Stakeholders who are affected by the production and marketing of poor quality products include:

Looking at net profits while neglecting the quality of goods and services, resources and management can be detrimental to your business. Many entrepreneurs who fail to focus on quality find themselves closing shop.

Poor-quality products and services have a negative impact on customers. Such products and services can cause a business to lose customers faster than they can gain new ones. In a customer driven market, meeting customer expectations and needs is vital to maintaining and improving market share. Superior quality products and services bear a positive effect on market share. Satisfied customers will continue to patronize your products and can even recommend them to other prospective customers.

Your employees can make or break your business. Having an efficient and highly trained workforce that is ready to serve you and your customers is vital to business success. Quality personnel can pull in more customers, produce more products and work more efficiently. Keeping your employees satisfied, trained and motivated can produce favorable effects such as cost savings and sales increases. Employees who lack training and do not meet quality standards are a big disadvantage to operational efficiency. They can create dissatisfied customers and project a negative company image.

The quality of management a company utilizes to plan, direct and control its resources has a direct impact on its operation. Competent managers can run a business more efficiently than managers who fall below standards. Applying a quality-management system ensures that customer's requirements as well as operational efficiency is achieved. Operational efficiency results in savings in expenses, while customer satisfaction leads to increase in sales. An effective management team can instill excellence for the overall success of the business.

Lack of quality in human, financial, physical and knowledge factors needed to perform business processes results in an unfavorable effect on a company's profitability. A loss of market share and a diminishing customer base results in a decrease in sales and an increase in marketing expense. An inefficient workforce translates into low productivity and leads to higher operating or production cost. Lack of quality management can delay or impede progress and cost the company more time and resources to accomplish its goals. The opposite effect can be attained by developing business practices that instill quality in all levels of activity.

Find the appropriate balance of competing claims by various groups of stakeholders."

- Warren G. Bennis

All businesses have a variety of stakeholders. As a result, it is important to understand how the organisation impacts stakeholders and how stakeholders may impact the organisation. This can be understood through stakeholder analysis. Let's take a look.

Stakeholder Definition

Stakeholders are parties that have an interest in the organisation. These parties can be either affected by or affect the organisation. The group of stakeholders generally include employees, owners, governments, customers, investors and suppliers communities

Stakeholders do not all have the same interest, therefore it is important to understand each of them individually.

Customers' interests may be to buy good quality products at affordable prices. While the interest of employees is to get a higher salary and sustain their employment.

There are two main types of stakeholders which are either internal or external. It is important to understand each of the stakeholder groups to be aware of their interests and the effect they may have on the organisation.

Internal stakeholders

Internal stakeholders are those who have a direct relationship with the company. As they are a party working inside the organisation or are the company executives. Their key role is to perform in the organisation effectively so that the company or a project gains value. The internal stakeholders' interests are usually to gain benefits from the project or a company.

Employees - The main interest comes from employment income, security and safety. These stakeholders affect the company or a project through their quality of work.

Owners - The main interest of this stakeholder party is to reach the organizational goals most effectively and efficiently and maximise the company's profits. Executives affect the company or a project in regards to how well they're managing the company or a project.

External stakeholders

External stakeholders do not work with the company directly but are affected or have an effect on the organisation or a project. These stakeholders are interested in the company or a project.

Governments - These stakeholders' best interest is to collect taxes and benefit from the increased GDP. Governments can affect the company by implementing new regulations and imposing taxes on products or services that the company produces.

Customers - The main interest for customers is to buy the best quality product or service at the lowest price. If customers are satisfied with the service they might have a positive impact on the company by leaving a positive review, for example. On the other hand, negative reviews can damage a company's reputation.

Investors - Investors are interested in a company or a project that can grow and bring more value in the future. Investors have an impact on the company as their investments can give the company more finances to grow.

Suppliers - This external stakeholder party is crucial to the company as they supply products or essential parts that the company needs. They have the interest to gain profit from the company by supplying goods. They can positively impact the company if they supply resources of good quality and affordable price. On the other hand, if organizations if suppliers produce goods at a bad quality and high price it can have a negative impact on the company.

