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Stаkеhоldеr Mаnаgеmеnt Rоlе in Vаluе Сrеаtiоn and Соmреtitivе Аdvаntаgе Essay Example

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Stаkеhоldеr Mаnаgеmеnt Rоlе in Vаluе Сrеаtiоn and Соmреtitivе Аdvаntаgе

The rising global market competition has raised a rising trend and need for organisation to create a sustainable competitive edge. In this case, the realisation that tangible assets no longer guarantee market sustainability, organisations have sought for alternative avenues to create value for their customers. As Budde, Felcht and Frankemlle (2005, p.191) described it, value creation as the process through which the offered products deliver more benefits to the customers, both perceived and real at a constant market price. This offers the customers and product users’ value for money spent. As Waligo, Clarke and Hawkins (2014, p.1343) argued, one of the strategic avenues develop to create this desired value and enhance a sustainable market competitiveness is the use of stakeholders management. This is the inverse and a contrast to the traditional process of suing the shareholder management approach. As such, unlike the traditional shareholders management approach that focused on maximising investment returns for the shareholders at the expense of the others in the market the stakeholders’ management approach seeks to ensure comprehensive stakeholders satisfaction in an organisational market setting. This essay evaluates how the adoption of the stakeholders’ management role promotes an organisational value creation and competitiveness in the long run period.

The process of using the stakeholders’ management role in creating value and competitiveness starts with the stakeholders’ analysis process. In this case, Bryson (2004, p.26) noted that in order to promote and facilitate an organisational application of the stakeholders management approach, a stakeholders analysis process is imperative. This is the process through which the stakeholders, both internal and external are reviewed and profiled based on their interest in an organisational operations and their influence power respectively. On one hand, organisations list the stakeholders with the greatest power and interest as the most sensitive. In this case, this realisation supports the formulation of organisational strategies (Currie, Seaton and Wesley, 2009, p.44).

First, the stakeholders’ analysis process results impacts on the governance systems in an organisation. In this case, it ensures that the most powerful and interested stakeholders form the key component of the governance boards. As such, this implies that the powerful and interested groups are the key components of the organisational strategic decision making body (Huxham and Vangen, 2013, p.17). This process has two impacts. On one hand it enables the formulation of organisational strategies and decisions that are customer and stakeholders oriented. For instance, in the determination of the pricing strategy, rather than focusing on the shareholders sole need to maximise returns on investment, the stakeholders’ representatives consider the plight of their groups, allowing for an effective and balanced focused pricing strategy, similar to all other strategies (Harrison and Wicks, 2013, p.102). This has the subsequent result of creating value for the customers and as such developing a positive market image and a strong positive brand equity value. As Kim et al (2012, p.1612) established, the modern highly competitive and dynamic global market relies on the use of an organisational brand equity to create a sustainable competitiveness. Hence, through such value creation, devised form stakeholders involvement in decision making, organisations increase their market positioning and competitiveness (Waligo, Clarke and Hawkins, 2014, p.1343).

On the other hand, the use of the highly powerful and interested stakeholders in strategic decision making creates a stakeholders ownership of the decisions perception (Kerzner, 2013, p.34). As such, there is minimal resistance to an organisational operations and decisions among its stakeholders (Trahms, Ndofor and Sirmon, 2013, p.1279). For instance, if the employee union is involved in the determination of the employee rewards and remunerations, it is less likely that events such as strikes and resistance would curb such ventures. James (2016, p.495) stated, stakeholders resistances a major challenge in creating value in the market. In this case the study described the situation as a strategic bankruptcy. This is because; an organisational value has its perceived element, besides the real value elements. Hence, if the stakeholders have a negative perception on the venture operations, it implies that the perceived value element is lost, leading to a low customer value delivery in the market. Therefore, this indicates that the use if the stakeholders inclusion in decision making enables organisations increase the perceived value as well as creating a sustainable market competitive edge.

