Stakeholders are the ones who play a huge role when it comes to businesses and project managers in knowing those individuals or groups affected by their projects. An example of stakeholder analysis is the construction project involving the government, community, investors, and employees. Knowing and classing the stakeholders mentioned above will better inform businesses in deciding and reducing conflicts. This process mainly involves identifying stakeholders, mapping the environment, and involving stakeholders to distribute the project successfully. It is essential to understand the impact and interest of stakeholders to provide a sound base on which the engagement strategy will be developed.
What is Stakeholder Analysis Matrix?
A stakeholder analysis matrix is a tool used to categorize stakeholders according to the degree of power and interest in a project. As a result, the matrix with this technique highlights key players in the engagement-inner function. It provides a structured approach for evaluating the degree and nature of engagement with stakeholders.
All You Need To Know About Stakeholder Analysis Matrix
The matrix for stakeholder analysis has four quadrants:
- High Power – High Interest: The most potent groups of stakeholders are reckoned herein. These stakeholders must be considered for analysis at all levels since their needs are paramount in decision-making and hinder smooth project progress.
- High Power – Low Interest: They possess considerable power but exhibit low interest in project day-to-day happenings. They must be kept satisfied as they might not be activated into blockers, who would delay or even resist a project.
- Low Power – High Interest: Such stakeholder groups are few and are not in a position of power, so they should be kept up to date and engaged because they may become either advocates or practical hindrances.
- Low Power – Low Interest: Such stakeholders would have little influence. Therefore, they need routine monitoring. The project hardly influences them, but changes that are outcome-related can undoubtedly have an indirect impact on their lives.
Importance of Stakeholder Analysis Matrix
A stakeholder analysis matrix is a device used to classify stakeholders based on the level of strength and interest in a project. With this approach, the matrix identifies prominent players in engagement-inner functions. The importance of the stakeholder analysis matrix is given below:-
- Concentrate on Key Stakeholders: One-way managers can prioritise stakeholders is by impact; this allows attention to be paid to the most crucial, ensuring effective resource allocation.
- Waste of Spending: Businesses can direct their efforts, time, and money to the most impactful areas to avoid unnecessary spending.
- Improved Communication and Engagement: Organizations can tailor communication strategies to each stakeholder using the correct grouping. It ensures that the most relevant people stay informed and engaged.
- Preventing Stakeholder Conflicts: Solving issues early allows companies to prevent conflicts from escalating, limiting potential delays and resistance.
- Role of Guides Decision-Making: The matrix provides a definitive structure for its managers to design strategies and make informed decisions.
Stakeholder Analysis Example
Real-World Elements of Infrastructure Projects Inspired by a company wanting to build a new highway. Stakeholders in this issue can be government bodies, construction companies, environmentalists, residents, and investors. These groups have different interests, power levels, and influence over the highway project.
Example 1: A New Highway Construction
A multitude of stakeholders have essential roles in a highway construction project. That includes approving a permit, establishing regulations, and paying for a portion of the project. Land acquisitions, noise pollution, and traffic distributions will affect residents, who must be appropriately engaged. Banks, insurers, or investors fund the project in anticipation of long-term revenue, generally through tolls or public-private partnerships. The construction companies execute and complete the work on time and within budget. Environmental organisations could fight or endorse the project depending on its ecological impact. You reflect on these stakeholders so that you can strategically plan to work with them and so that your project can go through the approval stages, build, and deliver with minimal conflicts.
Example 2: Starting a New Software Product
A company developing new software to be made as an application thinks about multiple stakeholders. Coding and testing are two significant activities for developers when building a product. Project managers manage the process, keeping tabs on deadlines and budgets. Sales and Marketing teams add pounds for the software. They listen to customer feedback for features and improvements. Investors will be funding the project expecting a return on investment because regulatory authorities have to enforce compliance with data protection and cybersecurity laws. Engaging with these stakeholders can help avoid delays, promote user satisfaction, and drive increased software adoption.
Example 3: Hospital Expansion Project
Many people and organisations are involved in expanding a hospital (for example). The project is overseen by hospital management, who ensure organisational goals and objectives are met. Doctors and nurses need better facilities and machinery to provide better patient service. Consumers enjoy enhanced amenities and lower wait times. Building codes and zoning regulations are the purview of local authorities. Construction companies handle the expansion, and neighbourhood groups might complain about noise access. Stakeholders managed well, leading to regulatory approvals with as little disruption as possible; a successful expansion benefits all involved.
