Stakeholders into primary and secondary

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Stakeholders Mapping and Power/Interest Matrix

We can classify an organization's stakeholders into Primary and Secondary. The primary stakeholders are those without whose continuing participation a firm cannot exist. They include shareholders & investors, employees, contractors, customers & suppliers. On the other hand, secondary stakeholders are those who influence or affect or are influenced by, the corporation, but they are not engaged in transactions with the corporation or essential for its survival. They include media, action groups, government agencies, trade unions, regulatory authorities.

Stakeholder management is the process of managing the expectation of anyone that has an interest in a project or will be effected by its deliverables or outputs. Any company which aims to achieve long term success has to chalk out a strategy for managing its stakeholders. There are two major elements to Stakeholder Management: Stakeholder Analysis and Stakeholder Planning. Stakeholder Analysis is the technique used to identify the key people who have to be won over by the company. Then Stakeholder Planning is used to build the support that helps the company succeed. Following or during a Stakeholder Analysis process, it is often useful to categorize the various stakeholders by drawing further pictures of what the stakeholder groups are, which interests they represent, the amount of power they possess, whether they represent inhibiting or supporting factors for the organization to realize its objectives, or methods in which they should be dealt with. Stakeholder Mapping is the process of creating such pictures to clarify the position of the stakeholders of the organization.

A type of Shareholder Mapping is the Power / Interest Matrix. This stakeholder map classifies stakeholders in relation to the power that they hold and the extent to which they are likely to show interest in the strategies of the organization. The Power / Interest Map can be used to indicate what type of relationship the organization should have with each ofthe groups.

  • The stakeholders in 1st Quadrant are both powerful and highly interested in the strategies of the organization. The acceptability of strategies to these key players should be an important consideration in the evaluation of new strategies.
  • Stakeholders in 2nd Quadrant are powerful, but their level of interest in the strategies of the organization is low. They are generally relatively passively, but may suddenly emerge as a result of certain events, moving to group D on that issue. They should be kept satisfied.
  • The stakeholders in 3rd Quadrant require only minimal effort and monitoring.
  • The stakeholders in 4th Quadrant should be kept informed. They can be important to influence the more powerful stakeholders.

Stakeholder Mapping in Google

Above we have shown the Power / Interest Grid for Google. We have colour-coded the stakeholders to indicate which of them are expected to be blockers or critics against your organisation and which are supposed to be advocates or supporters. We have indicated Green for advocates, Red for critics and Orange for neutral stakeholders. Google has stakeholders in all the 4 quadrants of the Grid.

  • High power, High interest: Google engages with the advertisers (who generate revenue), shareholders, suppliers (who supply hardware), customers, managers and financial institutions and puts in maximum effort to satisfy them. They are included in deciding strategies and while governing the company. Also the competitors (Yahoo, Microsoft) movements are carefully monitored and managed by applying counter strategies to nullify their strategies.
  • High power, Low interest: The content providers (for Orkut, YouTube, Blogger, Scholar etc) and the employees (who develop the software) are not as interested in the strategies of the company but they have high power over the decisions the company takes. In such a scenario Google puts enough work in with these people to keep them satisfied by giving free services to its content providers like esteem to Scholars, popularity to YouTube users, connectivity to Orkut users and a playground like, relaxing and luxurious office setting to its employees.
  • Low power, High interest: The mainstream media and IT Critics/Activist Groups comprise this category. Google keeps these people adequately informed and talks to them to ensure that no major issues are arising. These people are often responsible for spreading the brand name of the company. Still conflicts arise between these stakeholders and Google.
  • Low power, Low interest: Government and the Community comprises this category. Google monitors the happenings in the political scene and conducts CSR activities/college events to satisfy the community.

Stakeholder Conflicts in Google

Here we will give some specific examples of stakeholder conflict in Google

Google Personalization and the SEO impact of Advertisers

Google has announced a new personalization service that will impact the natural search results that consumers experience over time as they continue to search. This capability will be given to searchers, even if they have not opted in to the existing personalization service.The new process will monitor individual user selections over time and present natural search results driven by this past behaviour. There are ramifications of this new process for advertisers trying to drive higher rankings leveraging Search Engine Optimization (SEO). Our first hypothesis is that consumers will click on what they know (i.e., known brands). The personalization algorithm will recognize this behaviour and create a self reinforcing mechanism - selection of known brands will cause them to continue to appear, while unknown brands will be pushed down regardless of SEO efforts. This creates a tricky barrier for new brands and brand launches, against entrenched competitors. Hence to drive results in SEO in a personalized world, advertisers will have to ensure that the actual text, i.e., the messaging that drives a click through, shows up. This presents a potential conflict of interest between the advertisers and Google's management.

