Interacting with Company Stakeholders
Written by Gregory Steffens for Gaebler Ventures
Are you making the most of your company's key stakeholders. Ignore them at your own peril. This is part two of a two-part series of articles addressing each of the most common stakeholders and how to maximize their satisfaction with the company.
In our previous article on company stakeholders, we looked at customers and suppliers.
In this article, we take a look at the rest of a company's key stakeholders.
Key Company Stakeholders
While companies rarely want to satisfy the desires of their competitors, situations exist where competitors cooperate with one another for their mutual benefit.
Of course, the best option for companies to manage their competitors involves outperforming them to the point of their insolvency. Differentiation and cost leadership strategies are successful methods to accomplish this.
However, firms and their competitors can participate in joint ventures, cooperative lobbying efforts, and mergers to benefit both parties. By forming a joint venture to lower research and development costs, competitors can cooperate with one another to increase their market shares versus market leaders.
Moreover, competitors can collectively lobby government officials to change or prevent legislation that could harm their operations and profit margins. Finally, mergers are always an option to increase the two firms' presence in an industry.
For many industries, government laws and regulations play an important role concerning firms' operations. Because of this reality, successful companies will take a proactive approach to changing or preventing changes in current regulations.
They form legal, tax, and government relations departments to focus on any potential legislation that could help or harm their performance. Moreover, direct lobbying, support of political action committees, and campaign contributions to sympathetic politicians are additional ways to legally influence government policies.
Aside from the legal and ethical dilemmas, direct gifts to politicians should not be pursued since any discovery of the act will greatly harm the perception of the company and its brands.
Smaller companies are limited in the amount of influence they can realistically wield. Focusing on local communities and governments offers the best potential for firms to affect these stakeholders.
hey should donate time and money to local charities and community events and be involved in local political issues. By finding an issue that is of particular interest to the community, a firm can capitalize on the sentiments of the people. For example, in Columbia, Missouri, a college town of about 75,000 residents, a grocery store started a campaign called "Shoes that Fit." The goal was to collect children's shoes from the residents and distribute them to underprivileged local youths whose families could not afford properly fitting shoes.
By partnering with local television stations for advertising as well as other businesses, the campaign cost the store relatively little but increased consumers' perceptions of the business. Moreover, more customers visited the store to donate shoes and stayed to do their shopping.
Activist groups can have a powerful effect on consumers and, in turn, the operations and profits of a business. Through negative publicity via the media or advertising, activists can influence customers sympathetic to their causes.
Traditionally, companies have dealt with these groups through public relation efforts that try to deflect or counteract any negative attention. However, a more proactive approach involves consulting with group leaders regarding their particular issues.
Through open communication, firms can attempt to pacify the group's concerns prior to any negative consequences. Even if their requests cannot be met, a compromise may be reached. For instance, if the concern was environmentally related, the company could partner with the activist group to research alternative processes and advancements.
Not only does this avoid a potential problem for the company, but, if the research proves successful, the firm could discover a resource that could be used to create a sustainable competitive advantage.
Gregory Steffens is a talented writer with a strong interest in business strategy and strategic management. He is currently completing his MBA degree, with an emphasis in finance, at the University of Missouri.
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