executive summary

Stakeholder management has become one of the core processes for the organizations in the current era. The following paper assesses the potential benefits that the companies can attain from stakeholder management and the tools that they can use for stakeholder management, specifically within the food processing industry. The paper also incorporates a stakeholder matrix and communication plan for United Biscuits.

The analysis indicated that effective stakeholder management allows the companies to:

  • Effectively manage risks
  • Develop fruitful long-term relationships
  • Enhance growth and development
  • And improve organizational performance

To attain these benefits, it is necessary for the organizations to have effective communication plan for the stakeholders. For United Biscuits, the key stakeholders include staff, customers, owners, government, regulators, financiers, suppliers, and the community. Hence the company shall ensure that the risk, revenue, CSR and product development information is shared and communicated to the related stakeholders.

1.   introduction

The current global business environment exposes the organizations to a number of threats and opportunities. Along with this, there has been a consistent increase in the interconnectivity between the organizations and their stakeholders. The present day organizations, therefore, are required to effectively manage and the stakeholders in an effective manner. Effective stakeholder management provides the companies with a wide range of benefits, which can ultimately help them in attaining competitive edge over their rivals (Freeman, et al., 2007). The following paper aims at assessing the importance of stakeholder management within the food processing industry. In this case, the United Biscuits, which is a food manufacturing concern in UK, has been chosen as a case organization.

2.   literature review

2.1.       stakeholder theory

Freeman (2007) defined stakeholder the most comprehensive words possible as “any group or individual who can affect or is affected by the achievement of the firm’s objectives.” The role of stakeholders is extremely important for any organization. During the life of any organization, many players come are connected to the organizations and they shall be considered while making any strategic or other decisions – especially in the circumstances of complex nature. This definition of stakeholders led to the development of a model which placed the organization in the center surrounded by a varied group of shareholders. The model further evolved with time, and divided the stakeholders in two different categories to be mapped on the model. Primary and Secondary stakeholders, where primary stakeholders are the groups that can directly impact the organization and secondary stakeholders are those that can indirectly impact the organization by contributing to the relationship between primary stakeholders and the organization (Freeman, et al., 2007). The common examples of primary stakeholders of an organization are shareholders, employees, suppliers, customers, society and financial institutions, while that of secondary stakeholders are law making bodies, competitions, agencies, media, social and other groups etc. The organization take formal steps to identify and map stakeholders in their model and this process is usually referred to as stakeholder mapping (Bourne and Walker, 2005).

This stakeholder mapping process is continuously undertaken by the organization and it involves in identification and capturing all types of simple and complex relationships that can exist between an organization and any other partner (Fassin, 2008). There are various methods of identification of stakeholders, one of the commonly adopted method being identification of shareholders based on management’s perspective on three: power; legitimacy; and urgency (Mitchell, Agle, and Wood, 1997). In order to effectively use the stakeholder theory as an analytical tool in the organizational strategy and decision-making process, it is important to accurately evaluate the nature of relationship and dependencies between organization and its various stakeholders.

The evaluation of lateral relationships between the stakeholders and an organization is essential to accurately develop stakeholder matrix (Frooman, 1999). Various studies conducted on stakeholder theory establish a link of the said theory with social network theory. It can be easily said that a range of various possible relationships and networks exist between diversified groups and organization (Rowley, 1997). Furthermore, it is crucial to consider the change in relationships over time. It is not just the initial assessment of stakeholders relations and its impact on the organization but also the change therein and constant updating (Lamberg et al., 2008). Many scholars also argue that the stakeholders of an organization also have a relationship among themselves. They can also use their personal relationships to improve their placement in the organization’s model of stakeholders. Thus, it can be said that stakeholder relations ships are complex and can intervene with each other in anticipation to improve relative position (Lewrick, Raeside, and Pelsi, 2007).


Stakeholder analysis is a process of identification, evaluation, assessment and placement of stakeholders in the organization’s stakeholders’ model (Mok et al., 2015; Rose, 2013). It is a process of systematic collection of quantitative and qualitative data and then properly analyzing that to identify and classify the stakeholders and their impact on the organization (Rose, 2013).

