Essay on Strategic Decisions in Complex Stakeholder Environments
Number of words: 649
In current business environments, stakeholders affect business transactions more than ever. It is now necessary for business organizations to engage various stakeholders in their environment. Stakeholder engagement in organizations refers to the involvement of various groups of stakeholders in transactions. Stakeholders have a right to oppose or support policy or decisions of organizations; they may have influence on the community or hold influential posts in the society. Therefore, business organizations need to have a strategic teams engaging in creation of new policies and making decisions.
Complex Stakeholder Environments
Business strategy formulation responsibility lies with the top most managers in an organization. It is easy for managers to make decisions in a case where they have few clients and stakeholders. But, managers now have the task of setting priorities for firms despite complex stakeholder environment. Organizations with vast numbers of stakeholders, requires management teams to complete various complex tasks. Stakeholders may be so diverse, that some deal indirectly with the management (Bruce et al 37-38). This therefore brings forth the possibility of indirect transaction with stakeholders. Strategic plans respond to stakeholder needs. In complex stakeholder environments, engagements go beyond communication of business transactions to other issues (Alexander, and Mansouri 539-552). In multinationals, stakeholders include the local community, suppliers, consumers, foreign governments and investors.
Models for Evaluation Stakeholders
For the strategic management team to overcome complex stakeholders’ needs, various models may yield positive response. These models help prioritize stakeholders, tracking indirect forms of transactions with stakeholders and in the valuation of their contributions in terms of non- monetary returns. The exchange model, may assume estimation in cash values between two clients or the level of importance of service between two clients. This strategy consists of mathematical models, which assist in prioritizing outputs of firms. Nodes of the model represent stakeholders, while the arrows represent a flow of interactions (Bruce et al 39).
Benefits of Strategic Decisions
According to Alexander, and Mansouri (541), Stakeholder engagements benefits organizations in since it yields partnership relationships, result in beneficial interactions with local communities and the combinations of diverse resources. Other benefits to stakeholder interactions include sharing of business risks and competencies. Organization benefits in terms of utility, resource utilization and resources received. The strategy models need to calculate the utility function of stakeholders. These models need to evaluate the amount of utility beneficial to the organization.
Further, the models need to consider calculating resource utilized in comparison with outputs. And finally these models need to consider evaluating the level of satisfaction of all stakeholders. Considering these models, a multinational organization may develop a network diagram. The interactions involve local communities, investors, government, consumers and NGO’s (Bruce et al 42). Evaluation of satisfaction of various stakeholders in a complex environment may be measured in numerical values or other measures.
It is evident that stakeholder engagement assist in aligning needs of societies, practices and expectations. Such engagement provides sustainable results and improves shareholder’s value. Providers of strategic decisions in organizations need to consider the ever changing business environment as well as ways of reaching sustainable development. It is necessary for management teams to consider all sides of relationships. It is not enough to just consider direct relationships with stakeholders eliminating indirect engagements. Management teams need to arrange logistical, production, human resources and government relationships. Considerations need to further include interaction with project teams, local community, government entities and other players. Moreover, these strategic decision need to assist firms overcome challenges (Bruce et al 43).
Rodriguez‐Melo, Alexander, and S. Afshin Mansouri. “Stakeholder engagement: Defining strategic advantage for sustainable construction.” Business Strategy and the Environment 20.8 (2011): 539-552.
Bruce, G. Cameron, Edward, F. Crawley, Wen Feng, and Maokai Lin. “ Strategic decisions in complex Stakeholder environments: A theory of Generalized exchange.” Engineering management journal 23.3 (2011): 37-45.