Real World Example: Stakeholder Analysis Steps
Stakeholders are the ones who play a huge role when it comes to businesses and project managers in knowing those individuals or groups affected by their projects. An example of stakeholder analysis is the construction project involving the government, community, investors, and employees. The steps in Stakeholder Analysis are as follows:
- Stakeholder identification: Identify all stakeholder groups that are positively or negatively impacted by the project. But knowing who they are and what their role and interests are in the decision-making process will be appropriating so that no major players are missed in the creation of policy.
- Stakeholder Analysis: Power Interest Grid: A matrix is created for the stakeholders of your project based on their power and interest levels. This data helps determine their strategy and how often they will receive communications.
- Stakeholder Engagement Strategy: This strategy is designed to enable the project team to effectively engage with stakeholders.Establish a roadmap for reporting and bringing stakeholders on board. It should be tailored to the situation of each group but further help them engage and support.
- Clarifying Communication Strategies for Stakeholders: Adapt communication strategies in consideration of stakeholders. It promotes transparency and enhances the relationship between the organization and the shareholders.
Stakeholder Mapping Example
One of the defining examples of stakeholder mapping is the emergence of stakeholders and a diagram. Example of Key Stakeholders In a project IT, the project sponsors, developers, customers, end-users, and regulatory bodies. A stakeholder map does this by categorising them internally and externally by levels of influence.
Types of Stakeholders in a Business
- Internal Stakeholders – Employees, managers, and owners fall under this group. They affect everything from business operations to decision-making processes.
- Outside Stakeholders – Customers, suppliers, investors, regulatory authorities. They affect business growth and reputation in the market.
- Direct Stakeholders – These stakeholders are directly involved in business activities, and their involvement impacts the day-to-day operations and success of the company.
- Indirect Stakeholders – The business results touch them but are not involved in everyday operational-level activities. Their effects tend to be both long-term and strategic.
Relevance to ACCA Syllabus
Stakeholder analysis is a key component of Corporate governance, Strategic management decision-making and Risk management in the ACCA syllabus. It allows accountants to consider how differing stakeholder interests affect financial reporting and auditing and those who run businesses. It is one of the core elements taught in higher-level ACCA exams (i.e. Strategic Business Leadership (SBL) and Corporate and Business Law), where ACCA students – understanding of stakeholder analysis enables them to ensure ethical and sustainable decision-making.
Stakeholder Analysis Example ACCA Questions
Q1: An example of primary stakeholders of a firm is?
A) Local communities
B) Environmental activists
C) Government agencies
D) Shareholders
Ans: D) Shareholders
Q2: Suppliers form a firm’s core stakeholders. What is the relevant approach to stakeholder management?
A) You are acting against the interest of the supplier
B) Cultivation of long-term partnerships and contracting
C) Not informing the supplier of the reduction in payment
D) Fresh food suppliers are no longer included in the financial plan.Introduction
Ans: B) Cultivation of long-term partnerships and contracting
Question no 3：How is stakeholder analysis helpful in making ethical decisions in corporate governance?
A) that the precision in the financial statements is rigged
(B) It provides ethical sustainability for various stakeholders
C) it emphasises maximizing returns to the shareholders
D) It decreases the role of external regulators
Ans: B) t provides ethical sustainability for various stakeholders
Q4: A holding company is operating and managing subsidiaries around the world. As it expands into new geographies, what do you evaluate to understand how a new environmental law will impact its operations? Which is the First Stakeholder group toanalysee?
A) Customers
B) Government regulators
C) Employees
D) Competitors
Ans: B) Government regulators
Q: Which strategic planning tool is used to analyse stakeholder power and interest to determine their influence on business decisions?
A) Mende low’s Matrix
B) Porter’s Five Forces
C) Balanced Scorecard
D) SWOT Analysis
Ans: A)Mende low’ss Matrix
Relevance to US CMA Syllabus
Stakeholder analysis is an essential part of global strategic management accounting, performance assessment, and decision-making, covered in the US CMA syllabus. Business strategy demands budgeting, cost control, and risk assessment through stakeholder analysis, and CMAs have this capability. It supports management accountants in evaluating the financial implications of stakeholder expectations and ethical considerations.
Stakeholder Analysis Example CMA Questions
Q1: Which of the following is an external stakeholder in management accounting?
A) Shareholders
B) Internal auditors
C) Financial analysts
D) Board of Directors
Ans: C) Financial analysts
Q2: You are a CMA who suggested a company consider customer preference in product pricing. This is an example of:
A) Cost reduction strategy
B) Stakeholders influence Decision Makers
C) Analysis of the financial statement
D) Regulatory compliance
Ans: B) Stakeholders influence Decision Makers
Q3: Why should a management accountant undertake a stakeholder analysis before implementing any cost-cutting measures?
