Business Stakeholders & Mendelow’s Power-Interest Matrix

25 question-and-answer flashcards covering stakeholder categories, expectations, conflicts, and the Mendelow power-interest matrix, aligned with the lecture transcript.

Who are considered "stakeholders" in a business context?

All individuals or groups that are interested in, influenced by, or able to influence the activities of the business.

What distinguishes INTERNAL stakeholders from other stakeholder types?

They work inside the organization and can strongly influence how the business is run (e.g., employees, managers/directors).

Give two examples of INTERNAL stakeholders.

Employees and managers/directors.

Why are managers/directors separated from employees when listing stakeholders?

Although they are employees, they hold greater power and decision-making authority, so their needs (status, bonus, pay) differ and carry more weight.

What is the primary expectation of EMPLOYEES as stakeholders?

Fair pay, good working conditions, and job security.

Define CONNECTED stakeholders.

Parties outside the organization that have a direct transactional or investment relationship with the business (e.g., shareholders, customers, suppliers, finance providers).

Why are SHAREHOLDERS categorized as CONNECTED stakeholders?

They invest capital, become part-owners, and expect dividends, capital growth, and business continuity.

State two main expectations of CUSTOMERS as stakeholders.

Product satisfaction and required features/quality.

What do SUPPLIERS mainly expect from a business?

Prompt payment according to agreed credit terms.

Who are FINANCE PROVIDERS and what is their core expectation?

Banks or corporations that lend money; they expect repayment with interest and adherence to any security agreements.

Define EXTERNAL stakeholders.

Groups with no direct transactional link who can influence or be influenced by the organization (e.g., local community, environment, government, trade unions).

Name one positive and one negative impact a factory might have on the LOCAL COMMUNITY.

Positive: more jobs & higher purchasing power. Negative: increased pollution (air, water, noise).

Who are PRESSURE GROUPS in the stakeholder context?

Non-governmental organizations that push firms to act ethically, especially regarding environmental practices.

Why is GOVERNMENT treated as an EXTERNAL, not CONNECTED, stakeholder?

It has no direct contractual dealings or investment; it only collects taxes and enforces laws.

What is the difference between PRIMARY and SECONDARY stakeholders?

Primary stakeholders have contractual relationships with the firm (employees, directors, shareholders); secondary stakeholders do not (most externals).

Provide an example of a STAKEHOLDER CONFLICT between employees and managers.

Employees want higher wages and better conditions, whereas managers seek to minimize costs to maximize their bonuses.

Explain a conflict between CUSTOMERS and SHAREHOLDERS.

Customers want durable, high-quality goods, while shareholders may prefer cost-cutting to raise profits, possibly lowering quality.

What is the purpose of Mendelow’s Power-Interest Matrix?

To prioritize stakeholders by plotting their level of power and interest, guiding managers on whose needs to satisfy first.

Which two axes are used in Mendelow’s Matrix?

Level of Power (vertical) and Level of Interest (horizontal).

How should KEY PLAYERS (high power, high interest) be managed according to Mendelow?

Closely engage and satisfy their needs; their views are dominant in decisions.

What strategy is suggested for stakeholders with HIGH INTEREST but LOW POWER?

Keep them informed of developments.

How are LOW POWER–LOW INTEREST stakeholders treated in the matrix?

With minimal effort—monitor but do not invest significant resources.

In a redundancy scenario where employees are NOT unionized, which quadrant might they fall into?

High interest, low power → “Keep informed.”

When only three major shareholders control most shares, how are they classified in the matrix?

High power, high interest → “Key players.”

If a local community is mildly concerned but has legal leverage, which Mendelow strategy applies?

Low interest, high power → “Keep satisfied.”