Google's conflict with authors and publishers

Other companies which had experienced meteoric rise before Google like Nike, Microsoft, Gap and Wal-Mart, came down with a crash because they did not engage their external stakeholders in their business planning. The sort of monopoly which each of these companies enjoyed during their time in their domain led them to an insular culture and gross misuse of their power. In a particular case, Google's Book Search and Print Library projects have elicited criticism from authors and publishers and spawned lawsuits accusing Google of copyright infringement. Google began scanning portions of books, some of which may have been under copyright protection, with the intention of allowing users to search for and view portions of these books online. Despite Google's altruistic claims of trying to make books more accessible to everyone online, the dispute is over who profits: Google for promoting books, or authors/publishers of the content?

Google's self-censor in China

Google is being criticized for acquiescing to demands from the Chinese Government to self-censor several websites banned by the country's censors in order to gain approval to enter the potentially lucrative Chinese market. Such action goes against Google's anti-establishment image, and more important, it is a step backwards from Google's mission to "organize the world's information and make it universally accessible and useful". Here we see a stakeholder conflict between the Community, Google's consumers, the Activist Groups, the Media and the management who have criticised this profit seeking compromise which Google has made.

Facebook and Google - Contrasts in Privacy

Recently, Facebook has implemented changes that affect the privacy of status updates, whereas Google made headlines for its apparent disregard for privacy. Facebook has quickly responded to criticism and backlash, and has implemented additional changes to try and accommodate concerns, while Google CEO Eric Schmidt dismissed privacy concerns entirely. The Canadian government pressed the issue and succeeded in pressuring Facebook into changing a handful of practices to address privacy concerns. As Facebook implemented changes this week, which were previously announced and anticipated--a change of pace for Facebook changes, there was immediate backlash. Google is also faced with constant criticism and concern from privacy advocates. However, the difference between Facebook and Google as relates to privacy is that Facebook appears to listen to concerns and respond by implementing changes to try and address issues, while Google seems to be dismissive. The Google response is to just stress why you should trust it, or why you shouldn't care about privacy. This kind of attitude from Google leads to conflicts with the Government and the Community.

Free411.com and Goog-411.com

Free411.com is a simple service that looks up directory listings for free, saving callers fees of a dollar or more per inquiry. The customer can look up listings online, but most people call the toll-free number. Where free411 makes its money is by forcing users to listen to an ad before they get the number they are looking for. The service is incredibly successful averaging more than 25 million calls per month. Recently Google launched its competitor Goog-411 which is a bit more sophisticated than Free411, offering product and service classifications and suggestions, which, of course, also generate more revenue. Google had taken a long look at investing in or acquiring Free411 under a nondisclosure agreement between the two companies, only to abruptly break off discussions and start its own competing service. This strategy of getting start-ups to explain their business models and share their technologies was practically invented by Microsoft, which would then break off talks, start a competing product or service and use pressure on industry partners to put the smaller company out of business. By pursuing such a Business strategy, Google is only losing its reputation which it has built over the years and creating conflicts with its stakeholders for short term profits.

Google's Product Domain

Google's Organizational Environment

An organization is affected in its day to day working by its environment. Organizational Environment comprises those forces outside the organization's boundaries that can impact it. The Forces can change over time and are made up of Opportunities and Threats. Opportunities consist of openings for managers to enhance revenues or open markets. Opportunities can be new technologies, new markets or new ideas. Threats are issues that can harm an organization. Issues which can become threats are economic recessions, oil shortages etc. As a modern manager, one manage the organizations environment so as to reduce uncertainty in it and must seek opportunities and avoid threats.

The organizational environment comprises the General and the Specific Environment. The Specific Environment consists of the forces from outside stakeholder groups that directly affect an organization's ability to secure resources. Customers, Distributors, Unions, Competitors, Suppliers, and the Government are all important outside stakeholders who can influence and pressure organisations to behave in certain ways.

