Stakeholder Based Approach In Business Management
In the theoretical world of business management, a stakeholder-based approach to management suggests that managers need to formulate and implement many processes to satisfy the numerous stakeholders groups who are the in the firm. The main goals in the process are to manage and to unify the relationships and interests of the various shareholders, customers, suppliers, employees, employers, etc and the other groups in a way to successfully ensure the existence of the business in the long-term.
A stakeholder-based approach highlights how the management of the business environment is, the relationships and the promotion of common interests amongst the various stakeholders.
There are a large amount of groups who have vested interest in the long-term
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For a business to be able to survive in a very inconsistent environment, management must implement the direction for the firm. To successfully change direction, management needs the full support of the stakeholders whose actions could affect the firm and also to understand how the firm would affect the stakeholders. The stakeholder-based approach works in conjunction with the traditional aim of “maximisation of the shareholder’s wealth”.
The aim of the stakeholder-based approach is to provide a strategic framework to the company. This framework allows enough flexibility to deal with changes in the environment without managers having the need to regularly adopt new strategic measures.
Under the stakeholder-based approach management is encouraged to develop strategies to identify, and invest in all the relationships that will ensure success in the long run. For a stakeholder-based approach to be successful, values must be incorporated as the key element of the management
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The vital purpose of a stakeholder-based approach to management is to set a new direction for the enterprise. The stakeholder-based management approach suggests that relationships amongst the stakeholders can be created and influenced.
The stakeholder-based approach is about putting specific names and faces for the stakeholders. There is value in the developing of a comprehension of the stakeholders who are closely related to the business. This level of understanding enables management to create an array of strategies and options that have the support of the many different stakeholders’ participants; and it is only with this support that management can somehow be able to achieve the existence and survival of the firm in the long run.
The stakeholder-based approach provides integration to the process of strategic decision making. Managers must be able to find ways to satisfy the various stakeholders and at the same time realizing that all stakeholders will not be benefited all the time. Management cannot guarantee situations where all stakeholders win at the same time.
Examples of applied stakeholder-based
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