Question

Eexplain the power and interest of five different stakeholders of a procurement function using an appropriate model

Answer 1

The five different stakeholders in the procurement function are as following, starting from the

1- Shareholders: who have high power and high interest which they interest in profitability, so they will receive a good level of dividends and growth in share value. The power of the shareholder they can vote out the directors of the company and director responsible of the procurement function, also they can withdraw their investment in the organization.To achieve profit,procurement should be looking in best value and lower costs, so that the profit will increase.

2- Lenders / banks: whohave high interest / low power, as they interest to return back they investment (via interest). And building strong relationship with company for the continues investment. The power of the lender that supporting the company by lending money for the company. The procurement function should use the lending money to fill-full the company needed by purchasing the raw material and buying items to keep production running. So, the management able to pay back money lend.

3- Suppliers: if the supplier was small they will be high interest / low power, they interest will be running they business and generate profit for their company, so they have little power to run they business rather than to stopped and affecting their customs production and cause problem for the procurement function.

4- Small investors: who have low interest / low power, as they are interested to sourcing of sale revenue and profit to keep they business running on market, the power of small investors is to switch the and withdraw the custom. Some of large organization are not risk to deal with small investor as they commercially not stable. So, the procurement function of small investors the will effaced and might be loss of many of the business.

5- Government: who have high power / low interest, which they interest to corporate tax revenue and insuring the company are working under the government laws. The power of the government that inviting large companies to invest in the country which will be good profit for the local procurement function who have interest to make a deal with these companies. (ex. Ikea company going to open new branch in middle east, so they looking for the staff, transportation, food catering, supplying material. That will be good invest for the local procurement function).

As shown above Mendelow’s Matrix, please find explanation of the interest and power of the stakeholders:

stakeholders with neither power nor interest (A) are a low-priority group: resources will not be wasted taking their goals or potential response into account. Small investors, or large suppliers with whom the organization only does a small volume of business, may be in this category. So too may the local community or other organizational functions, in relation to particular decisions with low immediateimpacts on them.

Stakeholders in Segment (B) are important because of their high interest: they may have low direct influence, but unless they are kept 'in the loop' and understand the need for decisions, they may seek additional power by lobbying or bandingtogether to protect their interest. Community, small supplier and employee groups may be in this category, in relation to decisions which impact significantly on their interests. The recommended strategy is to keep them informed of plans and outcomes, through stakeholder marketing, communication and education programmers.

Stakeholders in Segment (C) are important because of their high influence: they currently have low interest, but if dissatisfied or concerned, their interest may be aroused. A large institutional shareholder, or large supplier, may be in this category, as may government agencies and regulatory bodies (if the organization is broadly compliant). Senior managers in departments not directly affected by a procurement decision may also fall into this category. The recommended strategy is to keep stakeholders satisfied, so that they do not need to exert their influence.

Stakeholders in Segment (D) are known as 'key players': they have influence and are motivated to use it in their own interests. Major customers, key suppliers and intermediaries, senior procurement managers and strategic allies/partners may be in this category. The recommended strategy is one of early involvement and participation, so that the stakeholder's goals can be integrated with organizational goals as far as possible — securing support, rather than resistance.