Stakeholder mapping is the process of identifying the individuals or groups that have a claim to an organization (Freeman 2010, pp. 44-113). Stakeholder mapping is a very important tool in strategy development due to the following reasons. First, it helps in identifying the relevant groups, entities, and people whose interests have to be satisfied by the company. Virtually all strategies that are developed by organizations are meant to satisfy the needs of their stakeholders. Thus, a strategy cannot be developed before the identification of the relevant stakeholders.
Second, stakeholder mapping facilitates an understanding of the perspectives and interests of various stakeholders. Undoubtedly, stakeholders have varied interests that often conflict (Ansoff 2007, pp. 21-56). For instance, customers may want a price reduction to purchase adequate amounts of various goods and services. However, the managers of the selling company may be interested in a price increase to achieve their profit objectives. In this case, an effective marketing strategy can only be developed in the interests of each stakeholder is clearly understood and taken into account.
Third, stakeholder mapping enables managers to understand the importance of various stakeholders. The most important stakeholders are those whose needs and interests have to be fulfilled for the organization to achieve its mandate. Customers are often considered the most important stakeholders in business organizations. As a result, companies often ignore other important stakeholders such as suppliers and employees as they try to satisfy customers’ needs (Simmons 2008, pp. 463-475). This leads to dissatisfaction among employees and suppliers who in turn fail to act in the interest of the company and its customers. Therefore, stakeholder mapping has to be done to facilitate a clear understanding and prioritization of the needs of various stakeholders.
Fourth, stakeholder mapping is an important tool for evaluating the influence that various stakeholders have on the organization and its strategies. Stakeholders have different levels of influence on the organization (Freeman 2010, pp. 81-113).
For instance, the shareholders and managers of companies have great influence due to their authority and ability to determine resource allocation. In this case, an effective strategy can only be developed if the organization can strike a balance between the influence and importance of various stakeholders. For instance, industry regulators are very influential but not very important to businesses. By contrast, customers are very important but lack influence in companies. In this respect, there will be a conflict of expectations that can only be addressed if the relative influence and importance of various stakeholders are taken into account.
Finally, stakeholder mapping is necessary to ensure adequate support during strategy development. It helps managers to identify relevant stakeholders such as employees, the community, and regulators whose support is necessary to develop and implement a strategy (Jahansoozi 2006, pp. 942-955). For instance, employees have to be involved during product strategy development so that they can contribute their knowledge and expertise. The community must also be involved to avoid costly resistance during the strategy implementation stage. In sum, identifying and involving all relevant stakeholders helps in achieving unanimous support for a strategy to avoid failure.
References
Ansoff, H 2007, Strategic Management, Sage, London.
Freeman, R 2010, Strategic Management: A Stakeholder Approach, McGraw-Hill, New York.
Jahansoozi, J 2006, ‘Organization-stakeholder relationship: exploring trust and transparency’, Journal of Management Development, vol. 25. no. 10, pp. 942-955.
Simmons, J 2008, ‘Employee significance within stakeholder-accountable performance management systems’, Total Quality Management Journal, vol. 20. no. 5, pp. 463-475.