Stakeholder Management
Stakeholders are a group of individuals who are significantly affected by decisions made within and by an organization. There are two classes of stakeholders, which include primary and secondary stakeholders. The former; primary stakeholders have a direct impact on the decisions made within an organization. These include employees, customers, and managers. On the other hand, secondary stakeholders are those impacted by decisions made but do not directly influence or rather a primary stake in the decision-making process. Notably, stakeholders have a say in the company's operations and direction, but the final decision is not dependent on them. Usually, the management of both primary and secondary stakeholders is the core responsibility of the senior management in ensuring the right decisions are made. Thus. The concept of stakeholder management describes the entire management of expectations and judgments of the company's stakeholders. Embarking on positivity in stakeholder management creates an environment for building trust and stimulates collaborative efforts crucial for wealth creation.
Impact on Various Stakeholder Groups
Howitt (2012) reveals that in the decision-making process, providers, purchasers, and the manager who makes decisions should be considered. For the provided scenario, the garment manufacturer is considering moving its “Made in the USA” clothing line off-shore. This decision will impact various groups, including employees/unions, communities, and stockholders.
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Employees/Unions
If manufacturing of the clothing line is moved off-shore, employees based in the U.S. will lose their jobs. Consequently, when the word is out on why the company is laying off employees, the purchasers will vote with their wallets on the rationale of the basic value-respect, which is crucial for people (Harrison & Wicks, 2013). Based on the case scenario, the company hardly respects its employees because the rippling effects will spill over to the communities where individuals are employed.
Communities
Based on the scenario, it is evident that the company has a substantial presence in rural areas. The company is considered the primary employer in most of these small rural communities. While this may not be a significant concern for decision-makers based on the fact that there are big anticipated margins, the impact on the communities is one of the crucial qualitative factors in this decision. Harrison and Wicks (2013) reveal that some of the recommendations made by managers may have economic value while at the same time reducing other stakeholder values. Therefore, this negatively impacts the value and at the same time raises concerns on the ability of the firm to sustain its economic performance. When referring to this scenario, communities and employees are the key stakeholders. If the decision to move off-shore is implemented, managers will have lost insight into the communities from where they source their employees.
Stockholders
The decision to move off-shore may be appealing to the managers but also will significantly impact stockholders. Furthermore, it would be a matter of time before everyone becomes apparent of the decision. As primary stakeholders, they may have no initial say but at one point must be informed of the drastic changes (Terris, 2005). In the long run, trust issues and lack of collaboration may arise due to this change. Conclusively, just a single group of stakeholders can benefit from moving the manufacturing off-line, hence the necessity for recommendations.
Recommendation
Based on the above scenario, it is implausible that the expectations of all stakeholders will be met. Therefore, it should be determined which expectations are to be fully satisfied. As discussed above, both the purchasers and providers will be negatively impacted, implying that very few stakeholders will benefit from moving manufacturing off-shore. Like the employee in this case, the continual of manufacturing in the U.S. and looking for ways to increase margins is the best recommendation.
References
Harrison, J. S., & Wicks, A. C. (2013). Stakeholder theory, value, and firm performance. Business ethics quarterly , 97-124. Trident Online Library. https://www.jstor.org/stable/41967821?seq=1
Howitt, M., & McManus, J. (2012). Stakeholder management: an instrument for decision making. Management Services , 56 (3), 29-34. https://apaxresearchers.com/wp-content/uploads/2020/10/Stakeholder_Management_An_ins
Terris, D. (2005). Ethics at work: Creating virtue in an American corporation . UPNE.
