executive summary

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

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

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

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

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).

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,

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

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

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

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
  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
  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,

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

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
  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;
  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,

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).

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

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.,

3.4.       stakeholder communication plan
for united biscuits

Objective Strategy Activity Target
Messages Timing and
Lead Success
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
Increased customer
Increased rate of success
for new products
CSR related information
To establish the
compliance with laws regulations and contribution to community and
Development of CSR
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
Compliance and HR Team
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
Development of risk
Monthly meetings with the
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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