Abstract
The Abu Dhabi National Energy Company (TAQA) is the largest energy company in the MENA region which mission is to provide the water desalination and the power generation along with the gas and oil exploration within the region. The company’s stakeholder management can be discussed with references to Freeman’s Stakeholder Theory which focuses on the role of stakeholders in the organisation’s development.
It is necessary to concentrate on TAQA’s primary stakeholders who are shareholders and customers and on the local communities as the company’s significant secondary stakeholder. These stakeholders are associated with different stakeholders’ perspectives. The relations between managers and stakeholders are regulated according to principles of stakeholder management. The purpose of the report is to analyse the stakeholders of TAQA in relation to Freeman’s Stakeholder Theory.
Introduction
The Abu Dhabi National Energy Company (TAQA) is the largest company within the energy industry in the Middle East and North Africa (MENA) region which was founded in 2005. The company is controlled by the government which owns more than 72% of TAQA. The company specialises in power generation and water desalination.
Thus, the company’s basic functions and operations are the oil and gas exploration and their further production (TAQA, 2012). It is necessary to focus on examining the company in relation to its stakeholders. To provide the stakeholder analysis, it is important to refer to Freeman’s Stakeholder Theory according to which the company can be examined as the group of stakeholders which is influenced and can affect the outside participants or stakeholders.
From this point, a stakeholder is the person or a group which can be involved in the process of the company’s development and be affected by this process that is why the organisation should orient in its development to the stakeholders’ interests (Mellahi, Morrell, & Wood, 2010). Thus, the purpose of the report is to determine and explore the stakeholders of the Abu Dhabi National Energy Company in relation to Freeman’s Stakeholder Theory and with references to their perspectives and principles of stakeholder management.
Identification of Stakeholders
Being the largest “owner of power generation and water desalination assets in the United Arab Emirates”, TAQA’s progress depends on many stakeholders who can contribute to the company’s development or be influenced by the organisation’s strategies (TAQA, 2012). TAQA operates not only in the MENA region, the company also has the developed partnership with the companies in the North America and Europe. It is possible to determine ten major stakeholders whose role is significant for the company’s development:
- Shareholders
- Employees
- Customers
- Business partners
- Suppliers and distributors
- Local communities
- Research institutions
- Competitors (the other influential energy companies within the industry)
- Financiers
- Public authorities
Stakeholders can be divided into primary and secondary ones. Primary stakeholders are those ones who can be directly affected by the company’s development along with influencing the organization’s progress with their own activities. Secondary stakeholders are usually indirectly involved in the company’s development because they are not connected with the industry itself (Mellahi, Morrell, & Wood, 2010).
Thus, two TAQA’s primary stakeholders are not only associated with the power generation and energy industry but also with the company’s activities. It is necessary to analyse such TAQA’s primary stakeholders as shareholders and customers. The secondary stakeholder for the analysis is the local communities.
TAQA’s main shareholder is the ADWEA (Abu Dhabi Water and Electricity Authority) with a 51% shareholding, the Farm Owners’ Fund has a 21.1% shareholding, and 27.5% are privately owned.
Thus, the distribution of shareholding is significant for the company’s being the governmentally controlled but independent organisation and the largest energy company within the region (TAQA, 2012). TAQA’s shareholders are primary stakeholders because they control all the spheres of the company’s development within the industry and in relation to the international operations.
It is necessary to note that TAQA’s customers can be analysed not only in relation to the MENA region, but the customers can be also identified in such countries as the USA, the Netherlands, and Canada because of the company’s developed international relations (TAQA, 2012).
The customers play the important role in TAQA’s progress because their needs affect the strategies worked out in the company and annual plans for realising the gas and oil exploration and further provision for the customers. The rates of the company’s growth are directly associated with the customers’ demands that is why customers should be discussed as the primary stakeholders.
Local communities are also affected by TAQA’s activities. The company follows the principle of working together with the community to help to “build a sustainable business that benefits everyone”, and moreover, “this pledge to support economic and social development, and protect the environment is core to the way we behave as a business – whether as an employee, an operator, or a local partner” (TAQA, 2012).
Thus, the issues of the environmental protection and local employment in the region can be discussed with references to TAQA. However, local communities are only the secondary stakeholders because they are external and have no direct economic relations with the company.
Perspectives of Stakeholders
It is important to pay attention to three perspectives of stakeholders. These perspectives are the descriptive, instrumental, and normative ones. According to Freeman, the descriptive perspective is the orientation to the actual roles and functions performed by stakeholders and the company’s managers in relation to stakeholders. The accents are made on the response to the stakeholders’ interests (Mellahi, Morrell, & Wood, 2010).
From this point, the descriptive perspective is characterised for shareholders as the main stakeholders. The company’s strategy and the managers’ actions directly depend on the shareholders’ interest in the company’s development. For instance, the fact of TAQA’s basing on the government as the main shareholder determines the perspectives of the company’s development and business relations within the industry (TAQA, 2012).
The instrumental perspective can be explained as the orientation to the further progress. The accents are made on the managers’ actions to satisfy the stakeholders’ needs and to contribute to gaining more benefits in the future.