Stakeholders’ Matrix is one of the most used and valid method for the stakeholders’ analysis as it helps in the appropriate positioning and characterization of stakeholders (Aaltonen et al., 2008; Aaltonen and Kujala, 2010; Aaltonen et al., 2015; Sæbø et al., 2011). There are various types of stakeholders’ matrices based on the stakeholders’ characteristic for the identification and placement of any stakeholder in various organizational setups (Ballejos and Montagna, 2008).  As an example, the power/ interest matrix can also be used to describe and identify main stakeholders based on the power / interest executed for the implementation of any project (Pacagnella Júnior et al., 2015). Using the power / interest matrix can be used effectively to deal with complex and difficult projects. Another type of matrix that can be used by organizations for stakeholder analysis is the stakeholder influence identification matrix (De Schepper et al., 2014). In case of Public Private Partnerships, where the stakeholder relationships are highly complex and complicated to manage, this matrix can contribute to manage the stakeholders. The power / interest / influence (characteristic) matrix approach for stakeholder analysis, however has one major lacking, and that is that this approach cannot identify and evaluate the stakeholders’ attitude towards any project.

To avoid the limitation pertaining to stakeholders’ characteristic based matrix approach, some researched came up with a salience/position matrix to analyze the change in stakeholders’ placement or positioning. This change in placement also leads to a change in their importance and that can also be evaluated with the help of this matrix. In this matrix, the stakeholders are classified and ranked on the degree of salience (low to high degree of salience) and degree of supportiveness (unsupportive or supportive) (Aaltonen et al., 2015).

Both models identified above usually present an empirical overview and that cannot easily resolve the limitations and issues of the key stakeholders (Yang, 2014). Furthermore, it is also presented by various studies that the results obtained from these models are more accurate if the project is less complicated (Pryke et al., 2006).

3.   Critical Analysis, evaluation and examination

3.1.       identification of stakeholders in food processing industry

Any organization has certain levels within it that operate in isolation and in connection to achieve the desired results for the organization. The levels that can be found in a food processing industry are: corporate; strategic business unit; and project. Each level is assigned a different set of duties and interactions as explained below:

  1. The corporate level deals the overall environment including the political, social, economic, technological, environmental and legal aspects that an organization operates in. It also identifies the relationship of business processes and projects with the organization as a whole.
  2. The strategic business unit is usually concerned about a certain department or activity within an organization.
  3. The project level deals with the project specific interactions (Moodley, Smith and Preece, 2008).

This paper will be talking about and evaluate the stakeholder relationships at a corporate level to deal with the stakeholders of the construction industry.

Stakeholders are identified on the basis of relationship and contracts entered with them. Some stakeholders can be easily identified on the basis of their relationships for example employees, owners, government, bankers etc. For the purpose of stakeholder identification on the basis of contracts is the most appropriate method in case of construction industry (Friedman and Miles, 2001). It is a normal business practice for a company to enter into contracts and these contracts and their impact on the organization helps in identification of stakeholder relationships. Contracts entered by an organization can be implicit and explicit, creating the indirect and direct relationships. Explicit contracts are directly entered contracts (with vendors, bankers, suppliers, etc) establishing direct and easily identifiable relationships. Implicit contracts are informal contracts (eg. with government, charities, NGOs, society etc) that are implied and do not establish any direct relationship, however exists with groups that are somehow interested in the organization (Moodley, Smith and Preece, 2008).

For the purpose of this paper, the following table sets down indicative list of the stakeholders for a food processing organization identified on the basis of contract-based stakeholder approach. Stakeholder analysis may not be able to cover the whole list of stakeholder but it helps in identification of groups having immediate stake in the organization.

Explicit Implicit Implicit recognized Unknowns
Equity holders Regulators Community Interest groups
Financiers 1st tier suppliers 2nd tier suppliers 3rd tier suppliers
Partners Staff Government Trade associations
Owners Users/Consumers Local government Overseas regulators
Sponsors   Relevant NGOs Overseas government
    Unions Public

Source: Moodley, Smith and Preece (2008)

After the identification of the stakeholders, the management shall identify and understand the impact of those stakeholders on the organization or the projects that it runs. It is essential for the management shall also consider the avenues available to those stakeholders to communicate with the organization in terms of communicating their needs and grievances. This helps the management to predict the behavior of these stakeholders and the extent to which it can affect the organizational goals and objectives (Moodley, Smith and Preece, 2008).