The General environment consists of forces that shape the Specific environment and affect the ability of all organisations in a particular environment to obtain resources. Demographic and Cultural, International, Political, Technological, Economic and Environmental Forces are the main components of the General Environment.

The main customer groups of Google are :

  1. Advertisers
  2. Content Providers (Youtube, Blogger, Picasa, Orkut etc)
  3. Software and Hardware Users (GTalk, Gmail, Chrome, Google Earth)
  4. Search Engine Users (Web, News, Images, Scholar, Books, Video)

In the case of Google, the specific and general forces in the Environment have a deep impact in shaping its strategies.

Specific Forces

The customers are a major specific force Google has to deal with. As we saw earlier, through its AdSense and AdWord programs Google has to simultaneously satisfy both the advertisers as well as its profit requirements. Also, it has to frequently update its software applications and launch new ones to stay ahead of its competition and stay in the mindspace of the users. Google also has to have attractive salary packages, perks and benefits and an up-to-date, luxurious office space in order to attract and retain the best talent as employees and managers. Google is especially quick to identify new, innovative business opportunities (GPS Navigation Maps, Video Services, Goog-411). In that regard, Google usually follows the strategy of venturing into that domain by acquiring a prominent name in that field or else starting up its own venture in that domain which usually drives the smaller players out of the market due to economies of scale. Also Google has had to compromise with Government censors and restrictions in order to enter specific markets eg the prime case of China.

General Forces

  • Demographic/Cultural Forces - Cultural Forces have less of an impact on Google since its products and services are universal in nature. However in every country Google customizes its services according to that place's languages, rituals, festivals and customs like in India Google customizes its homepage to reflect any ongoing festivals like Dussehra, Holi etc.
  • Political Forces - Political Forces impact the specific environment of Google by posing restrictions and censorship on the citizens of the country. A prime case is China where Google compromised on its motto of democracy of information by self censoring certain words and websites in order to gain entry into the lucrative Chinese Market.
  • Technological Forces - Google has been the front-runner in introducing innovative technology in the software and IT market and it has also been a leader in identifying potential winning businesses in the IT sector. It follows a strategy of either acquiring, or forming alliances, with existing companies in its entry domain or starts up its own ventures from scratch. Google intends to become an "information service" company which controls most of the electronic channels in the coming days
  • Economic Forces - Google has been less affected than other companies due to the recent economic crisis since in the times of recession people search for things which give them more value and Google offers all its services for free and hence provides maximum value to its consumers.
  • However, Google also has not remained totally unaffected by the recession. It has laid off about 58 employees and plans around 300 more as a cost cutting measure. Capital spending was also down about 40%. At the same time, it shuttered several small operations, including a radio advertising and a newspaper ad space project. Google's revenue, almost all of which comes from advertisements placed next to related search results, rose 6% from a year earlier but slipped 3% from the fourth quarter. However Google's slowdown looks good compared with the larger advertising market, which is expected to fall at least 5% this year. But it has become apparent that Google's underlying business is feeling the effects of the recession.

  • Environmental Forces - Being a portal and a search engines, Google requires a huge amount of energy to cool and operate their data centers. This is because, a search query is sent not to a single data centre but to many competing ones - may even be sent to servers thousands of miles apart. Google's infrastructure sends back the data from whichever produces the answer fastest. The system minimises delays but raises energy consumption. Google has servers in the US, Europe, Japan and China. However Google has taken a number of steps to account for the environmental forces like installing solar panels in its Mountainview office, providing electric shuttles to employees, and leading research in "green computing". Google aims to tackle the environmental menace by the following 3 strategies (taken from their official blog)
  • reduce energy consumption by maximizing efficiency;
  • invest in and use renewable energy sources; and
  • purchase carbon offsets for the emissions that we can't reduce directly.
  • Global Forces - Globalization has rendered the world small. The present age is an "information age" which will see the convergence of communications and information technology. Financial markets will have an important role to play in the future with investing money in distant lands becoming easier. The virtual world will slowly merge with the real world with virtual transactions and virtual interactions replacing their real counterparts - not only between businesses but also between "consumers and businesses" and "consumers and consumers". Google has adopted a business strategy in which in invests in only such future technologies and hence stands in good stead to tackle the global forces.

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