According to the instrumental perspective, it is important to maximise the profits and contribute to the company’s success. It is important to concentrate on stakeholders while determining and achieving the goals for the company’s strategic development in relation to the instrumental perspective (Mellahi, Morrell, & Wood, 2010).
That is why, the instrumental perspective should be also discussed with references to shareholders because they are the most influential stakeholders among the mentioned ones. For example, TAQA main shareholders are ADWEA (51.0%), the Financial Support Fund of the Farmers of Abu Dhabi (21.1%), thus, “both shareholders are 100% owned by Abu Dhabi Government” (TAQA Global, 2012).
As a result, it is impossible to ignore the strategies developed by ADWEA for the next year while developing the strategic plan for TAQA, and the activities of the company’s managers are affected by the Abu Dhabi Government’s vision of the industry’s progress. That is why, the interests of TAQA’s shareholders become important from the point of the instrumental perspective.
The normative perspective depends on the definite ethical principles in relations between the managers and stakeholders. Thus, different ethical, philosophical, and moral aspects are also important for regulating the relations between the managers and stakeholders because following the ethical principles, it is possible to build the cooperative and positive relations which result in some positive effects.
On the contrary, the ignorance of the ethical aspects can lead to the difficulties in building the partnership and other kinds of relations within the industry and in the other spheres. According to the normative concept, the company has definite responsibilities in relation to its stakeholders (Mellahi, Morrell, & Wood, 2010). That is why, the normative perspective is directly associated with customers as primary stakeholders and indirectly connected with local communities as secondary stakeholders.
It is important to focus on the company’s relations with customers. It is stated in TAQA’s ethical standards and principles that “we will strive to create mutual advantage by understanding the needs of our customers, contractors, suppliers and other business partners and conducting ourselves honestly, responsibly and fairly, with the highest level of integrity” (TAQA: Code of business ethics manual, n.d.).
Moreover, “no one should take unfair advantage of others through manipulation, concealment, disparagement, abuse of privileged information, misrepresentation of material facts or any other unfair dealing practice” in relation to customers (TAQA: Code of business ethics manual, n.d.). The stated principles are important for developing the productive relations between the company and such stakeholders as customers.
Principles of Stakeholder Management
It was determined that the company has the definite responsibilities in relation to such stakeholders as shareholders, customers, employees, business partners, and local communities. These responsibilities are closely connected with seven principles of stakeholder management. It is possible to pay attention to three principles which can be discussed as influential for TAQA because of its direct orientation to following these principles.
The first principle stresses the role of managers in acknowledging and managing the stakeholders’ interests and in responding to these interests and definite concerns. It is stated in the principle that these interests and concerns should be taken into consideration when managers develop strategies or they are involved in the decision-making process (Mellahi, Morrell, & Wood, 2010).
TAQA follows this principle directly because there are many primary and secondary stakeholders within the industry which affect the company’s development and can be affected significantly by the progress of the largest energy company in the MENA region.
Thus, the company’s operations directly depend on the activities of employees, customers, suppliers, and business partners. The ignorance of any customer, supplier, or partner can lead to breaking the whole chain of the company’s activities. That is why, to provide the effective cooperation, it is necessary to meet stakeholders’ needs and respond to their interests.
The next important principle for TAQA is the third principle. According to this principle, the managers should develop the definite behaviours in relation to the stakeholders’ constituency (Mellahi, Morrell, & Wood, 2010).
From this point, the third principle is connected with the first principle, and there are explanations according to the managers’ behaviours directed toward the stakeholders. For instance, the process of working out the strategies in TAQA and definite management processes for the next year are based on Abu Dhabi Government’s perspectives in relation to the energy industry because TAQA can be discussed the governmentally controlled company (TAQA, 2012).
The seventh principle explains the ways to avoid the conflict between the interests of managers as stakeholders and the necessity to meet the interests of the other company’s stakeholders.
The issues of legal and ethical responsibilities should be resolved with references to such methods as reports, communication, and meetings (Mellahi, Morrell, & Wood, 2010). This principle should be discussed in relation to TAQA because the company has the reputation of the organization in which much attention is paid to building the positive relations between the stakeholders and managers.
For instance, TAQA’s activities are based on satisfying the interests of managers as stakeholders and on providing the open dialogue between the company and such stakeholders as local communities. It is stated in TAQA’s principles, “we are also guided by our responsibility to give back to the communities in which we operate. We primarily do this by generating wealth, creating employment and developing skills in the communities in which we operate” (TAQA, 2012).
Conclusion
The Abu Dhabi National Energy Company known as TAQA develops its policy in relation to stakeholders according to the principles of stakeholder management. As a result, the company succeeds within the industry, meeting the interests and responding to the concerns of all the organization’s stakeholders.
It is possible to determine such primary stakeholders as shareholders (with references to Abu Dhabi Government) and customers and such a secondary significant stakeholder as the local community because the company concentrates on the environmental and communities’ issues, including the communities of all those countries in which TAQA operates.
References
Mellahi, K., Morrell, K., & Wood, G. (2010). The ethical business: Challenges and controversies. UK: Palgrave Macmillan.
TAQA. (2012). Web.
TAQA: Code of business ethics manual. (n.d.). Web.
TAQA Global. (2012). Web.