¶ … successful the business has been at recognizing and satisfying stakeholder interests.
Paul Terminal Warehouse was originally a start-up business founded in 1916 by Harry McNeely Jr. To him, the nascent business was doing well, providing above-average income for him and his family, and making their lives in the twin cities area opulent by turn-of-the-century standards. Concepts of governance, stakeholder management, and development of plans for managing take-over attempts by his family never most likely entered his mind. He was too busy working to create a business that would outlast his own life, creating a legacy and stable source of income for future generations of the McNeely family. CEOs who are founding members of companies rarely have the ability to step away from the vision of the business and the many demands on their time to create stakeholder models, frameworks and criterion for success, which is why the majority of them fail (Ng, Thorpe, 2010).
Even after a generation of success, the McNeely family ignored the need to define accountability, levels of ownership and performance, and consider the requirements of primary, secondary and key stakeholders in their business plans. As a result, the management team enjoyed a tremendous false sense of security that would later be shattered by bitter family conflict and greed. Studies indicate that founder's families often battle years, even decades, for control of corporate assets when a stable and reliable stakeholder and succeed plan both have been defined and are enforced through wills and trusts (Puri, 2010). Not only has this business grown to a significant size without either of these to vital strategies in place, the stakeholder plans also neglect the critical ecosystem of the business that serves as the foundation of its value chain. These stakeholders include the employees, customers, stockholders (from private investment), suppliers, the local government entities who rely on taxes from this business, and the many ancillary businesses this one feeds with cash from transactions. Too often, it takes the most desperate and challenging of circumstances to bring a company to the realization that they need to have very definite plans about the future, both from a stakeholder as well as a succession planning standpoint. This family business exhibits a rigidity of organizational structure and lack of focus on the future, and instead seems to be looking the organization as a blend of family loyalties and business opportunities. As a result, the company is mediocre to failing at recognizing and satisfying stakeholder interest in the first decades of its existence. Only after a massive legal battle does the company management teams have the ability to separate out the loyalties to the family and the needs of the business.
Describe the mechanisms that are available to manage relationships with stakeholders and to influence the strategic direction and performance of the company.
There is plain and simple not enough communication going on about how stakeholders can be managed to consistent levels of performance with accountability defined in key metrics and expectations. The most fundamental strategy the company can take it so create an internal and external stakeholder framework by which they can accurately interpret and gauge how effective they are in meeting expectations and needs. The focus on creating a balanced and unified external and internal stakeholder model provides businesses with the necessary foundation for creating more value over the long-term by partnering with, not fighting, stakeholders (Ho, 2010).
By taking into account the previous agreements and many expectations, defining stakeholder feedback and initiatives-based expectations, and then interviewing stakeholders can a foundation be created for future growth (Epstein, Widener, 2011). Often it is only through litigation that family-run businesses wake up and realize that prudent and focused stakeholder management can avert massive drains on company resources, from the time of senior management of the cash they have...
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