The second value creation aspect in stakeholders’ management is the offered diversity. In this case, Dezso and Ross (2012, p.1073) developed a study evaluation the role of boards diversity. The study established that organisations with boards diversity had better governance systems, that those which lacked such diversity. Diversity under the stakeholders’ management approach occurs when different stakeholder segments are represented in the boards of governance. As such, each has its unique perceptive and interests. Although there are initial challenges in the diverse boards’ norming stages, the performing stage allows the boards to create multi-perspective decisions, touching on all the stakeholders’ interests (Kirton and Greene, 2015, p.54). Through this diversity and representation, the customers’ confidence and trust in an organisational operation is developed. Trust occurs when the customers feel that they needs and wants have a chance of being addressed through the presence of key group representatives. The element of trust was construed Nguyen, Leclerc and LeBlanc (2013, p.96) as a key component for the long term market competitiveness. As such, as supported by Martinez and Bosque (2013, p.91), the authors argued that competitiveness in the long run will be achieved through increased customer loyalty and satisfaction, elements of which their trust in a corporations operations plays a foundational role.

One of the key leading organisations in the use of the stakeholders’ management model in order to create customers value and enhance market competitiveness is the LEGO Group Company, a global leader in the manufacturing of baby toys. In this case, the organisation established the LEGO Group institute. The institute provides a platform and avenue through which the organisation engages other institutions on child learning. In this case, through a structured dialogue process, the children learning institutions represent a key powerful stakeholders section (Jolibert et al, 2012, p.15). The stakeholders are powerful in that they are the opinion leaders on the toys and tools that are relevant in supporting children learning. Moreover, they have a high interest in the manufactured toys to ensure that they meet and deliver on the expected children learning process. Therefore, this analysis argues that through the children learning institutions involvement, the venue expands its decision making perspectives and scope. As such, this creates a more informed and quality toys manufacturing, as well as increased customers confidence and trust on the effectiveness of the manufactured toys.


Bryson, J. M. 2004, “What to do when stakeholders matter: stakeholder identification and analysis techniques”, Public management review, vol. 6, no.1, pp. 21-53.

Budde, F., Felcht, U.-H., & Frankemlle, H. 2005, Value Creation: Strategies for the Chemical Industry, Wiley-VCH, Weinheim

Currie, R. R., Seaton, S., & Wesley, F. 2009, “Determining stakeholders for feasibility analysis”, Annals of Tourism Research, vol. 36, no.1, pp. 41-63.

Dezsö, C. L., & Ross, D. G. 2012 “Does female representation in top management improve firm performance? A panel data investigation”, Strategic Management Journal, vol. 33, no. 9, pp. 1072-1089.

Harrison, J. S., & Wicks, A. C. 2013, “Stakeholder theory, value, and firm performance”, Business ethics quarterly, vol. 23, no. 01, pp. 97-124.

Huxham, C., & Vangen, S. 2013, Managing to collaborate: The theory and practice of collaborative advantage, Routledge, New York

James, S. D. 2016, “Strategic bankruptcy: A stakeholder management perspective”, Journal of Business Research, vol. 69, no. 2, pp. 492-499.

Jolibert, A., Muhlbacher, H., Flores, L., Dubois, & P.-L. 2012, Marketing management: A value-creation process, Palgrave Macmillan, Basingstoke

Kerzner, H. R. 2013, Project management: a systems approach to planning, scheduling, and controlling, John Wiley & Sons, London.

Kim, K. H., Jeon, B. J., Jung, H. S., Lu, W., & Jones, J. 2012, “ Effective employment brand equity through sustainable competitive advantage, marketing strategy, and corporate image”, Journal of Business Research, vol. 65, no.11, pp. 1612-1617.

Kirton, G., & Greene, A. M. 2015, The dynamics of managing diversity: A critical approach, Routledge, London.

Waligo, V. M., Clarke, J., & Hawkins, R. 2014, “The ‘leadership–stakeholder involvement capacity’nexus in stakeholder management”, Journal of Business Research, vol. 67, no. 7, pp. 1342-1352.

Martínez, P., & del Bosque, I. R. 2013, “CSR and customer loyalty: The roles of trust, customer identification with the company and satisfaction”, International Journal of Hospitality Management, vol. 35, pp. 89-99.

Nguyen, N., Leclerc, A., & LeBlanc, G. 2013, “The mediating role of customer trust on customer loyalty”, Journal of service science and management, vol. 6, no. 1, p. 96.

Trahms, C. A., Ndofor, H. A., & Sirmon, D. G. 2013, “Organizational decline and turnaround a review and agenda for future research”, Journal of Management, vol. 39, no. 5, pp. 1277-1307.

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