Chapter 4 - Stakeholders

Question 1

Categorisation and relationship of stakeholders

Answer 1

Principal - contribute capital, expect return, shareholders, debtholders

Agency - paid by principal to perform specific role, directors, trustees

Controllings - Supervise princpals/agents, regulators, professional bodies

Advisory - advise principals/agents, actuaries, lawyers, credit rating agencies

Incidental - affected by behaviour of principals/agents, creditors, suppliers

Question 2

Strategic alliances

Answer 2

Benefits:
Faster product development
Access to new markets
Sharing of financial risks
Economies of scale

Pitfalls:
Conflicts of interest
Waste of resources
Reputation linked
Intellectual capital and property loss

Question 3

Stakeholders

Answer 3

PAT DOG CARCASE

P Public
A Advisors
T Trustees

D Directors
O Other suppliers
G Government

C    Customers
A    Agencies     
R    Regulators
C    Creditors
A    Alliances
S   Shareholders 
E   Employees

Question 4

Customer management consists of

Answer 4

MARK

M Manage crisis
A Acquire new ones
R Retain current
K Know them

Question 5

Stakeholder conflicts

Answer 5

Companies should:
Understand interests, align where possible and include in corporate business plan

Agency risk
Remuneration
Financing
Dominant CEO
Low risk management decisions
Regulators & Government