3.2.       stakeholder matrix for united buscuits

On the basis of the above mentioned identification of the key stakeholders for United Biscuits, the following stakeholder matrix has been developed for the organization:

3.3.       reasons for stakeholder management in food processing industry

uncovering and eliminating the food risks

Previously the risk analysis of the food products and their safety was conducted by professional risk managers and risk assessment bodies. However, the public trust and reliance on them has declined over the recent past, especially in the agri food sector, due to mis happenings, hence United Biscuits can use stakeholder management as a tool of eliminating food risks (Berg, 2004; Dreyer et al., 2008). Many accidents have been reported in the past due to lack of food safety and that has considerably shaken the consumer confidence (de Jonge et al., 2007; Houghton et al., 2008). Many safety policies and standards were designed and implemented on government and institutional levels due to such accidents. For example, the revisions in common safety policy due to the bovine spongiform encephalopathy (BSE) leading to new variant Creutzfeldt–Jakob disease (vCJD) (Reilly, 1999; Jasanoff, 1997; Smith, Young and Gibson, 1999). Moreover, due to technological advancements in the food industry and potential health and safety risks associated with the technology, the public confidence on food safety has further declined (Frewer et al., 2004). Thus, the food industry and the relevant organizations therein are taking many efforts to regain the lost consumer and society confidence. These measures include increasing the transparency of risk analysis procedures and increasing stakeholder intervention in the designing, research and decision-making processes (Houghton et al., 2008; Vos and Wendler, 2006). There is general consensus among the management of the food industry organizations that stakeholder involvement is getting crucial day by day especially for risk identification, analysis, assessment and management processes undertaken by them (Dreyer et al., 2006; De Marchi and Ravetz, 1999;). This, however, is still under progress and successful involvement and participation of stakeholders in any organization’s risk assessment processes has not been evaluated as such (Walls, Rowe and Frewer, 2011).

Another theory that talks about stakeholder in an organization and their impact on the businesses is the stakeholder management theory. This theory considers organization a complex multidimensional network with scattered and varied relationships with a humongous number of interconnected and independent stakeholders. Any organization’s performance depends on the management of this stakeholder network (Zsolnai 2006).

Stakeholder involvement in the risk management will render numerous advantages for United Biscuits. Some of these are listed below:

  1. Increasing stakeholders’ trust level;
  2. Giving stakeholders’ an opportunity to participate in the decisions considering themselves and their future;
  3. Improving the quality of business decisions;
  4. Understanding of the societal and community pressures on the organizations;
  5. Stakeholders developing a sense of involvement in the organization’s decision making process – making them feel involved;
  6. Creating understanding among the stakeholders regarding risk and opportunity management and creating a shared sense of managing risk (Walls, Rowe and Frewer, 2011).

It is very important for the management of the United biscuits to ensure that they effectively involve the The overall stakeholder approach is based on the premise that the stakeholders are not rational when considering and analyzing risks. They are more influenced by the cultural insights and societal pressures. Thus, every person has their individual idea about risk and that idea plays an important role in their assessments and thus the overall objectivity of the risk assessment and analysis may be impaired (Shepherd, 2008).

Eventually, it has been concluded that there is no specific method for risk analysis and assessment and it is totally dependent on the values, beliefs and ideologies of the individuals undertaking the risk assessment. Although the risk managers and analysts have become more educated and resourceful in terms of technology and information regarding their job majority are still affected by their cultural and ideological explanations regarding risk (Barnes, 2002).  Thus, it can be easily said that most of the companies, although highly developed in risk assessment, may leave some significant institutional “blind spots” while identifying, assessing and managing risks (Loosemore, 2010).

relationship building with influencers

In the growing and globally competitive current day business environment businesses are highly focused about building the trust of key stakeholders. As these stakeholders can influence any business and its performance in the short and long term (Huber, Scharioth and Pallas, 2004). Usually, organizations that are gaining financial strength are ignorant of the stakeholders like employees, environment and society. This attitude of organizations towards their key stakeholders may benefit them in the short term but considering a longer time duration these gains usually club into losses and permanent damage to the relationships and brand image. By ensuring effective levels of stakeholder management, United Biscuits can develop fruitful long term relationships.

