stakeholder theory & external & internal analysis

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Zaid AL-amirProfessional Sales RepresentativeOTX Team - Riyadh

Structural Agenda through our Project Strategic Management

Sherif Fathy

Introduction

The Basis of stategy : structure

14th September2015

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Agenda:Internal

stakeholder

External stakeholder

Stakeholder theory

External analysis Internal analysis

Part 1

Part 2


Flash points about strategic management :

1- Definition is some sort of future plan of action, undertaken by senior management include the formulation and Implementation of the major goals and initiatives taken by a company's top management on behalf of owners , based on consideration of resources and an assessment of the internal and external environments in which the organization competes .

Importance of strategic Management

1. To Shape the future of the business.

2. To create an effective strategic idea.

3. Encourage managers and employers to be more innovative and creative.

4. To make better control.


Objectives for this session:

By the end of this session, you should be able to describe:

1- A definition of ‘stakeholders’ for your organisation

2- you be able to differentiate between Internal and External stakeholder

3-also you be able to differentiate between Macro & Micro environment in external analysis

4-The PESTEL framework as a tools for analysing the macro-environment

5- the Importance of Internal Analysis & a value chain as a method for assessing each activity in the business


Stakeholder theory :

1-What to Know About Stakeholder Theory ??

2- Have you ever wondered why businesses care to do so much for their consumers?


It’s because of Stakeholder theory!



What is it?Stakeholder theory is an idea that businesses should not function only for financial benefit; they should run for the benefit of both their owners and stakeholders.

The idea is that when businesses pay attention to their stakeholders- customers, suppliers, employees, and investors- they will make a larger overall profit.Who introduced it?Edward FreemanHe began work on the Stakeholder Theory in 1984



Who uses it?

Businesses, organizations, and even the Government! Anyone who values morals and the relationship between the consumer and corporation.

So what?The theory is important because it acts as a way to understand Corporate Social responsibility, or how a business regulates itself.

It promotes the ideology that businesses making a profit are dependent on behaving honorably and with morals.


Definition :groups or individuals that have an interest in the well being of the company and they are affected by the goals , operations or activities of the organization or the behavior of its members .

1. Stakeholders categorised into :

Internal stakeholder .

External stakeholder.


Stakeholder theory : internal stakeholders

Internal stakeholders (also known as primary stakeholders) are those within an organization with an interest in its success and failure, since they may be rewarded or punished accordingly. Employees, managers, corporate leaders, and owners/stockholders are examples of internal stakeholders.

ExampleA manager is an example of an internal stakeholder. Managers may own shares in the company, or may receive bonuses or other perks if the company does well, which is why they push for success. Conversely, when the business does poorly, they suffer.

https://www.boundless.com/management/definition/leader


Stakeholder theory internal stakeholders ( cont. )

1- Entrepreneurs :Who wish to do their own thing , develop their own technical , commercial ,ideas , be independent

2- Managers :Are likely to have a particular interest , and the concern for , the size and growth of the organization and it is profitability ,job security , power and prestige ( office size , type of company car . Number of stuff working for them

3- Non managerial employees :Normally concerned with improving pay and condition and ,particularly in the current economic situation

4- Employees :Are more productive when they have sense of participation in the decisions affecting them

Stakeholder theory: External stakeholders

External stakeholders include shareholders, or stockholders, as well as governmental bodies, communities, financiers, and customers.

External stakeholders can exercise different types of power over an organization and try to influence its decisions through applying economic or political pressure.

1- governments•Seeking finance through taxation and other means •2- safety•3- industrial harmony

https://www.boundless.com/management/definition/power


External analysis :

Introduction- definition: External Analysis

there are two parts or level – Environmental analysis 1- macro environment affecting all firms

2- the industry analysis of the “near “ or “micros” environment which is much more specific


External analysis :

Benefits of external analysis include

1- increasing managerial awareness of environmental changes

2- increasing understanding of multinational settings

3- Improving resource allocation decisions

4- Acting as an early warning system


External analysis:

Macro environment :

Macro environment is also known as General environment and remote environment. Macro factors are generally more uncontrollable than micro environment factors. When the macro factors become uncontrollable , the success of company depends upon its adaptability to the environment.

Tools for analysing the macro-environment

The PESTEL framework


External analysis:

The PESTEL FrameworkThe PESTEL framework categorises environmental influences into six main types:

Political Economic Social Technological Environmental Legal


External analysis:

Political EnvironmentThe political environment of a country is influenced by the political organizations such as philosophy of political parties, ideology of government or party in power, nature and extent of bureaucracy influence of primary groups etc .

