Strategic

The Dependency of Stakeholders in an Organization

A firm might depend on a stakeholder group at any particular time.
(a) A firm with persistent cash flow problems might depend on its bankers to provide it with money to stay in business at all.
(b) In the long term, any firm depends on its customers.

Degree of dependence of Stakeholders

The degree of dependence or reliance can be analyzed according to these criteria:
(a) Disruption: Can the stakeholder disrupt the organization’s plans (e.g. a bank withdrawing overdraft facilities)?
(b) Replacement: Can the firm replace the relationship?
(c) Uncertainty: Does the stakeholder cause uncertainty in the firm’s plans? A firm with healthy positive cash flows and large cash balances need not worry about its bank’s attitude to a proposed investment.

The way in which the relationship between company and stakeholders is conducted is a function of the parties’ relative bargaining strength and the philosophy underlying each party’s objectives. This can be shown by means of a spectrum:

Source: ICAEW

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