The organization needs to assess the stakeholders on the basis of two key variables or potentials; potential to threaten and potential to co-operate. These reflect the potential of any stakeholder to co-operate with the organization to achieve its objectives of the potential to issue a threat and challenge the organization. In order to manage these stakeholders, organizations can adopt reactive, proactive, defensive or accommodative approaches depending on the potential of these stakeholders (Lim, Ahn and Lee, 2005).

Thus, in order to determine the stakeholder management strategies, the organization needs to first analyze the extent of stakeholder’s potential for threat and potential for cooperation. Various, stakeholder management practices undertaken by the organizations include leading, educating, monitoring, defending, collaborating and involving (Lim, Ahn and Lee, 2005). Various institutes and research bodies are working on developing a list of critical aspects of stakeholder management. Yilmaz and Gunel (2008) identified and listed the following major principles of stakeholder management:

  1. Identification of stakeholders’ interests – use those interests for the decision making;
  2. Communication between the stakeholder and organization – to provide a sense of stakeholder engagement;
  3. Accepting the fact that different stakeholder relationships exist – direct and indirect, formal and informal, implicit and explicit, etc. The organizations have to understand and respect all the relationships and give them their due rights;
  4. Balance the risks and rewards associated to each stakeholder – fair distribution of rewards, balancing risks appropriately and equal distribution of benefits;
  5. The need to communicate and co-operate with public and communities as well as private entities to reduce risks associated with the organization;
  6. Respecting the human rights – reducing the impact on human rights by organizational practices in the present and future; and
  7. A need for the managers to identify and manage conflict of interest – proper stakeholder management without selfish motives to increase the trust on organization (Yilmaz and Gunel, 2008).

attaining different perspectives on organizational success

As discussed earlier too, the past decade has shown a general trend of involving external stakeholders in business and organizational decision making. This stakeholder engagement has rendered positive results for the organization and thus has become popular over the past few years (Kettl, 2015). One of the key benefits that United Biscuits can attain in this regard is a variety of viewpoints and perspectives on organizational success.

One of the strategies that can be used in this regard is that of stakeholder orientation. The attention that the organizations give to their key stakeholders is called stakeholder orientation. Various studies show that stakeholder orientation effects the organizational performance in the positive manner. Stakeholder orientation has various forms like market orientation, customer orientation, competitor orientation, employee orientation etc. Each aspect has its importance and contributes the organizational growth and performance. In case of United Biscuits, customer orientation leads to customer satisfaction and loyalty – ultimately increasing sales, brand loyalty and brand equity. Market orientation, on the other hand, increases the organizational and departmental focus towards achieving market leadership – leading to improved performance, increased departmental co-operation, organizational commitment to excellence and employee satisfaction on job (Conner, 2017).

The key aspect of the stakeholder theory is its connection with the performance – effective stakeholder management must increase the organizational performance. Thus, if an organization appropriately manages stakeholder interest then the performance will eventually improve. When working on stakeholder management, the management of United Biscuits has to consider that the impact of each stakeholder is different on the organization performance and growth. Orientation towards key stakeholders like employees, competitors, consumers, vendors, technology and shareholders helps an organization to lay down a clear vision, mission and strategy – leading to the ultimate improvement in performance collaborated by the figures like increased sales and profit. Not only financial performance, stakeholder management also influences the organization’s corporate social performance in a positive manner and helps an organization to manage key relationships in a good manner (Conner, 2017).

Another aspect of stakeholder management is employee management – an extremely critical aspect as it is directly connected to the human resource performance. Employee management has various facets and each step / measure taken for employees plays its part. To list a few employee engagement, providing a safe and healthy working environment to every employee, provide competitive rewards and benefits, recognition, challenging job descriptions, trainings, etc. Each step towards employee management leads to improved productivity, motivation and loyalty – eventually increasing organizational performance (Conner, 2017).

