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Step 1: Determining Influences on Mission, Vision, and Strategy Formulation.
One way to analyze the importance and roles of the individuals who compose a
stakeholder group is to identify the people and teams who should be consulted as
strategy is developed or who will play some part in its eventual implementation.

These are organizational stakeholders, and they include both high-level managers
and frontline workers. Capital-market stakeholders are groups that affect the
availability or cost of capital—shareholders, venture capitalists, banks, and other
financial intermediaries. Product-market stakeholders include parties with whom the
firm shares its industry, including suppliers and customers. Social stakeholders
consist broadly of external groups and organizations that may be affected by or
exercise influence over firm strategy and performance, such as unions, governments,
and activist groups. The next two steps are to determine how various stakeholders are
affected by the firm’s strategic decisions and the degree of power that various
stakeholders wield over the firm’s ability to choose a course of action.
Step 2: Determining the Effects of Key Decisions on the Stakeholder. Step 2 in
stakeholder analysis is to determine the nature of the effect of the firm’s strategic
decisions on the list of relevant stakeholders. Not all stakeholders are affected equally
by strategic decisions. Some effects may be rather mild, and any positive or negative
effects may be secondary and of minimal impact. At the other end of the spectrum,
some stakeholders bear the brunt of firm decisions, good or bad.
In performing step 1, companies often develop overly broad and unwieldy lists
of stakeholders. At this stage, it’s critical to determine the stakeholders who are most
important based on how the firm’s strategy affects the stakeholders. You must
determine which of the groups still on your list have direct or indirect material claims
on firm performance or which are potentially adversely affected. For instance, it is
easy to see how shareholders are affected by firm strategies—their wealth either
increases or decreases in correspondence with the firm’s actions. Other parties have
economic interests in the firm as well, such as parties the firm interacts with in the
marketplace, including suppliers and customers. The effects on other parties may be
much more indirect. For instance, governments have an economic interest in firms
doing well—they collect tax revenue from them. However, in cities that are well
diversified with many employers, a single firm has minimal economic impact on
what the government collects. Alternatively, in other areas, individual firms represent
a significant contribution to local employment and tax revenue. In those situations,
the effect of firm actions on the government would be much greater.
Step 3: Determining Stakeholders’ Power and Influence over Decisions. The
third step of a stakeholder analysis is to determine the degree to which a stakeholder
group can exercise power and influence over the decisions the firm makes. Does the
group have direct control over what is decided, veto power over decisions, nuisance
influence, or no influence? Recognize that although the degree to which a stakeholder
is affected by firm decisions (i.e., step 2) is sometimes highly correlated with their
power and influence over the decision, this is often not the case. For instance, in
some companies, frontline employees may be directly affected by firm decisions but
have no say in what those decisions are. Power can take the form of formal voting
power (boards of directors and owners), economic power (suppliers, financial

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