CSR Presentation by Group 3 - Stakeholder theory
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This document presents a theory of stakeholder identification and salience. It defines stakeholders broadly as any group or individual that can affect or is affected by an organization's objectives. It identifies three attributes that determine a stakeholder's salience: power, legitimacy, and urgency. Based on these attributes, stakeholders can be classified into four classes ranging from latent to definitive. The document applies this framework to analyze BP's stakeholders following the 2010 Deepwater Horizon oil spill, including which classes they fell into. It argues BP should have acknowledged responsibility earlier and prioritized the environment and communities over shareholders.
CSR Presentation by Group 3 - Stakeholder theory
- 1. A THEORY OF STAKEHOLDER IDENTIFICATION AND SALIENCE PRESENTED BY: GROUP 3 SEC B ANKIT AGGARWAL GAUTAM MAHESH 13P081 MONIKA KHETAN 13P088 GOPESH NAKRA 13P104 SATYAJIT TRIPATHY 13P109 SUYASH NIGOTIA 13P116 13P063
- 2. Stakeholder Theory Overview This article of Stakeholder theory deals with two prominent concepts: Identifying who the stakeholders are Salience of the various Stakeholder classes and their claims to the organization Who is a Stakeholder? “Any group or individual who can affect or is affected by the achievement of the organization‟s objectives” ~ Freeman
- 3. Stakeholders
- 4. Defining Stakeholders - Broad Vs Narrow View Narrow view Concerned with only the risk factor and includes: Voluntary Stakeholders & Involuntary Stakeholders Broad View Takes into account all those groups who can affect or are affected by the achievement of the organization‟s objectives. who can affect the organization – Influencers who are affected by the organization – Claimants
- 5. Stakeholder Attributes 1. Power A relationship among social actors, in which A can get B to do something which B would not have otherwise done Categorization of power – Coercive, Utilitarian & Normative 2. Legitimacy Socially accepted and expected structures or behavior under a socially constructed system of norms, values, beliefs and LEGITIMACY definitions INDIVIDUAL ORGANIZATIONAL SOCEITAL
- 6. Stakeholder Attributes 3. Urgency Exists when 2 conditions are met – When a relationship or claim is of a time-sensitive nature When it is critical to the stakeholder
- 7. Stakeholder Classes Power Dormant Definitive Urgency Dependen t Demanding Discretionary Legitimac y
- 8. Stakeholder Classes Class 1 - Latent Stakeholders • • • Powe r One Attribute & Low Salience Dormant Managers may choose to do nothing Consists of – Dormant, Legitimacy Urgency Demanding and Deman Discreti onary Discretionary shareholders ding Dormant Stakeholders • Possess power to impose their will but little or no interaction as they lack legitimacy or urgency • Examples – Those who have a loaded gun, those who can spend a lot of money
- 9. Class 1 - Latent Stakeholders (Continued) • • Discretionary Stakeholders Powe Likely to be recipients of corporate r philanthropy Dormant Examples – Beneficiaries of charity, Non-profit organizations Legitimacy such as schools & hospitals Deman Discreti ding onary Urgency • • • Demanding Stakeholders Those with urgent claims but no legitimacy or power Irritants for management but not worth considering Examples – People with unjustified grudges, serial complainers
- 10. Class 2 - Expectant Stakeholders • • • 2 Attributes & Moderate Salience Active rather than Passive Consists of – Dominant, Dependent and Dangerous Stakeholders Dominant Stakeholders Many theories position them as the only stakeholders of an organisation Possess Power + Legitimacy Examples – Board of Directors, Public relations
- 11. Class 2 - Expectant Stakeholders (Continued) Dangerous • Stakeholders Those with powerful and urgent claims and can be coercive and possibly violent Dependent • • Stakeholders Stakeholders who are dependent on other bodies to carry out their will, because they lack the power to enforce their stake Examples – Residents & animals impacted by incidents like Oil Spill, Mining etc.
- 12. Class 3 - Definitive Stakeholders • • • Often dominant stakeholders with an urgent issue Dependent groups with powerful legal support Examples – Democratic legitimacy achieved by a „Dangerous‟ nationalist party by winning national elections
- 13. DYNAMISM in RELATIONS A stakeholder can increase/decrease their salience by acquiring or losing one of the attributes: power, legitimacy or urgency Nonstakeholder Latent Expectant Definitive Example: When SEBI/IRDA receives a complaint, it moves from being a expectant to a definitive stakeholder
- 14. POWER-DYNAMISM MATRIX Stakeholders in groups A & B: Are the easiest to deal with Dynamism Stakeholders in group C: Are important because they are powerful. But low dynamism means their reaction is predictable and expectations can be managed Stakeholders in group D: Are important because thy are powerful. But low dynamism means their reaction is High Low Power Low Fewer Problems (A) Unpredictabl e but Manageable (B) High Powerful but Predictable (C) Greatest Danger or Opportunitie s (D)
- 15. British Petroleum Shareholder-driven company(bottom-line) Attempted to gain higher stock values through higher profits at the expense of safety concerns
- 16. Deepwater Horizon Oil Spill Biggest hit for BP and its public relations that had a direct impact on its share prices • Killed 11 people and injured many others • Date: Environmental Disaster: ignited public antagonism • Most importantly, it was not the first disaster linked to the BP brand. • 20th April, 2010 Place: Gulf of Mexico
- 18. Stakeholders of BP Identified Government(federal and state) Employees(current and the ones killed) Shareholders(majority and minority) Environmentalists Businesses along the coast(Tourism, Seafood) Coastal Residents Customers
- 19. Stakeholders and their Classes for BP Stakeholders Power Government Employees Shareholders Environmentalists Businesses along the coast Coastal Residents Customers * * * - Attributes Legitimacy Urgency * * * * * * * * * * * - Shareholder class Definitive Expectant (Dependent) Expectant (Dominant) Expectant (Dangerous) Expectant (Dependent) Expectant (Dependent) Latent (Discretionary)
- 20. What the company did? Undermined the extent of the damage Denied various claims made by researchers Use of unethical practices No empathy with those affected No consistency between the image it was trying to portray and what it really was!
