Stakeholder theory & external & internal analysis

Zaid AL-amir
Professional Sales Representative
OTX Team - Riyadh
1

Structural Agenda through our Project
Strategic Management
Sherif
Fathy
Introduction
The Basis of
stategy :
structure
14th September
2015
Tamer
Harby
Levels ,
formulation
Schools of
strategy
First of October
2015
Zaid
ALamir
Stakeholder
theory
External
and internal
analysis
18th
October
2015
Mahmoud
Moawad
SWOT analysis
Strategy
implementation
29th October
2015

Agenda:
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Internal
stakeholder
External
stakeholder
Stakeholder
theory
External analysis Internal analysis
Part 1
Part 2

Flash points about strategic management :
1- Definition
is some sort of future plan of action, undertaken by senior management include the formulation and
Implementation of the major goals and initiatives taken by a company's top management on behalf of
owners , based on consideration of resources and an assessment of the internal and external
environments in which the organization competes .
Importance of strategic Management
1. To Shape the future of the business.
2. To create an effective strategic idea.
3. Encourage managers and employers to be more innovative and creative.
4. To make better control.

Objectives for this session:
By the end of this session, you should be able to
describe:
1- A definition of ‘stakeholders’ for your organisation
2- you be able to differentiate between Internal and
External stakeholder
3-also you be able to differentiate between Macro & Micro
environment in external analysis
4-The PESTEL framework as a tools for analysing the macro-
environment
5- the Importance of Internal Analysis & a value chain as a method
for assessing each activity in the business

Stakeholder theory :
1-What to Know About Stakeholder Theory ??
2- Have you ever wondered why businesses care to
do so much for their consumers?

It’s because of Stakeholder theory!

What is it?
Stakeholder theory is an idea that
businesses should not function only
for financial benefit; they should run
for the benefit of both their owners
and stakeholders.
The idea is that when businesses pay
attention to their stakeholders-
customers, suppliers, employees, and
investors- they will make a larger
overall profit.
Who introduced it?
Edward Freeman
He began work on the Stakeholder
Theory in 1984

Who uses it?
Businesses, organizations, and even the Government! Anyone who values
morals and the relationship between the consumer and corporation.
So what?
The theory is important because it acts as a way to understand
Corporate Social responsibility, or how a business regulates itself.
It promotes the ideology that businesses making a profit are
dependent on behaving honorably and with morals.

Definition :
groups or individuals that have an
interest in the well being of the
company and they are affected by
the goals , operations or activities
of the organization or the
behavior of its members .
1. Stakeholders categorised
into :
 Internal stakeholder .
 External stakeholder.

internal stakeholders
Internal stakeholders (also known as primary
stakeholders) are those within an
organization with an interest in its success
and failure, since they may be rewarded or
punished accordingly. Employees, managers,
corporate leaders, and owners/stockholders
are examples of internal stakeholders.
Example
A manager is an example of an internal
stakeholder. Managers may own shares in the
company, or may receive bonuses or other
perks if the company does well, which is why
they push for success. Conversely, when the
business does poorly, they suffer.

Stakeholder theory
internal stakeholders ( cont. )
1- Entrepreneurs :
Who wish to do their own thing , develop their own
technical , commercial ,ideas , be independent
2- Managers :
Are likely to have a particular interest , and the concern
for , the size and growth of the organization and it is
profitability ,job security , power and prestige ( office size
, type of company car . Number of stuff working for them
3- Non managerial employees :
Normally concerned with improving pay and condition
and ,particularly in the current economic situation
4- Employees :
Are more productive when they have sense of
participation in the decisions affecting them

Stakeholder theory:
External stakeholders
External stakeholders
include shareholders, or stockholders, as well as governmental bodies,
communities, financiers, and customers.
External stakeholders can exercise different types of power over an organization
and try to influence its decisions through applying economic or political pressure.
1- governments
•Seeking finance through taxation and other
means
•2- safety
•3- industrial harmony

External analysis :
Introduction- definition: External
Analysis
there are two parts or level –
Environmental analysis
1- macro environment affecting all
firms
2- the industry analysis of the “near
“ or “micros” environment which is
much more specific

External analysis :
Benefits of external analysis include
1- increasing managerial awareness of
environmental changes
2- increasing understanding of multinational
settings
3- Improving resource allocation decisions
4- Acting as an early warning system

External analysis:
Macro environment :
Macro environment is also known as
General environment and remote
environment. Macro factors are
generally more uncontrollable than micro
environment factors. When the macro
factors become uncontrollable , the
success of company depends upon its
adaptability to the environment.
Tools for analysing the macro-environment
The PESTEL framework

External analysis:
The PESTEL Framework
The PESTEL framework categorises
environmental influences into six main
types:
Political
Economic
Social
Technological
Environmental
Legal

External analysis:
Political Environment
The political environment of a country is
influenced by the political organizations
such as philosophy of political parties,
ideology of government or party in power,
nature and extent of bureaucracy influence
of primary groups etc.
Economic Environment
Economic environment refers to the
aggregate of the nature of economic
system of the country, business cycles,
the socio-economic infrastructure etc.

