ACCA Applied Knowledge · Business and Technology · Stakeholders in business organisations
Harrow plc is a listed retailer. Its institutional shareholders hold 40% of the shares and rarely contact management, but they have previously voted to remove directors when returns fell. Employees are keenly interested in the company's plans but have no formal influence on strategy. Applying Mendelow's matrix, which pairing of stakeholder and recommended strategy is correct?
Institutional shareholders should be kept satisfied and employees kept informed. The shareholders have high power but low day-to-day interest, while the employees have high interest but little formal power, which places them in the keep informed quadrant of Mendelow's matrix.
- AInstitutional shareholders: keep informed; employees: keep satisfied
- BInstitutional shareholders: keep satisfied; employees: keep informedCorrect
- CInstitutional shareholders: manage closely; employees: minimal effort
- DInstitutional shareholders: minimal effort; employees: manage closely
Explanation
Institutional shareholders have high power (they can remove directors) but low interest in day-to-day matters, so they are kept satisfied. Employees have high interest but low power, so they are kept informed. The other pairings reverse the quadrants or misjudge the power or interest level.
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