About Stakeholder Management

The Importance of Stakeholder Management

The methodical identification of the many stakeholders in a business organization and the planning of strategies to engage them to meet their demands are referred to as stakeholder management (Harrison & Wicks, 2013).

A firm typically includes a wide variety of stakeholders, some of which are more important than others. There may be primary and secondary stakeholders as a result, and it is these systems of categorization and contribution that establish the type of connection an organization will have with its stakeholders. The stakeholder theory is also keen to point out that stakeholder management is not constrained by the conventional participatory management standards intended to placate the concerned parties. In essence, it is an approach to business management that makes it possible for an organization to attain a competitive advantage in the market place. As such, stakeholder management is an aspect of business strategy that goes deeper and assesses the structural problems and conflicts that usually afflict middle managers. Stakeholder management is, for this reason, concerned with the long-term survival of business (Howitt & McManus, 2012).

Impact of Relocating Manufacturing Centers

About the scenario presented, it is clear that the employees and their unions are the ones who stand to lose much more than other stakeholders. The consulting firm has suggested that the firm should consider offshore manufacturing so as to generate more profits as compared to when manufacturing is done in the USA. The first thing is that these employees stand to lose their source of livelihood. Alongside the employees, the communities close to the manufacturing centers stand to lose a vibrant economy as such centers usually are a host of other economic activities. Shifting the manufacturing base of the company’s products will mean that the areas will largely be left with little social services and other infrastructure contributions that may have developed as a result of the growth of the organization (Harrison & Wicks, 2013). Additionally, both the employees and the communities are also bound to lose a part of their identity as the organization is considered to be a part of their culture. The brand “Made in the USA” is something that people hold dear, and it is reflected in the fact that the products have been embraced well by the organization. A direct consequence of this development is that both of these stakeholders stand to develop a negative attitude towards the organization (Howitt & McManus, 2012).

However, it is the stockholders who stand to benefit the most should the firm decide to relocate its manufacturing centers to other countries. The most important thing for a shareholder is the financial returns. As such, any move that is designed to generate profits for a firm is bound to be embraced warmly by the stockholders (Harrison & Wicks, 2013).

Considerations for the Firm

It is important for the firm to understand that such a decision will change not only the financial statements but also the decision its entire vision and mission. It is an organization that has established in the USA and its major source of revenue is its branding strategy which is captured by the tagline, “Made in the USA”. The trend by other organizations has been to shift manufacturing operations to other parts of the world as seen in companies such as Apple among many others. It is an effective strategy as it reduces costs while at the same time ensuring that profits are attained. However, the stockholders are not the most crucial stakeholders in this case. The organization’s strategy has ensured that it has been integrated well with the communities in which its manufacturing centers are located. At the same time, other customers throughout the USA have come to associated the company’s products with their national value system. In an era in which many organizations have chosen the path towards outsourcing of cheap labor, the firm decided to stick to its ideal, and it is this decision that is responsible for creating a stronger market in the USA for the firm’s products.

Considering the Overall Strategy

To this end, the firm should consider its overall vision and mission and understand the nature and of its business in the country. Since the employees and their unions, as well as the communities, are bound to be negatively affected by such a move, it is possible that they may embark on a negative campaign aimed at destroying the value of the company’s brand. In the end, such a strategy may prove to be a negative move if the company still intends to sell its products in the USA. However, should the company decide to shift its manufacturing base of operations, it is recommended that they adjust their strategy including its branding so as to target a new customer base. It may mean that the organization may have to create a different marketing strategy and this can mean increased costs in the short-term. It may not necessarily be a sure-footed move since increased costs may affect overall profits which may mean that the stockholders will be unhappy (Harrison & Wicks, 2013). Instead, the organization should look to other players in the market who opted to retain their base of operations in the USA. It is possible for the organization to adapt to the market conditions and look for other ways of generating profits.

References

Harrison, J. S., & Wicks, A. C. (2013). Stakeholder theory, value, and firm performance. Business ethics quarterly, 23(01), 97-124.

Howitt, M., & McManus, J. (2012). Stakeholder management: an instrument for decision making. Management Services, 56(3), 29-34.