The Role of Stakeholders in Strategic Management: Essay Sample

Published: 2022-04-04 17:24:14
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Any commercial organization, company, or corporation always strives for profit. The essence of modern commerce and economic relations is based on constant self-development and the search for new markets and customers. These factors play a key role in forming strategies and methods for promoting companies in the global market. However, successful business campaigns are impossible without strategic management and far-sighted people who can predict future trends. At the same time, the role of stakeholders is also invaluable because it is the foundation of modern business. Here are the key aspects of modern commercial processes which can clearly show all parties' global roles and influences.

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What Is Strategic Management (SM) and Why Is It So Crucial?

To understand how business processes flow, you should start with basic terminology. So, strategic management is the field of management aimed at forming long-term goals and prospects in the context of any company, fund, or alliance. The main strategy is to choose the right approach and set of commercial tools to implement the right strategic patterns to boost profits.

The fact is that SM is a set of long-term activities that are extremely important for large companies and market players who want to influence the entire industry for many years to come. With the right strategy and tools to implement it, a company can also stand out from the crowd (thanks to its stakeholders).

Who Are Stakeholders (Special-Interest Groups)?

To begin with, you need to understand the basic terminology and determine which people are behind the control of companies and why they have the authority to dictate their terms (in certain situations). The fact is that a stakeholder is involved in companies' assets and is an integral part of commercial processes.

Internal and external stakeholders

In other words, some people or groups directly affect companies' functioning and have a stake in the business. As a rule, people with a vested interest can influence certain strategic decisions, influence commercial processes, and determine the direction of companies' development. In a way, these are "persons who have certain roles in projects."

What People or Companies Can Be In the Stakeholders Circle?

Let's take a closer look at the categories of so-called people with a personal interest, as this knowledge is critical to understanding their role in organizations. The fact is that the list of people with a vested interest can be very long. However, the basic list without a detailed description can be reduced to eight points. These are the special-interest groups that are directly involved in certain commercial processes and can influence the global strategy of organizations.

  • Shareholders;
  • investors;
  • creditors;
  • managers;
  • owners;
  • communities;
  • government;
  • financiers.

This list is ideal for understanding how many threads you can pull to change the global strategy of any company. So the people with a vested interest are directly interested in the progress and prosperity of organizations and are ready to influence certain business processes and decision-making. Without their participation, the activities of many groups do not make sense.

The Roles of People With a Vested Interest in Business Processes

Project Management

Most companies provide goods or services to the global market in one way or another. People with a vested interest can directly or indirectly influence which goods, products, and infrastructure are important to the end-user. In addition, individuals or groups associated with the company may also oversee the business processes necessary to promote new projects and conclude important transactions for the company's growth. The fact is that the overall growth vector of organizations is of paramount importance. Without stable profits and prospects, further progress is impossible. That is why people with a vested interest strive to oversee important areas of activity for the project to be profitable.

Project Portfolio Management

As a rule, the portfolio's key role in forming and managing belongs to the owners, top managers, and shareholders. At the same time, people with personal interests can also influence the selection of priority business processes, the allocation of assets, the creation or liquidation of new projects, or the delegation of authority. In other words, all activities related to the formation and management of the global portfolio directly or indirectly depend on the people with a vested interest.

Quality Control

This term characterizes a set of activities related to the control of key business processes of organizations. As a rule, key people with a vested interest can influence quality control in the manufacturing of products or the formation of services. This strategy is directly reflected in the high cost of drinks. In addition, such people or organizations can organize audits to analyze the current financial situation and the transparency of business processes.

Also, quality control helps to better understand the company's prospects and the correct choice of the organization's strategic goals. Generally, all control processes are systematized, and people with personal interests have access to reports and key statistics to adjust the overall growth vector of companies.

Managing Risks

Risk control is paramount for any company, as special-interest groups are interested in the profit and prosperity of all commercial processes. That is why they can exercise indirect and direct control over many processes and influence the decisions made if they directly depend on their authority. Determining risks is necessary, as wrong decisions can lead to losses or bankruptcy. As a rule, most organizations provide reports to people with a vested interest and inform them about the current business situation and prospects.

The Role of People With a Vested Interest in Technical Processes

As a rule, SM is not limited to risk management and asset diversification. Sometimes people with a vested interest can also influence certain technical processes, such as requirements for products or services. They also have the right to demand a full description of certain services or suggest restrictions related to markets or product lines.

Many technical aspects are related to the intensity of production or targeting a particular market. These issues are critical and often discussed by most people with personal interest, senior management, and owners. And the final decisions are made by all participants influencing the company's strategy.

Why Can Some People Influence Management Processes?

As you already know, most stakeholders are people or organizations that are investors or partners of certain organizations. When the creation and distribution of products and services depend on them, all important decisions are made collectively. As a rule, all vested interests maximize profits and reduce risks. That is why they do not always control all the business aspects. However, many people with a vested interest have the right to dictate the direction of the company's development, and this is an important detail that you should not forget.

Final Words

Any successful company cannot ignore stakeholders' opinions regarding SM and long-term goals. Depending on the business area and type of organization, the role of people with a personal interest can be quite significant, up to the control of top managers and changing the vector of the company's activities. However, the main goal of such people or organizations is to minimize risks and force majeure.

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The Role of Stakeholders in Strategic Management: Essay Sample. (2022, Apr 04). Retrieved from https://speedypaper.com/essays/the-role-of-stakeholders-in-strategic-management

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