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ACCA Strategic Professional · Strategic Business Leader · Stakeholder analysis and organisational social responsibility

Brightwater Bank is launching a new lending product. Its largest institutional shareholder holds 18% of the shares and has previously shown little interest in operational matters, but could vote against the board at the annual general meeting. Under Mendelow's matrix, how should the shareholder be classified and treated?

The shareholder is high power and low interest, so Mendelow's matrix calls for a keep satisfied approach. It can influence the board through its voting rights but shows little concern with operations, so the bank should reassure it and monitor whether its interest rises.

  1. AHigh power, low interest: keep satisfiedCorrect
  2. BHigh power, high interest: manage closely
  3. CLow power, high interest: keep informed
  4. DLow power, low interest: minimal effort

Explanation

The shareholder's voting rights give it high power, while its past behaviour shows low interest in operations. That is the keep satisfied quadrant. The risk is that a change in interest, such as a controversy over the product, would move it to manage closely, so management should monitor this.

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