Stakeholder Analysis Theory: Allegiance Air Company' Case | Free Essay Example

Stakeholder Analysis Theory: Allegiance Air Company’ Case

Words: 691
Topic: Business & Economics

Brief overview of the theory

In this research, stakeholder analysis theory was used to identify the parties that are likely to lose, gain or be affected in a given manner as a result of the outcomes of an action, a process or a program at Allegiance Air. This theory identifies each shareholder based on individual needs as well as desires with respect to the program, project or action (Johnson, Melin & Whittington 2003).

In addition, this theory determines whether each party is a primary or secondary stakeholder. It further analyzes the degree of interest and influence each stakeholder has on the outcomes of a project, action or program in the company (Savage, Nix, Whitehead & Blair 2001). According to this theory, a primary stakeholder is the key party that is directly involved in the activities of the corporation while secondary stakeholders are those parties having indirect relationship with the internal environment of the corporation.

Critical analysis

This theory was chosen to identify and examine stakeholders at Allegiance Air based on the knowledge that stakeholders and a given business organisation have a certain relationship, which has a profound significance in the business process (Cameron, Seher & Crawley 2010). Stakeholder analysis theory was chosen because it has a number of strengths that help analysts to define and examine individuals or parties who have an interest or set of interests in the company. It also identifies individuals and parties who are likely to be affected by any action the company might take (Mitchell, Agle & Wood 2007).

One of the major strengths of the theory is its consideration of power, need, influence and support. In any organisation, these aspects define the dimension of the organisation’s business and relationship with other individuals that affect its operation (Jacobs & Shapiro 2010). In defining stakeholders at Allegiance, the dimension of “power” is used to define stakeholders based on the strength of their control on one or more aspects of the corporation and its business (Cameron, Seher & Crawley 2010).

This theory examines each stakeholder based on the amount or degree of power on the corporation. In this context, the dimension of power was stated as high, low or medium. Shareholders were found to be the major and key stakeholders in Allegiance (Turner & Kristoffer 2002). Therefore, the theory identified Yahoo Finance as the major stakeholders in order of priority because the company’s employees own 21% of Allegiance in terms of shares (Johnson & Scholes 2009). Secondly, the theory considers suppliers as stakeholders to the company because their actions in supplying key aspects of Allegiance’s operations have profound impact on the company’s business (Weaver 2007).

In addition, it is worth noting that the theory has taken into account the modern knowledge that employees are part of the company. It attempts to shun the old thought that employees do not own the company (Mendelow 2001). In this particular concept, employees are the mechanism through which an organisation fulfills its corporate mission and vision (Hemmati, Dodds, Enayti, McHarry 2002).

It is also clear that this theory has taken into consideration the contemporary knowledge that corporate social responsibility is an important task for any business that seeks to survive in a given community. For instance, it considers customers and the local community as a part of the company, an important part of corporate social responsibility (Brugha & Varvasovszky 2010).

Nevertheless, this theory needs additional improvement in order to ensure that it effectively provides a good channel for identifying all the individuals who are likely to be affected by an action or process the company might take (Hein, Tziolas & Osborne 2011). In this case, it should be improved by looking at an evidence-based study on the company’s daily business to identify new parties that have at least some significant relationship with the organisation or its business, including the authorities that control some of its activities (Fletcher 2003).

In addition, the theory could be used in a better way to examine the relationship between the company or its processes and those of other parties such as suppliers. It is advisable to use the convergent stakeholder theory proposed by Jones and Wicks (2009).


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