High Power With High Level Of Interest Management Essay
Stakeholder is an individual, group, institution or organization who has interest in a particular firm or organization and the decisions of that firm or organization directly or indirectly affects their interest. Examples of stakeholders includes employees, shareholders, customers, suppliers, lenders, management, Government, Political parties, general public and many others including a Society as a whole.
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Generally stakeholders can be categorized into three different groups as Internal, External & Connected stakeholders. Examples of them are:
Internal stakeholders: include firms own employees & management
External stakeholders: include Government, General Public & Society as whole
Connected stakeholders: include Shareholders, Customers, Suppliers, Lenders, and Stockholders
Stakeholders have bargaining strength and they can exert influence on company’s strategies and to the mission statement to some extent and this influence depends on the power of the stakeholders, greater the power of the stakeholder group, greater will be the influence. Therefore, the organization’s stakeholder relationship must be managed by the organization according to their bargaining strength, their influence on the decision making of the organization, their power and the degree of interest they have in organization’s activities.
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Different stakeholder group has different interest/expectations from the organization about what they want from it and the expectations of the various groups will conflict. Here are some examples of different stakeholder along with their interest/objectives/expectations.
Employees/Managers: they only need Job security & satisfaction along with good working condition, their continuous growth, development & training for their better future.
Customers & Suppliers: customers need quality assurance at a reasonable price whereas the suppliers need regular orders in return of reliable & timely delivery of orders.
Shareholders: shareholders needs long term wealth in return of their investment.
Society as whole: whereas Society interest is totally different, they want a control pollution system, financial assistance to charities & community activities.
Based on the above facts & conflict of interest b/w different stakeholder’s perspectives, an organization needs strong management of their stakeholder’s interests as they play a key role in a success of any organization. Mendelow maps the different stakeholders on a matrix according to their power & influence and the level of interest in organization’s activities.
Level of Interest
Segment A: as they have minimum power & interest both, the stakeholders of this segment require minimal efforts.
Segment B: stakeholders that fall in segment B does have an ability to influence the company’s strategies, but as they have high level of interest in what the company does, their views by lobbying can be important in influencing the more powerful stakeholders. They should be kept informed about the company’s strategies. Charities are an example of that kind of stakeholders.
Segment C: although the stakeholders that fall in segment C have low level of interest in organization’s activities but they have greater power to influence therefore, they must be treated with care in order to keep them satisfied.
Segment D: stakeholders that fall in segment D are the key players, organizations strategies must be acceptable to them at least because they exert high power along with their high level of interest. An example of this would be a major customer of an organization on which the sale is heavily dependent.
COLOPLAST is counted in one of the best companies in world whose business is to develop medical devices & provide services related to them. Mission statement of the COLOPLAST is "Making life easier for people with intimate healthcare needs".
Stakeholders of COLOPLAST
As the COLOPLAST is working in medical devices industry its major stakeholders related to medical devices would be Medical Device Industry, Hospital & research institutes, Universities, Government & other related agencies while the other stakeholders would be Doctors & medical staff (employees), investors, suppliers, customers, distributors, trade associations, policy makers, regulatory community, general public & Society as whole. Below is the discussion of different stakeholder’s interest & influence of each category (Mendelow’s mapping) and an explanation of how they can effectively be managed by COLOPLAST.
High-Power with High Level of interest
As COLOPLAST is working in Medical Device Industry its main stakeholders which can exert High Power on the strategies of the COLOPLAST along with the High Level of Interest are Other Medical Device Companies, Doctors & Medical Staff, Regulatory Community, its major customers. The Regulatory Communities have great influence on Medical devices Industry in EU their aim to ensure the high level of protection of human health and safety encourages them to provide a legal framework for Medical Industry and in addition to regulatory approval medical devices industry is also covered by ISO quality Management standards. This great interest & powerful influence of this particular stake holder makes this group to be deal with care by COLOPLAST and strategies and activities of COLOPLAST must be acceptable to them. COLOPLAST must ensure all the quality assurance standards and comply with the regulatory framework in order to sustain in industry.
Low-Power with High Level of interest
Distributers, trade association, charities & general public they are stakeholders of COLOPLAST who although have low power to influence the COLOPLAST but they have high level of interest in COLOPLAST as the general public is much concern with the quality of devices that the COLOPLAST is providing to them and reasonable prices which means are they affordable to them or not. COLOPLAST must develop the strategies which are acceptable to them as they have less power to influence but their views have great value to those stakeholders who have strong power to influence the Company. COLOPLAST must deal with these stakeholders carefully.
High-Power with Low Level of interest
Large Institutional Shareholders of COLOPLAST fall in this category as they have no high concern of what the company is doing but the long term increase in their wealth kept them satisfied. So COLOPLAST strategy to manage these stakeholders is to keep them satisfied by distributing handsome dividends every year. This is only possible when COLOPLAST strategies to manage the other strong stakeholders are strong.
COLOPLAST is working in an industry where Regulatory bodies have very strict requirements about quality assurance so it must satisfy the needs of these Regulatory bodies, although COLOPLAST is committed to the ten principles of UN Global Compact. It needs more improvements and continuous fellowship of these bodies to remain satisfied with rest of the stakeholders.
Business Planning & Development of Strategies
Business planning is the identification of the business’s goals, its objectives & missions, it is a prescribed statement which set out the business goals, reasons why they believe that they are attainable and a detailed plan how to reach to those goals; in short, Business Plan of any organization provides a written presentation of its operations. Organizations developed business plans and take them as a decision making tool to compete successfully in a particular market. Based on its Business Plans organization developed different business strategies to achieve its objective which may be focused on business as a whole or different areas of a business such as customer retention & product introduction.
COLOPLAST is well developed international organization in medical devices industry and it is listed on Danish Copenhagen Stock Exchange. COLOPLAST develops products and services related to ostomy, continence care, wound care, skin care & surgical urology products to make life easier for those people who have deeply personal & private medical conditions (www.coloplast.com).
Business Planning & Current Strategy for Performance Analysis
Strategy Coloplast develops products and services that make life easier for people with very personal and private medical conditions. Working closely with the people who use our products, we create solutions that are sensitive to their special needs.
In March 2012, Coloplast launched a revised strategy sharpening the company's focus on organic growth.
The strategic priorities centre on increasing investments for:
Continued growth in the core markets in Europe
Increased growth in the developed markets outside Europe (the USA, Canada, Japan and
Further expansion in Emerging Markets
Stabilising the European Wound Care business
Globalising the Urology Care business
The strategy is supported by:
a strong pipeline of new products
sustained cost discipline and execution of the most recent plan for Global Operations.
The strategy covers a 3–5 year time horizon.
Capital structure and dividend policy
When launching the revised strategy, the Board of Directors resolved that the company would no longer
accumulate cash earmarked for material acquisitions. Potential major acquisition will be financed
separately. Accordingly, less cash on hand will be required, only to cover operational cash flow
fluctuations. For that purpose, minimum cash reserves of DKK 1bn will be maintained.
The existing dividend policy will remain unchanged. Accordingly, the Board of Directors generally intends
to distribute excess liquidity to the shareholders in the form of dividend and share buy-backs and to have
a dividend pay-out ratio of about 30%. However, share buybacks and distribution of dividend will always
take into account the Group’s liquidity requirements and growth plans. It may become necessary to pay
extraordinary dividends in order to comply with the target for the company's capital structure.
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