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Understanding Stakeholder Theory and Its Analysis

Understanding Stakeholder Theory and Its Analysis

Stakeholder
theory is the theory of operation of a business which is centered on the notion
that a business should take into account all stakeholder interests in order to
determine its proper course of action. In order to put stakeholder theory into
effect, one must understand who all the stakeholders of a given company might
be, thus requiring stakeholder analysis.

Stakeholder
analysis is the process of determining the parties that might affect and/or be
affected by the actions of the company. Such parties are understood as
stakeholders within the company in question. Stakeholder analysis also includes
determining prevailing attitudes among stakeholders with reference to a
particular course of action or project. This is significant because stakeholder
analysis can lead to an understanding of stakeholders’ reactions, and thus, can
lead to a better implementation of stakeholder theory by ensuring that the
stakeholders are best served and most satisfied with the actions taken.

Stakeholder analysis, at its core, requires a
determination of the primary categories of stakeholders under consideration.
This is significant primarily because one cannot conduct stakeholder analysis
if one does not know exactly how one is choosing to qualify a stakeholder.

There
are multiple methods of stakeholder analysis, some of which define stakeholders
based on how strong and legitimate a stakeholder’s relationship is to the
company and how much actual power to influence the company a particular
stakeholder can exert, while others define stakeholders in terms of determining
who is affected by the actions of the company. The exact determination of
stakeholder analysis will very much affect the implementation of stakeholder
theory.

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