Communities - This party is interested in the organization that creates employment, community spirit does not pollute the environment. Communities can have a positive effect on the organization if they positively talk about the business. However, if this stakeholder party does the opposite it may damage the company's image.

Stakeholder analysis is an important aspect a company should undertake before the beginning of any project as it helps to understand stakeholders. This analysis is often used in project management. The stakeholders are grouping them based on their levels, participation, interest and influence on the project. This analysis is usually presented in the stakeholder's analysis matrix.

Why is stakeholder analysis important?

Stakeholders usually have different needs which might overlap or contradict one another. Stakeholder analysis helps managers identify and manage potential conflicts of interest to make the best decisions. They group stakeholders according to the level of influence (power) and interest using analysis matrices.

What is a stakeholder matrix example?

The stakeholder matrix is the representation of stakeholders analysis in the visual format (see Figure 1 below). This matrix allocates stakeholders in terms of their level of power and interest that they have in the organization or a project. These assist business managers to be aware of the level of importance of each stakeholder group.

This is the example:

The stakeholder matrix will assist the business managers in deciding to which stakeholders they should invest the most time and effort. Organizations should put the most time and effort into the stakeholders who have high power and interest (also called key players) in the organization or a project. For instance, this can include managers ensuring that all main stakeholders such as customers needs are met and that they are satisfied with the project or the organization.

What is the stakeholder management process?

The stakeholder management process (see Figure 2 below) is aimed to improve the organization's relationships with stakeholders. As well as organize, monitor and manage stakeholders in an effective way.

The stakeholder management process follows five steps. Which are:

At this step, the stakeholders that have an interest in the company or a particular project are identified. Stakeholders can be internal and external, they can have positive or negative interest in the company or a project. Additionally, its crucial to identify each stakeholder's needs and expectations in regards to a company or a project.

2. Analysis

At this stage, the stakeholders are analyzed in great detail. The analysis may include:

• How stakeholders point of interest aligns with organizational goals

• Their power and level of interest in the organization or a project

• Stakeholders expectations and needs of the company or its project

• How stakeholders will positively impact a company or a project.

• How the project or a company will meet stakeholders needs and expectations

At this stage business managers should plan how to effectively manage and engage with the stakeholders so that they add value to the project or a company and fulfill their expectations.

4. Engage

To get the most value from the stakeholders business managers should keep them engaged throughout the project. This can be done by motivating them by stating how the outcomes of the project successfully will fulfill stakeholders' needs and expectations. Additionally, trust between stakeholders and the organization must be built to get the most value from the stakeholders.

5. Monitor

During the execution stage, stakeholders' engagement and level of participation in the project or organization should be monitored. This way business managers will be aware if stakeholders need additional assistance. As well as if stakeholders are on target reaching set goals.

Stakeholder - Key takeaways

• Stakeholders are a party that has an interest in the organization or its project. Stakeholders can either have an effect or are affected by the organization or a specific project.
• Two types of stakeholders include 1) internal: employees and owners. 2) External: Governments, customers, investors, suppliers and communities.
• In business, the key stakeholders usually involve: governments, customers, employees, investors, suppliers, communities.
• The stakeholder analysis is important for the company and to begging of any project. As the analysis can communicate the level of power and interest of stakeholders. This will help managers to adjust the plan on which stakeholders they should put the most time and effort towards.
• The stakeholder matrix example is the visual presentation of stakeholders analysis. The matrix includes stakeholders' level of power and interest in the company or a project.
• There are five phases of the stakeholder management process. They are identified as 1) Identity 2) Analysis 3) Plan 4) Engage 5) Monitor.

A company understand the needs of stakeholders by performing stakeholders analysis before the beginning of the project.

Stakeholders usually have different needs which might overlap or contradict one another. Stakeholder analysis helps managers identify and manage potential conflicts of interest to make the best decisions. They group stakeholders according to the level of influence (power) and interest using analysis matrices. 

