loyalty
among customers, leading to increased sales and
market share.
2. Competitive Advantage: CSR can also provide
businesses with a competitive edge. Companies that
integrate CSR into their operations can
differentiate themselves from competitors by
showcasing their commitment to sustainability and
social responsibility. This can attract socially conscious
consumers and investors who prioritize supporting
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3. Improved Employee Engagement:
Embracing CSR initiatives can improve employee
satisfaction and engagement. Employees are more likely to
be proud of working for a company that demonstrates a
commitment to social and environmental responsibility.

This can lead to increased employee morale, productivity,

and retention rates.

CSR initiatives also provide employees with opportunities for

personal growth and development, such as volunteering or
participating in sustainability programs, which can further
enhance their engagement.

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4. Risk Mitigation: CSR practices can help
companies mitigate potential risks and avoid
negative consequences. By proactively addressing
environmental and social issues, companies can
prevent reputational damage, legal disputes, and
regulatory penalties.

For example, implementing sustainable supply chain

practices can help companies avoid disruptions and
negative publicity associated with unethical sourcing
or labor practices. 20
5. Long-term Sustainability:
CSR initiatives contribute to long-term business
sustainability. By integrating environmental
sustainability into operations, companies can
reduce resource consumption, minimize waste, and
lower costs.
Socially responsible practices, such as fair labor
practices and community engagement, can enhance
relationships with stakeholders and create a positive
impact on society. This, in turn, can contribute to the
long-term success and viability of the business. 21
6. Positive Social Impact:
Perhaps the most important implication of CSR is
the positive social impact it can generate. By
investing in community development, education,
healthcare, and other social initiatives,
businesses can make a tangible difference in the
lives of individuals and communities.
In conclusion, CSR has far-reaching
implications for businesses, society, and the
environment. From enhancing reputation and
gaining a competitive advantage to improving
employee engagement and mitigating risks,
CSR offers numerous benefits. Moreover, CSR
contributes to long-term sustainability and
generates a positive social impact. 22
Stakeholders vs Shareholders:
is there a difference?
A stakeholder has a vested interest in your business
or a project. This type of stakeholder does not
typically have a financial stake in your business.
A shareholder has a financial interest in a business.
a shareholder is a partial owner of Company.

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Shareholders are a subcategory of stakeholders
because shareholders invest money in the
business.
However, since groups like employees and
local communities do not necessarily invest in
the business, they are stakeholders but not
shareholders.
This is an important distinction to make because
it tells you how best to prioritize your
stakeholders when you make decisions that
impact each one.

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 Thank
You!
The End 2