Concept of stakeholder management
Stakeholder management is engaging stakeholders through systematic identification, planning, implementation and analysis. Stakeholders are groups or individuals who hold importance in an organization as they are affected by outcomes of an organization or are involved in the work. Stakeholder management is essential in an organization because it affects the delivery of an activity, program or project. Good stakeholder management results to good relationships with stakeholders as it manages their expectations. Moreover, stakeholder management also ensures that all the stakeholders’ needs are met to ensure the relationship is good. The needs of stakeholders should be prioritized in business. It is therefore important to make sure a business understands its stakeholders so that they can meet the needs. There are various stakeholders in a business. They include shareholders, employees, customers, suppliers, communities among others. The stakeholder management theory states that a business is expected to create value for its stakeholders (Carroll & Boletus, 2014).
Impact on employees and unions
Employees and union staff will be negatively impacted if the company decides to follow the advice of the consulting firm. This is because the corporation has many employees both in manufacturing and sales. The employees in the manufacturing department will be out of jobs if the company decides to source labor from a different country. Since the company is a primary employer in the small rural communities in the region, many people in the communities will not have employment. This will negatively affect the relationship with employees in the organization. The remaining employees may also be affected by this move and lack of morale after their colleagues are forced out of work. The unions will also negatively react to the news as employees will be negatively affected. This will mean that members of the union will not have a source of income which is likely going to raise a challenge among the union members. This would eventually affect the reputation of the corporation.
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Impact on communities
The communities will be negatively affected if the company decides to off-shore its marketing. Development at the community level will be affected since the corporation offers employment to a large number of people at the community level. Since the corporation is a primary employer, the economy of the communities would also be reduced. This is because the circulation of money in the community would reduce because members will not have disposable income because of loss of employment. Members of the community may have to depend on the relief, as the government would have to compensate them. The employees who retain jobs in the region may also be faced to save more because they would live in fear of jobless. This would also affect the community as business will go down for locals in the area. The community would be greatly affected as the standards of living would be reduced in the long-term.
Impact on stockholders
The stockholders are basically the owners of the business. This is because their investments are what is used to do the business. The move to off-shore manufacturing facilities would positively affect stockholders. This is because the unit cost of production would be reduced by adopting this strategy. As a result, the stockholders would get more profits from the corporation. This is because this move would mean that the corporation’s focus would be on making profits in the organization. Therefore, stakeholders would get interest from their savings. The stakeholders’ equity would also be increased because their net income would increase. This would be the case even before considering dividends being paid (Phillips, 2003).
Recommendations
The employer described should not off-shore his manufacturing facilities to a poor nation offering cheap labor. Despite the savings the corporation would make, the move would negatively affect many stakeholders. According to the stakeholder theory, companies are expected to create value for its stakeholders. The business also has to be sustainable and successful. Therefore, to keep interest of stockholders, communities, employees, customers and suppliers the business should encompass aligned strategies which can meet all these needs. First, the customers who are major stakeholders would be affected by the company’s deceit (Freeman, 2010). This is because the company plans to make the products in cheaper countries and still label them as made in the United States. The customers would eventually figure this out and this would affect business for the corporation as demand for the products may go down. The communities would also be affected as the major source of income for members would be taken away. The move would positively affect the stockholders in the short-term. However, in the long-run business may not be as good as the corporation may lose its customers. This would make the stockholders get loses which would not be good for them. Employees would be affected as most of them would be rendered jobless by this move. The morale of the remaining employees may also go down as a result making this bad for business. Thus, the best move for the corporation would be to remain as a legit business “Made in the USA”.
References
Carroll, A. & Boletus, A. (2014). Business and Society: Ethics, Sustainability, and Stakeholder Management 9th Revised edition edition. South-Western College Publishing.
Freeman, E. (2010). Strategic Management: A Stakeholder Approach, Cambridge: Cambridge University Press.
Phillips, R. (2003). Stakeholder Theory and Organizational Ethics. Berrett-Koehler.