Suppliers are one of the key stakeholders of the organization and effectively managing them is also key to organizational growth and development. Supplier loyalty and retention is necessary as the organization will suffer if the supplier will withdraw their services. Traditionally the relationship between an organization and its suppliers was one sided with organization or supplier getting their work done and then end the relationship. But now the relationship between an organization and its suppliers is changing to a long term mutually beneficial relationship based on mutual trust. Organizations maintaining a long term relationships with a few trusted suppliers may show a higher level of performance (Conner, 2017).

innovation and expansion of business

In the continuously growing world, businesses also need to grow. To grow business expansion by product development and innovation is really important. This also holds true for United Biscuits. Stakeholders can contribute greatly to this business development aspect of an organization, in this case United Biscuits. Stakeholders create demand – customers, stakeholders meet demand – producers / suppliers, stakeholders provide design – researchers, stakeholders provide support services – finance, employees, etc. Thus, right stakeholder involvement at the initial stages of product development can be highly beneficial for the organization (agner Mainardes, Alves and Raposo, 2011). Moreover, it is important to interconnect various groups of stakeholders among themselves, for example customers with the design team, so that the requirements are met (Razali and Anwar, 2011). In any project, the participation of key stakeholders is necessary for success and avoiding failure. If the stakeholders are not involved in a timely and planned manner might cause troubles in the project (McManus, 2004).

To bring innovation the organizations may have to do any of the following (Enkel, Gassmann and Chesbrough, 2009):

  1. Increase the internal knowledge base by getting more information from stakeholders – outside in;
  2. Using unutilized internal knowledge to explore abandoned external ideas – inside out;
  3. Gaining joint knowledge by collaborating with all the innovation groups – coupled.

Various studies suggest that all the above processes are not equally important in all the business settings. The organization and its management should identify and select the most appropriate process for bringing in innovation (Enkel, Gassmann and Chesbrough, 2009).

Using the outside in innovation process means that some resources might be acquired externally, which also applies in the context of food processing industry. Acquiring services also includes outsourcing various functions. Highly sophisticated areas like research and development and technology can be easily outsourced to industry experts (Dahlander et al., 2010). By acquiring some services, the organization can focus on their core competencies and use the experts to do their work.

The coupled innovation process, on the other hand, works on the idea of ‘give and take’. This exchange is of ideas, resources and information with external stakeholders can be done by different means – both formal and informal (Faems et al., 2008). In the outside-in process although the organization can usually acquire the complicated services or resources but knowledge stays with the external provider. However, in case of coupled process the complex and sophisticated knowledge is shared (Spithoven et al., 2013). Both processes have their own costs and benefits, thus to make the most in lesser cost and time, a suitable mix of outside-in and coupled processes has to be opted (Faems et al., 2010).

3.4.       stakeholder communication plan for united biscuits

Objective Strategy Activity Target audience Messages Timing and resources Lead Success measures
To present the corporate performance Convince the relevant stakeholders about the performance of the company Development of the annual reports Annual general meetings Development of stakeholder presentation Owners, Staff, Equity Holders, Financiers, Government, Customers, Community, Suppliers The company is making effective use of the resources invested in it At the end of every fiscal year Board of Directors Positive voting for the future initiatives of the company at annual general meeting Enhanced credit rating
Product Development To expand into profitable product areas Development of customer poles One to One interaction with the customers Market Research Business Intelligence Marketing Campaigns Staff, Customers, Management, Owners The company incorporates rigorous research and customer feedback in the new products At the initiation of any new product development process Marketing and Product Development Heads Meeting the sales target of the new products Increased customer awareness Increased customer satisfaction Increased rate of success for new products
CSR related information sharing To establish the compliance with laws regulations and contribution to community and environment Development of CSR initiatives Reporting of the performance of these initiatives Development of CSR Reports Owners, Staff, Equity Holders, Financiers, Government, Customers, Community, Suppliers The company realizes and fulfills its responsibility towards the community At the end of every fiscal year Compliance and HR Team Head Enhanced reputation of the company Positive news Increased share prices
To share risk related information of the company To ensure that the key stakeholders approve of the risk return appetite and risk management of the company Development of risk register Monthly meetings with the staff Owners, Staff, Equity Holders, Financiers, Government, Regulators, Suppliers, Customers To keep the stakeholders ensured about the transparent behavior of the company Reports at the end of fiscal year. Meetings will occur monthly Risk Management and Compliance Team Increased stakeholder satisfaction Better reputation Enhanced positive recommendations

4.   conclusion

As can be seen from the above mentioned analysis, the use of stakeholder management strategies cannot only provide the organizations with opportunities to enhance its performance and risk management, but can also aid it in expanding into profitable markets and product categories. The analysis of United Biscuits indicated that the company shall invest in the identification of the key stakeholders and then shall interact with them effectively to ensure that it exploits the benefits of stakeholder involvement in an appropriate manner.


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