- 21. What BP should have done? 1. 2. 3. 4. 5. 6. Be more alert to the significance of the company‟s identity in the minds of the public React quickly Be present on the ground to build an emotional connect with those affected Balance legal/economic language with emotional/empathic tones in their public statements Acknowledged the company‟s moral responsibility before dealing with legal liabilities Put the interests of the company‟s shareholders and managers after those of the environment and the communities affected by the spill
- 23. Questions
Editor's Notes
- #2: AnkitIntroduction and that we are going to present an exhaustive example of BP at the end
- #3: AnkitSay that this definition of stakeholder is in layman terms.Some questions answered in the article:Who is a stakeholder? What is at stake?What types of Shareholders exist?The theory explains why managers pay certain kinds of attention to certain stakeholders and why they respond to them the way they do
- #4: AnkitVarious possible shareholders for a company in an eg. Not much time to be spent on this slide
- #5: AnkitExplain Voluntary and Involuntary shareholdersExplain Influencers and claimantsInfluencers: Those who have the power to influence the firm’s behaviour, direction, process and outcomesClaimants: Those who have a legal, moral or presumed claim on the firm but not the ability to influence its functioning
- #6: GautamExplain the three categorizations of power (check from booklet)Explain the three types of legitimacyAdditional points on Power - A party to a relationship has power to the extent it has or can gain access to coercive, utilitarian or normative means, to impose its will in the relationship- Power is transitory – it can be acquired as well as lost
- #7: GautamUrgency - Stakeholder attribute of urgency helps move the model from static to dynamic
- #8: GautamNotin detail
- #9: SatyajitLatent stakeholdersstakeholders & may not even recognize them as stakeholders
- #10: SatyajitDiscretionary stakeholdersNo pressures on managers to engage with this group, but they may choose to do so
- #11: SatyajitExpectant - Seen by mangers as ‘expecting something’ Dominant - Likely to have a formal mechanism in place acknowledging the relationship with the organisation
- #12: SatyajitDangerous Stakeholders Examples – Strikes and Terrorist activities Employee Sabotage or coercive/unlawful tactics used by activists Religious or political terrorists using bombings, shootings
- #13: SuyashDefinitive Stakeholders Possess all three attributesAn expectant stakeholder who gains the relevant missing attributeThose classified as dangerous could gain legitimacy
- #14: Suyash
- #15: Suyash
- #16: GopeshIntroduce the case here
- #17: GopeshDeepwater Horizon was an ultra-deepwater, offshore oil drilling rig[6] owned by Transocean. Built in 2001 in South Korea by Hyundai Heavy Industries,[3] the rig was commissioned by R&B Falcon, which later became part ofTransocean,[8] registered in Majuro, Marshall Islands, and leased to BP from 2001 until September 2013.[9] In September 2009, the rig drilled the deepest oil well in history at a vertical depth of 35,050 ft (10,683 m) and measured depth of 35,055 ft (10,685 m)[10] in the Tiber Oil Field at Keathley Canyon block 102, approximately 250 miles (400 km) southeast of Houston, in 4,132 feet (1,259 m) of water.[11] On 20 April 2010, while drilling at the Macondo Prospect, an explosion on the rig caused by a blowout killed 11 crewmen and ignited a fireball visible from 35 miles (56 km) away.[12] The resulting fire could not be extinguished and, on 22 April 2010, Deepwater Horizon sank, leaving the well gushing at the seabed and causing the largest offshore oil spill in U.S. history.
- #18: Gopesh
- #19: Gopesh1. ResidentsCosts of repair, maintenance & replacement of anything on property damaged by oilCost of cleaning upLoss of enjoyment of their propertyDecline in property prices2.Seafood IndustryFishing in the area is suspended resulting in loss of jobsPrice of seafood to increase3.Tourism Industryhotel industry, the restaurant industry, tour operators and anyone who sells or rents boats or other watercraft are affected by the oil spill4.Employees11 workers lost their lifeWorkers who continue to work are with a company with a lost reputationDeclined value of retirement fund of employees5.Wildlife-affected for a long time6.ShareholdersLoss of reputation resulting in declining stock value
- #20: Monika
- #21: Monika
- #22: MonikaRead the last page of the case for details