Stakeholder analysis and organisational social responsibility: formula sheet

Key formulas

Internal stakeholders

Internal = employees, managers, directors

They work within the organisation and are directly affected by its decisions.

Connected stakeholders

Connected = shareholders, lenders, customers, suppliers, distributors

They have a direct economic or contractual link with the organisation.

External stakeholders

External = government, regulators, community, pressure groups, media

No direct contract, but they affect or are affected by the organisation.

Primary vs secondary

Primary = essential to survival; Secondary = affects or is affected, but not essential to survival

Judge this from the scenario. A secondary group can gain power quickly.

Stakeholder claim

Stakeholder → interest/claim → possible conflict → effect on strategy

Use this chain to turn a list of names into an applied answer.

Key players

High power + High interest → manage closely

Involve in decisions, negotiate and seek active support. Example: major investors or a dominant lender in a restructuring.

Keep satisfied

High power + Low interest → keep satisfied

Consult and reassure. Watch for events that could raise their interest and move them to key players.

Keep informed

Low power + High interest → keep informed

Give regular, honest information. They may lobby, campaign or join other groups to gain power.

Minimal effort

Low power + Low interest → minimal effort

Monitor at low cost. Do not ignore them forever, as positions can change.

Mendelow's matrix: high power, high interest

High power + high interest = key players

Manage closely. Involve them in decisions and seek their support.

Mendelow's matrix: high power, low interest

High power + low interest = keep satisfied

Consult enough to avoid them becoming opposed. Watch for rising interest.

Mendelow's matrix: low power, high interest

Low power + high interest = keep informed

Communicate well. They may gain power by joining with others.

Mendelow's matrix: low power, low interest

Low power + low interest = minimal effort

Monitor only. Do not spend scarce management time here.

Engagement ladder

Inform → Consult → Involve → Collaborate → Empower

A general scale of increasing influence. Match the level to the group's position on the matrix.

Triple bottom line

Economic (profit) + Social (people) + Environmental (planet)

Three areas of performance reported together. They are not summed into one number.

Sustainable development definition

Meet needs of the present without compromising the ability of future generations to meet their needs

Use this wording when asked to define sustainability.

Gray, Owen and Adams positions (in broad order)

Pristine capitalist → Expedients → Proprietarians → Social contract → Social ecologists → Socialists → Radical feminists

Moves from shareholder-only focus to wide social and environmental duty. Know the first four well.

CSR versus sustainability

CSR = responsibilities and behaviour; Sustainability = long-term outcome

They overlap but are not the same thing.

Carroll's four layers (base to top)

Economic → Legal → Ethical → Philanthropic

Economic: be profitable. Legal: obey the law. Ethical: be fair and do right. Philanthropic: give voluntarily. Say whether each is required, expected or desired.

Friedman view

Social responsibility = maximise profit within the law and ethical custom

Covers the economic and legal layers. Rooted in agency thinking: managers act for shareholders.

Stakeholder view

Duties are owed to all groups affected by the organisation, not only shareholders

Managers balance competing claims. Links to the ethical and philanthropic layers and to long-term value.

Strategy stance range

Reactive → Accommodating → Proactive

Use to describe how actively the organisation responds to CSR expectations and to recommend a change.

Triple bottom line

People (social) + Planet (environmental) + Profit (economic)

A framework for reporting performance on three dimensions, not a calculation.

Social audit scope

Aims set → performance measured → compared with aims → reported to stakeholders

Use this sequence to describe how a social audit works.

Test of a credible report

Relevant + Balanced + Comparable + Verifiable

A checklist for judging quality. It is a study aid, not a formal standard.

Greenwashing test

Claim made vs evidence and actual practice

A gap between the two signals greenwashing risk.

Quick revision

• Stakeholders are those who affect or are affected by the organisation. Groups include internal, connected and external.
• Mendelow's matrix has two axes: power and interest. The four boxes are minimal effort, keep informed, keep satisfied and key player.
• Stakeholder positions change over time. Re-plot them when events change.
• Conflicts arise when stakeholder aims clash, such as shareholder returns against employee jobs or community impact.
• Engagement can range from informing to consulting to involving, depending on the stakeholder's power and interest.
• CSR is the organisation's responsibility for its impact on society and the environment beyond legal minimums.
• Sustainability means meeting present needs without harming the ability of future generations to meet theirs.
• Carroll's pyramid has four layers: economic, legal, ethical and philanthropic.
• CSR stances range from a minimal, compliance-based view to a proactive, strategic view.
• Social and environmental reports can be voluntary, so scepticism about their reliability and completeness is needed.
• Assurance on such reports adds credibility but may be limited in scope.
• Always end a point with what management should do and why.

Common mistakes

• Listing stakeholders with no link to the case. Fix: Only name groups that appear in the scenario or are clearly affected, and tie each to a fact.
• Putting shareholders in the internal group. Fix: Treat shareholders as connected. They have an economic relationship but do not work within the organisation, unless the case says they are also staff.
• Placing stakeholders without any evidence. Fix: Give a reason from the scenario for both power and interest. One short evidence point per axis is enough.
• Confusing power with interest, such as placing employees as high power just because they care a lot. Fix: Ask separately what the stakeholder can do to affect the organisation, and how much it cares. Care without means to act is high interest, low power.
• Listing stakeholders without saying what they want Fix: Give each group a specific interest taken from the scenario, then link it to a conflict.
• Placing groups on the matrix with no reasoning Fix: Write one sentence on why the group has high or low power and interest, using scenario facts.
• Treating CSR and sustainability as the same thing. Fix: State the difference: CSR is about responsibility and conduct, sustainability is about long-term outcomes and resource use.
• Listing the positions without applying them to the case. Fix: Choose one position, quote case evidence, and explain what it means for the organisation.
• Listing the four layers with textbook definitions and no case facts. Fix: Attach a fact from the scenario to every layer you mention, and say what it means for the organisation.
• Treating philanthropy as the most important layer. Fix: Remember the base comes first. A firm that is unprofitable or breaks the law cannot fix that with donations. Note that philanthropy is voluntary.

Exam tips

• Always tie each stakeholder to a fact in the case. Generic lists earn few marks.
• Say why a group fits a category. A short justification shows judgement and scores professional skills marks.
• Do not stop at classification. Add the claim, the conflict and a recommendation if the requirement allows.
• Look for hidden stakeholders such as regulators, local communities, lenders and the media. Cases often mention them in passing.
• Link this topic to the next step in the same case, such as ranking by power and interest or a governance point.
• Always justify placement with a fact from the case. A bare grid earns few marks.
• Link strategy to the scenario. Say what the company should do, who should do it and why it helps.
• Mention movement between boxes when the case hints at a trigger such as a protest, vote or new law.