CIMA E1 Syllabus A. Role of the finance function - The Mendelow Framework - Notes ^{4 / 4}

This framework is used to attempt to understand the influence that each stakeholder has over an organisation’s strategy.

The idea is to establish which stakeholders have the most influence by estimating each stakeholder’s individual power over – and interest in – the organisation’s affairs.

The stakeholders with the highest combination of power and interest are likely to be those with the most actual influence over objectives.

The Mendelow Framework

• Power
  Is the stakeholder’s ability to influence objectives

• Interest
  Is how much the stakeholders care

• Influence
  = Power x Interest

However, it is very hard to effectively measure each stakeholder’s power and interest.

The ‘map’ is not static; changing events can mean that stakeholders can move around the map

Mendelow Framework - explanation

• A) Low power, low Interest - Minimal effort

  These can be largely ignored, although this does not take into account any moral or ethical considerations.

  It is simply the stance to take if strategic positioning is the most important objective.

• B) Low power, high interest - Keep informed

  Can increase their overall influence by forming coalitions with other stakeholders in order to exert a greater pressure and thereby make themselves more powerful.

  The management strategy for dealing with these stakeholders is to ‘keep informed’.

• C) High power, low interest - Keep satisfied

  All these stakeholders need to do to become influential is to re-awaken their interest.

  This will move them across to the right and into the high influence sector, and so the management strategy for these stakeholders is to ‘keep satisfied’.

• D) High power, high interest - Key players

  Those with the highest influence.

  The question here is how many competing stakeholders reside in that quadrant of the map.

  If there is only one (eg management) then there is unlikely to be any conflict in a given decision-making situation.

  If there are several and they disagree on the way forward, there are likely to be difficulties in decision making and strategic direction.