Corporate Stakeholders Analysis

Earlier I talked a bit about your corporate mission and mission statement. The interesting fact is that all business entities (including yours) have essentially the same mission – to satisfy aggregate needs – financial, functional and emotional – of their stakeholders. The ‘first among the equals’ are, obviously, owners of your business – entrepreneurs and investors. In other words, your shareholders.

In other words, the genuine mission of a business entity (or any other organization, for that matter), is to create the maximum possible amount of aggregate value for its stakeholders. This is the raison d'être for any organization of any type (business, government, NGO, etc.) in any country. Only specific ways the organization does it are different.

Your stakeholders include not only your shareholders and your clients/customers/consumers, but also your partners (e.g., your distributors and dealers), your suppliers, government entities, creditors, media, influential individuals, NGO, community at all levels – from local to federal and other. In short, all those whose decisions and actions may produce a material effect on your company well-being. In other words, help or hinder your progress towards achieving your strategic corporate objectives.

As I mentioned before, this aggregate value thing goes both ways. Because you would want all of your stakeholders to create the maximum amount of aggregate value for your company as well. This is called the external corporate harmony principle. 

Therefore, your company must (a) assemble the optimal portfolio of corporate stakeholders; (b) get to know needs and desires of these stakeholders; (c) satisfy the aggregate needs of your stakeholders to the highest possible extent – and definitely better than your competition and (d) make sure that your stakeholders satisfy your aggregate needs. And – as perception is the only reality – you need to make sure that you properly communicate superiority of your UVP to your stakeholders.

In other words, you will need a highly efficient Stakeholders’ Relationship Management system. SRM, not just CRM. The system developed and managed by highly competent SRM team. The team utilizing optimal – and highly efficient – SRM methodology, corporate process and tools.

Like brand and product management, SRM is very information-intensive. Therefore, you will need to develop – and keep relevant and up-to-date at all times – a comprehensive knowledge base on your corporate stakeholders.

Among your aggregate value components, financial value is the ‘first among the equals’.  Hence, every stakeholder of yours is only as good as the amount of financial value he/she/it generates for your company. Therefore, your SRM for each stakeholder must be built around the corresponding financial model. Well-structured model with accurate and up-to-date content developed by a highly qualified financial analyst using the optimal and very efficient methodology, process and tools.

Thus, relationship with every stakeholder is an investment project complete with the corresponding KPI – breakeven point, payback period, net present value (NPV) and the internal rate of return (IRR). And – as any other investment project - in addition to a financial plan (valuation model), each relationship must have both an operational and a business plan.

Financial model of a stakeholder has the usual KPI - its financial value, economic profit (which determines if the relationship in question has economic sense), ROIC (return on invested capital) and WACC (weighted-average cost of capital).

The latter reflects corporate risks associated with a specific stakeholder. Typically, due to diversification effect, an individual product is riskier than your business as a whole; therefore, its WACC is higher than the corporate one.

Obviously, your SRM by itself is useless. To be useful and valuable to your company it must be tightly integrated into your strategic and operational management process. In other words, you need to develop and deploy a highly efficient corporate process of using your SRM in your strategic and operational management.