A) To make sure cost cuts do not harm key stakeholders
B) For matching criteria reduction of financial reporting
C) To remove the need for stakeholder involvement
D) To maximise profit at the cost of constituents
Ans: A)To make sure cost cuts do not harm key stakeholders
Q4: A company is launching an automated cost management system— Which stakeholder is bost impacted?
A) Customers
B) Employees
C) Investors
D) Government regulators
Ans: B) Employees
Q5: What is the primary focus of stakeholder analysis in strategic decision-making?
A) Pursue only short-term profits
B) Looking beyond stakeholders just being money
C) Balancing the profit vs morality interests of stakeholders
D) Board member’s decisions only at first
Ans: C) Balancing the profit vs morality interests of stakeholders
Relevance to CFA Syllabus
From a CFA perspective, stakeholder analysis falls under investment analysis, risk management and corporate governance as integral. A Financial Analyst understands how various stakeholders influence business performance, stock value and sustainability. This idea is particularly relevant in specific ethical investing and shareholder engagement tactics models.
Stakeholder Analysis Examples CFA Questions
Q1: What type of stakeholder analysis will a CFA? The most relevant external stakeholder is?
A) Employees
B) Environmental groups
C) Internal auditors
D) Board of directors
Ans: B) Environmental groups
Q2: How would you say stakeholder analysis ties into how investments are made?
A) It assists analysts in evaluating whether corporate action meets investor expectations
B) It has aa shorttermm return focus
C) It no longer matters if you have any market risk
D) It reduces the requirements for the analysis of financial statements
Ans: A) It assists analysts in evaluating whether corporate action meets investor expectations
Q3 Most: An Investment Analyst Is Analyzing a Company’s Plans to Engage Its Shareholders. This is an example of:
A) Risk assessment
B) Stakeholder management
C) Capital budgeting
D) Regulatory compliance
Ans: B) Stakeholder management
Q4: What are customer preferences, and why should an investment analyst consider them when conducting stakeholder analysis?
A) For market demand and long-term viability assessment
B) In order to create fewer compliance requirements
C) To prioritise short-term returns to investors
D) To exempt consumer rights issues
Ans: A) For market demand and long-term viability assessment
Q5 As a CFA, determine whether a corporation’s social responsibility programs impact investor confidence. This is an example of:
A) Portfolio management
B) ESG (Environmental, Social and Governance) analysis
C) Tax planning
D) Liquidity risk assessment
Ans: B) ESG (Environmental, Social, and Governance) analysis
Relevance to US CPA Syllabus
The US CPA syllabus already includes a baseline of topics for stakeholder analysis in financial reporting. Audit and regulatory compliance. Because financial information is so vital to these shareholders and management, a CPA should describe the role of the shareholders, regulators, and management in promoting financial disclosures and ethical behaviour. It shall connect to cater to the risks involved as it needs to be made transparenttof the stakeholders.
Stakeholder Analysis Example CPA Questions
Q: In which stakeholder group must a CPA consider when preparing financial statements?
A) Customers
B) Investors and creditors
C) Competitors
D) Community organisations
Ans: B) Investors, creditors
Q2. So, a CPA understands that government regulators must enforce tax laws. This is an example of:
A) Clean Financial Statements
B) Reaching out to stakeholders as per principles of regulatory compliance
C) Cost-cutting strategy
D) Maslahatlaringizni xavfsiz mahsulotga kesh qilish
An : B) Stakeholder analysis to ensure compliancewithf regulation
Q3: Stakeholder analysis helps CPAs in an audit to:
A) Risk of financial statements being misstated
B) Implicitly respond to the stakeholder expectations
C) Boost short-term profit margins
D) Hand over all your duties to corporate fiefdoms
Ans: Option A: Assess fraud risk factors that may affect the reliability of the financial statements
Q4: An example of an indirect stakeholder in the financial reports?
A) Shareholders
B) External auditors
C) Suppliers
D) Board of Directors
Ans: C) Suppliers
Q5: How do you view stakeholder analysis relevant to risk management from a CPA lens?
A) It also goes to the sleuth of a financial statement error risk and a conflict of interest
B) You can play around with statements
C) It ensures the benefit can be realised only by the insider.
D. That removes audit procedures
Ans: A ) Guides the risk in financial reporting and possible related party transaction conflicts