To get the most value from the stakeholders business managers should keep them engaged throughout the project. This can be done by motivating them by stating how the outcomes of the project successfully will fulfill stakeholders' needs and expectations. Additionally, trust between stakeholders and the organization must be built to get the most value from the stakeholders. 

Two types of stakeholders include 1) internal: employees and owners. 2) External: Governments, customers, investors, suppliers and communities.

There are five phases of the stakeholder management process. They are identified as 1) Identity 2) Analysis 3) Plan 4) Engage 5) Monitor.

Question

What are the stakeholders?

Answer

Stakeholders are parties that have an interest in the company. This party can be either affected or affect the organisation.

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Why is it important to understand each stakeholder?

Answer

 It is crucial to understand each stakeholder individually. Because each stakeholder has different interests, expectations and involvement in the organisation. Therefore, by understanding each stakeholder organisations can adjust their management process and the level of time and effort they invest in each stakeholder.

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What are the types of stakeholders?

Answer

Two types of stakeholders include 1) internal: employees and owners. 2) External: Governments, customers, investors, suppliers and communities.

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What are the key differences between external and internal stakeholders?

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The key differences between these two stakeholder types are that internal stakeholders are directly involved in the organisation or its project. While the external stakeholders are outside of the organisation but are affected or have an effect on the organisation or a project. As well as have some level of interest in the company.

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 What effect do governments have on the organisation or a project?

Answer

Governments can have a significant impact on the organisation as they have the power to set rules and regulations. For example, governments can set a high tax on products that the company produces which results in the spending more of the company's budget.

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 What is the stakeholder analysis?

Answer

Stakeholder analysis examines and groups stakeholders based on their key features. That includes stakeholders levels of participation, interest and influence they have on the project or a company.

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In what format the stakeholder analysis is presented best?

Answer

The stakeholder analysis can be presented best in the stakeholder’s matrix that groups each stakeholder based on their levels of power and interest they have in the company or a project.

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 Why stakeholder analysis is important?

Answer

The stakeholder analysis is important because it helps to identify stakeholders needs and adjust the management process to get the most value out of them. The analysis presented in the matrix will help business managers to determine to what stakeholders they should allocate the most time and resources.

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How are the most important stakeholders named on the stakeholder matrix?

Answer

On the matrix grid, the key stakeholders are identified as the ones who have a lot of power and interest in the company or a project. They are called Players.

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What is the stakeholder management process?

Answer

The stakeholder management process is the step by step guidance that aims to improve the organisation’s relationships with Stakeholders. As well as organise, monitor and manage stakeholders in an effective way.

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What are the key steps of the stakeholder management process?

Answer

 There are five key steps of the stakeholder management process. identified as 1) Identity 2) Analyse 3) Plan 4) Engage 5) Monitor. 

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What is the role of the step called ‘Engage’ in the stakeholder’s management process?

Answer

The key role of the ‘Engage’ step is to get the most value from the stakeholders by keeping them engaged throughout the project. This can be done by communicating to stakeholders how the outcomes of the successful project will fulfil their expectations.

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Which of these are internal stakeholder?

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Which of these are internal stakeholders?

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Internal stakeholders do not work with the company directly but are affected or have an effect on the organisation or a project. 

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They have a direct relationship with the company. As they are a party working inside the organisation or are the company executives. Who are they?

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Which of these are external stakeholders?

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Which of these are external stakeholders?

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Which of these are external stakeholders?

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What is the first step of the stakeholder management process?

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What is the last step of the stakeholder management process?

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This external stakeholder party is crucial to the company as they supply products or essential parts that the company needs. Who is it?

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This party is interested in the organization that creates employment, community spirit does not pollute the environment. Who is it?

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The main interest for this party is to buy the best quality product or service at the lowest price. Who is it?

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This stakeholder's best interest is to collect taxes and benefit from the increased GDP. Who is it?

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The main interest of this stakeholder party is to reach the organizational goals most effectively and efficiently and maximise the company's profits. Who it is?

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Stakeholder analysis helps managers identify and manage potential conflicts of interest to make the best ___.

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This stakeholder is interested in a company or a project that can grow and bring more value in the future. Who is it?

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