CIMA P3 Syllabus B. Strategic risk - Mendelow’s Matrix - Notes ^{7 / 13}

Prioritise stakeholders and help decide which strategies to adopt to manage stakeholders.

Each stakeholder can be placed in a specific quadrant after analysing their level of power and interest.

• Power
  Is the stakeholder’s ability to influence objectives

• Interest
  Is how much the stakeholders care

1. 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.

   Examples of 'Key Players'

   - Major shareholders of a company

   - Residents of a country who vote in the local government elections and these elections result in a number of changes to local government officials.

2. 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’.

   Examples of 'Keep Satisfied'

   - Associations like the the BCA (Business Consultancy Association) who have high power but low interest in a business

   - Government of a country who has very strict regulations with heavy fines being levied on companies who fail to abide by them. 

   A company operating in the country should make sure that it has tight controls to ensure that these regulations are never breached and the government of the country is kept satisfied.

   - Central government of a country controls the amount of money that the local government receives, it rarely intervenes in local government affairs unless there is evidence of mismanagement of funds.

3. 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’.

   Examples of 'Keep Informed'

   - Employees who are NOT part of a union when a company is moving all its operations to a different country to reduce costs.

   - Current customers of a business that are interested in it's expansion but do not act collectively.

   - Individual patients of a hospital when a hospital is planning to move to a different location / or undergo budget cuts. 

   This is because individual patients have high interest but low power.

4. 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.

   Examples of 'Minimal Effort'

   - A supplier when there are many alternate suppliers in the market

   -  A business is planning expansion, their employee roles will not change in the expansion and the current employees are not unionised. 

   Here, the current employees will be placed in the minimal effort quadrant because they can be easily recruited and replaced.

   - End consumers of a business who is planning to acquire a rival company

Moving from one quadrant to another

Examples of stakeholders moving from one quadrant to another include:

• The government will shift from 'Keep satisfied' to 'Key player' if a company found that a batch of their products contained different ingredients to that described on the packaging and this could lead to a fine being levied by the government.

• Customers would be in the 'Minimal effort’ quadrant before the invention of social media and shift to the ‘Keep Satisfied’ quadrant after the invention of social media because their comments on the social media will influence other potential customers.

• An individual will shift from 'Keep informed' to 'Minimal effort' if they held 5% of a company's shares but are now selling most of their holding.