External analysis:
Social Environment
The social dimension or environment of a nation determines
the value system of
the society which, in turn affects the functioning of the
business. Sociological factors such as costs structure,
customs and conventions, mobility of labor etc. have far-
reaching impact on the business.
technological Environment
The business in a country is greatly
influenced by the technological
development. The technology adopted by
the industries determines the type and
quality of goods and services to be
produced and the type and quality of
plant and equipment to be used.

External analysis:
Legal Environment
Legal environment includes flexibility
and adaptability of law and other legal
rules governing the business. It may
include the exact rulings and decision of
the courts.

External analysis:
Micro Environment
The micro environment is also known as the task
environment and operating environment because
the micro environmental forces have a direct
bearing on the operations of the firm.
a)Suppliers
An important force in the micro
environment of a company is the
suppliers, i.e., those who supply the
inputs like raw materials and components
to the company.
Customer
The major task of a business is to
create and sustain customers. A business
exists
only because of its customers.

External analysis:
Marketing Intermediaries
The marketing intermediaries include
middlemen such as agents and merchants
that help the company find customers or
close sales with them.
financers
The financers are also important
factors of internal environment.
Public
Public can be said as any group that has
an actual or potential interest in or on an
organization’s ability to achieve its
interest. Public include media and
citizens.

Internal analysis:
internal analysis
The internal environment is the environment that has a
direct impact on the business. Here there are some
internal factors which are generally controllable because
the company has control over these factors. It can alter or
modify such factors as its personnel, physical facilities,
and organization and functional means, like marketing, to
suit the environment.

Internal analysis:
Importance of Internal Analysis
To identify strengths to build on and
weaknesses to overcome as they
formulate strategies for competitive
advantages..
Value Chain
A method for assessing strengths and
weaknesses divides the business into a
number of linked of activities that may
each produce value for the customer.
It comprise into
1- primary
2- support activities

Internal analysis:
Some Factors to consider in Assessing a Firm’s Primary
Activities
1-Inbound Logistics:
Location of distribution facilities to
minimize shipping times.
Excellent material and inventory control
systems.
Systems to reduce time to send “returns” to
supplier.
Warehouse layout and designs to increase
efficiency of operations for incoming
materials.

Internal analysis:
Operations:
Efficient plant operations to minimize
costs.
Appropriate level of automation in
manufacturing.
Quality production control systems to
reduce costs and enhance quality.
Efficient plant layout and workflow
design
Outbound Logistics:
Effective shipping processes to provide
quick delivery and minimize damages.
Efficient finished goods warehousing
processes.
Shipping of goods in large lot sizes to
minimize transportation costs.
Quality material handling equipment to
increase order picking.

Internal analysis:
Marketing
Innovative approaches to promotion and advertising.
Selection of most appropriate distribution channels.
Proper identification of customer segment s and needs.
Effective pricing strategies.
SERVICE:
Effective use of procedures to solicit customers
feedback and to act on information.
Quick response to customer needs and emergencies.
Ability to furnish replacement parts and equipment
inventory.
Quality of service personnel and ongoing training.
Appropriate warranty and guarantee policies.

Internal analysis:
ASSESSING A FIRM’S SUPPORT ACTIVITIES
1-Procurement
Refers to the function of purchasing inputs used in the firms value chain, not
the purchased inputs themselves.
2-Technology Development
The array of technologies employed in most firms is very broad, ranging from
technologies used to prepare documents and transport goods to those
embodied in processes and equipment or the product itself.
3- Human Resource
Consist of activities involved in the recruiting, hiring, training, development,
and compensation of all types of the personnel.
4- General Administration
Consists of number of activities, including general management, planning ,
finance, accounting, legal, government affairs, quality management, and
information systems.

summary
1-definition of ‘stakeholder
groups or individuals that have an interest in the well being of the company and they are
affected by the goals , operations or activities of the organization or the behavior of its
members .
2-regarding any company there is a internal & external stakeholder
1. Internal like
2. Managers & employee & owners
External like
1- supplier & government & pressure group
2- in external analysis macro analysis uncontrollable since you are dealing The PESTEL
factors affecting all companies & in micro you can that because have a direct bearing
on the operation
 the Importance of Internal Analysis
To identify strengths to build on and weaknesses to overcome as they formulate
strategies for competitive advantages..

Refrances
• Strategic Management Book by Neil Ritson 13th edition
( BookBoon.com)
Source: Boundless. “Internal Stakeholders.” Boundless Management. Boundless, 21
Jul. 2015. Retrieved 13 Oct. 2015
from https://www.boundless.com/management/textbooks/boundless-management-
textbook/ethics-in-business-13/business-stakeholders-96/internal-stakeholders-451-
7622/

Thank you

Stakeholder theory & external & internal analysis

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