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Introduction to Stake Holder Analysis and Management

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So as an Entrepreneur you have many stakeholders that are affected by your business. From customers, Tax Authorities, Suppliers, Business Associations and Banks. For your business to be successful, you will have to learn to manage all of these stakeholders because they can either make or break your business. If you treat your customers badly then they will move on to the next competitor-the result is an obvious drop in profits. If you fail to manage relations with suppliers-when you develop the habit of paying late, then you are likely to be asked to pay cash up front and this can be costly especially in the current environment where hard cash is not easy to obtain. If you fail to settle your tax bills then you run the risk of paying penalties.

So the bottom line is that you have to manage relations with your stakeholders. So who is a stakeholder? My loose definition is that of anyone affected or interested in your business. Someone who can either make or break it. Someone may not even be your customer or buy your goods but can easily send malicious information about your business that can destroy it . Take for example the story of Andy Muridzo-most of the people talking about his recent affair with Bev are not his fans, some have never heard about his music, few have ever attended his shows but are interested parties in blasting him for his affair with sister Bev. This is the power of stakeholders-even those not remotely linked with your business can easily take an interest should something of interest related to your business come up. You may be forced to respond to a malicious Facebook post about your business because it can destroy your business.

Example of Stakeholders for Butchery

Lets assume you operate a butchery in the city centre, the city can be Lusaka, Lilongwe or Harare. So for this butchery lets find who can be a stakeholder.

 

  1. Employees
  2. Customers
  3. Suppliers
  4. City Health Department
  5. Workers Union
  6. The lessor who owns the property
  7. Neighbouring business owners
  8. Tax Authorities
  9. SME Associations
  10. Banks
  11. Shareholders
  12. Members of the Public
  13. The Government

So as you can see there are plenty of them and each party has a different interest in your business. Banks would be primarily interested in how well you are doing so that you can pay back their loans, Tax Authorities would be interested in whether you are paying taxes timeously. Customers will obviously be interested in the price and quality of meat.

Now in practice its very easy to concentrate on one stakeholder or a few and forget other critical stakeholders. You can concentrate on customers at the expense of the Health Department requirements or concentrate on shareholders at the expense of employees. This is usually the case during emergencies or periods of crisis which often lead to more crisis.

In next article, we will look closely at how to manage stakeholders and we are going to use a tool called The Mendelow Matrix, you can google search it for reference. We are going to look at the practical side of managing stakeholders. In the meantime you can draft your own list of stakeholders that affect your business. You can even draft a list of stakeholders that affect you as an individual-your employers,inlaws,relatives,neighbours,church,friends etc. Find out how well you are doing in terms of managing your personal relations and make a plan to improve.

ZBIN Wishes You a Fabulous Weekend

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Victor Muchemwa

The author Victor Muchemwa

Victor Muchemwa is a Chartered Management Accountant, ACMA, CGMA and an award winning business coach and consultant. Author of 5 books and skilled in financial analysis, strategic planning, risk management, and business coaching. Contact +263 773 055 063
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