Economic Environment

Economic environment refers to the aggregate of the nature of economic system of the country, business cycles, the socio-economic infrastructure etc.


External analysis:

Social Environment The social dimension or environment of a nation determines the value system of the society which, in turn affects the functioning of the business. Sociological factors such as costs structure, customs and conventions, mobility of labor etc. have far-reaching impact on the business.

technological EnvironmentThe business in a country is greatly influenced by the technological development. The technology adopted by the industries determines the type and quality of goods and services to be produced and the type and quality of plant and equipment to be used.


External analysis:

Legal EnvironmentLegal environment includes flexibility and adaptability of law and other legal rules governing the business. It may include the exact rulings and decision of the courts.


External analysis:

Micro EnvironmentThe micro environment is also known as the task environment and operating environment because the micro environmental forces have a direct bearing on the operations of the firm.

a)SuppliersAn important force in the micro environment of a company is the suppliers, i.e., those who supply the inputs like raw materials and components to the company. Customer The major task of a business is to create and sustain customers. A business existsonly because of its customers.


External analysis:

Marketing Intermediaries

The marketing intermediaries include middlemen such as agents and merchants that help the company find customers or close sales with them.

financersThe financers are also important factors of internal environment. PublicPublic can be said as any group that has an actual or potential interest in or on an organization’s ability to achieve its interest. Public include media and citizens.


Internal analysis:

internal analysis

The internal environment is the environment that has a direct impact on the business. Here there are some internal factors which are generally controllable because the company has control over these factors. It can alter or modify such factors as its personnel, physical facilities, and organization and functional means, like marketing, to suit the environment.

Internal analysis:

Importance of Internal Analysis

To identify strengths to build on and weaknesses to overcome as they formulate strategies for competitive advantages..

Value ChainA method for assessing strengths and weaknesses divides the business into a number of linked of activities that may each produce value for the customer.

It comprise into 1- primary 2- support activities


Internal analysis:

Some Factors to consider in Assessing a Firm’s Primary Activities

1-Inbound Logistics:Location of distribution facilities to minimize shipping times.Excellent material and inventory control systems.Systems to reduce time to send “returns” to supplier.Warehouse layout and designs to increase efficiency of operations for incoming materials.


Internal analysis:

Operations:

Efficient plant operations to minimize costs.Appropriate level of automation in manufacturing.Quality production control systems to reduce costs and enhance quality.Efficient plant layout and workflow design

Outbound Logistics:

Effective shipping processes to provide quick delivery and minimize damages.Efficient finished goods warehousing processes.Shipping of goods in large lot sizes to minimize transportation costs.Quality material handling equipment to increase order picking.


Internal analysis:

Marketing

Innovative approaches to promotion and advertising.Selection of most appropriate distribution channels.Proper identification of customer segment s and needs.Effective pricing strategies.

SERVICE:

Effective use of procedures to solicit customers feedback and to act on information.Quick response to customer needs and emergencies.Ability to furnish replacement parts and equipment inventory.Quality of service personnel and ongoing training.Appropriate warranty and guarantee policies.


Internal analysis:

ASSESSING A FIRM’S SUPPORT ACTIVITIES1-Procurement Refers to the function of purchasing inputs used in the firms value chain, not the purchased inputs themselves.

2-Technology DevelopmentThe array of technologies employed in most firms is very broad, ranging from technologies used to prepare documents and transport goods to those embodied in processes and equipment or the product itself.

3- Human Resource Consist of activities involved in the recruiting, hiring, training, development, and compensation of all types of the personnel.

4- General Administration Consists of number of activities, including general management, planning , finance, accounting, legal, government affairs, quality management, and information systems.


summary

1-definition of ‘stakeholder

groups or individuals that have an interest in the well being of the company and they are affected by the goals , operations or activities of the organization or the behavior of its members . 2-regarding any company there is a internal & external stakeholder 1. Internal like 2. Managers & employee & owners External like 1- supplier & government & pressure group

2- in external analysis macro analysis uncontrollable since you are dealing The PESTEL factors affecting all companies & in micro you can that because have a direct bearing on the operation

the Importance of Internal Analysis

To identify strengths to build on and weaknesses to overcome as they formulate strategies for competitive advantages..


Refrances

• Strategic Management Book by Neil Ritson 13th edition

( BookBoon.com)

Source: Boundless. “Internal Stakeholders.” Boundless Management. Boundless, 21 Jul. 2015. Retrieved 13 Oct. 2015 from https://www.boundless.com/management/textbooks/boundless-management-textbook/ethics-in-business-13/business-stakeholders-96/internal-stakeholders-451-7622/


Thank you

stakeholder theory & external & internal analysis

Leadership & Management