Stakeholder Influence:

There is a feature in corporate governance or strategic analysis in any company is the balance of power between the stakeholder groups and the relative power and influence of each group.

 

The Mendelow Framework can be used to understand the influence that each stakeholder group has over a company's strategies and actions.The framework identifies two factors that make up the strength of a stakeholders influence over a company's strategy,actions or decisions:

 

• The power the stakeholder is capable of exercising, and

• the interest that the stakeholder has in the particular issue,and how much the stakeholder cares about it.

 

Influence over a strategy or action comes from acombination of power and influence:

 

            Influence=Power*Interest

 

The mendelow framework can be presented as a 2*2 matrix.Each stakeholder group can be placed in one section of the matrix,and the company strategy for dealing with each particular group will depend on where it is positioned in the matrix.

 

                                     

                Low                   Mendelow Framework       High

   Low                                                                                              

                

                 Minimal Effort                           Keep Informed          

                                                                                  

                 Keep satisfied                             Key Players                     

                High

• If stakeholder have little power and low interest in a matter,a company can largely ignore them.(However the Mendelow framework doesnot consider ethical issues,and whether it would be ethically appropriate to ignore the stakeholder group).

• Stakeholders with highest amount of power and interest are the key players,whose influence will be of some significanein making strategic decisions.If there is just one stakeholder group in this section of the matrix-for example the company's senior management-there should be no problem.Difficultiescanaries when there are two or more stakeholder group in this section and they have differing interests and objectives.

• Stakeholders with high interest but low power may try to increase their power by entering into a coalition with one or more other stakeholders.However as long as the group remains in the high interest,low power, section of the matrix a company can limit is treatment of the group to keeping it informed about what is happening,but the companysdecision making will not be affected by the groups objectives.

• Stakeholders with alot of power bt only limited interest in a matter should be Kept satisfied so that they donot excercise their power to affect the company's strategic decision making.For a large company,the government may be such a shareholder.