Are we a

stakeholder
in this
incident?
 OWNERS & STAKEHOLDERS

People who have an interest, claim or stake in an organization, in

what it does, and in how well it performs
Interest – fringe stakeholders
Inside stakeholders: closest to the organization and has the
strongest or the most direct claim on organizational resources
Outside stakeholders: people who do not own the organization,
not employed by it and have some interest in it
Inducements > contributions
Class Activity 4A (Individual): Consider two roles you were involved before joining XLRI. Compare the
stakeholders, conflict and coalitions across those two roles: Submission dure before the session on 26.09.22
2
OWNERS & STAKEHOLDERS

July 23, 2023 3

 OWNERS & STAKEHOLDERS
COMPETING GOALS
Formation of coalitions
Primary goal of the organization -
maximizing shareholders wealth?
Area for conflict?
1. Long term vs short term orientation
2. What is the goal for an organization?
Case 1
Allocation of rewards
Organizational viability and dominant coalitions
Organizational Structure, Design and Change July 23, 2023 4
 CLASS ACTIVITY (Working in pairs)
• Choose any two departments from a previous organization and focus on the
difference between two departments, while identifying:
A. The stakeholders of both departments (target minimum 12 each)
B. The coalitions those stakeholders belong to (may consider any relevant issue)
C. Relative power and dynamics influencing power equation of those coalitions for
last 3-5 years
Those who are keen on advanced analysis may focus additionally on:
A1: Whether the inducement and contribution of same stakeholder is similar for both departments
A2: Are there subgroups within a larger stakeholder category
B1: Categorize coalitions into supporting, opposing, neutral coalitions
B2: Consider the possibility for subgroups within one of the stakeholder category you have considered
C1: Factors influencing changes in relative power
C2: How to work with your declared enemies and opponents on mutually accepted terms
 ORGANIZATION AND ITS STAKEHOLDERS
TOP MANAGERS AND ORGANIZATIONAL AUTHORITY

Authority: the power to hold people accountable for

their actions and to make decisions concerning the
use of organizational resources
The board of directors: monitors corporate managers’
activities and rewards corporate managers who
pursue activities that satisfy stakeholder goals
− Inside directors & Outside directors:
Chain of command: System of hierarchical reporting
relationships in an organization
Hierarchy: Classification of people according to rank
Organizational Structure, Design and Change July 23, 2023 6
Upendra Kr Sinha

Jamshedpur
 ORGANIZATION AND ITS STAKEHOLDERS
AGENCY THEORY

• Agency problem: a problem in determining

managerial accountability which arises when
delegating authority to managers
Moral hazard problem
− Very difficult to evaluate how well the agent has
performed because the agent possesses an information
advantage
− The agent has an incentive to pursue goals and
objectives that are different from the principal’s

Organizational Structure, Design and Change July 23, 2023 8

 ORGANIZATION AND ITS STAKEHOLDERS
AGENCY THEORY
Solving Agency problem:
Use Governance Mechanisms
Board of Directors
CEO and Board Chairman should not be the same
Right Set of Incentives
Stock option plans
Promotion tournaments and career paths
More disclosure
Salary details
Need for CEO to sign the balance sheet
Organizational Structure, Design and Change July 23, 2023 9
 Market Leader in VUCA World
1. Has the value creation stage of Maruti Suzuki has changed during 2011-22 period? Explain
2. How do you compare the environment of organizations such as Maruti Suzuki India Limited (MSIL), Suzuki
Motor Corporation (SMC) and Suzuki Motor Gujarat Pvt Ltd (SMGPL)? Feel free to search for additional
details in internet. Are they same and what are the implications? Also compare the environment and
emerging challenges of multiple plants of Maruti Suzuki?
3. How do you compare the stakeholder management issues reported in the case? Any application of concepts
such as inducement, contribution, coalition etc we discussed in class already?
4. Based on the case details, choose the year wherein in organization report maximum effectiveness based on
technical approach. Give reasons. If we shift focus to external resource approach, will the answer changes?
5. Any applications for the concept of bounded rationality discussed in chapter 3. Explain
6. Are you able to identify any moral hazard issues in this case? Whether the corporate Governance system is
working perfectly in this case?
7. How do you rate the competitive interdependency between Maruti and Toyota; feel free to additional facts
Questions 2, 5 and 7 are based on Chapter 3

July 23, 2023 Organizational Structure, Design and Change 10