Slide 2.

Public Sector Marketing

Tony Proctor

Tony Proctor, Public Sector Marketing, 1st Edition © Pearson Education Limited 2007
Slide 2.2

Chapter 2

The stakeholder value approach

Tony Proctor, Public Sector Marketing, 1st Edition © Pearson Education Limited 2007
Slide 2.3

Stakeholder theory

• Stakeholders are held to be those individuals or

groups that have a ‘stake’ in the organisation
• Stakeholders often include customers,
employees, management, stockholders,
creditors, suppliers, community and sometimes
even competitors.

Tony Proctor, Public Sector Marketing, 1st Edition © Pearson Education Limited 2007
Slide 2.4

Stakeholder interests

There is not a generic list of stakeholder interests.

Each case has to be taken on its merits but one
may make some generalisations about what may
be pertinent to specific settings.

Tony Proctor, Public Sector Marketing, 1st Edition © Pearson Education Limited 2007
Slide 2.5

Value for stakeholders as the objective

• It was suggested that creating value for shareholders

was the prime objective of any profit making corporation
(viz. Doyle, 2000).
• Shareholders are only one set of stakeholders in a
business. Customers, employees, suppliers and many
other sets of people and organisation also have a
vested interest.
• A more complex overall objective for a profit/non-profit
making organisation would be to create value for its
stakeholders in order to retain their interest and
commitment of time and investment, financial or
otherwise, to the organisation.
Tony Proctor, Public Sector Marketing, 1st Edition © Pearson Education Limited 2007
Slide 2.6

Power of different stakeholders

• Stakeholders have different perceptions

regarding the significance of their own stake,
how management values their stake, and with
respect the power of influence they have with
management.
• Powerful stakeholders possessing legitimate
claims might expect preference to be shown to
their opinions and wishes (Starik, 1994).

Tony Proctor, Public Sector Marketing, 1st Edition © Pearson Education Limited 2007
Slide 2.7

Organisational effectiveness the goal

• Stakeholder value is increased when organisational

thinking shifts away from efficiency toward
effectiveness.
• Effectiveness is about making the right decisions for
the future. Performance management tries to
identify operations and activities that create and
destroy value.
• This enables organisations to take appropriate
action as a consequence to maximise stakeholder
value and improve customer satisfaction.

Tony Proctor, Public Sector Marketing, 1st Edition © Pearson Education Limited 2007
Slide 2.8

Strategies that sustain value

Through maintaining good long-term relations with

stakeholders organisations can engender and sustain
value. First let us consider a number of ideas about value in
this relationship context (Christopher et al. 2002).
• Value is created as an offering and delivered through
recurrent transactions within a managed relationship.
• Value is created through mutually interactive processes
and shared through negotiated agreement within the life
of a relationship.
• Value is created and shared by interactions that emerge
from within networks of relationships.

Tony Proctor, Public Sector Marketing, 1st Edition © Pearson Education Limited 2007
Slide 2.9

Difficulties and restrictions in

implementing stakeholder value analysis
Top management’s capacity to take into consideration
the interests and expectations of multiple stakeholders
can create problems when formulating and
implementing strategies. Measurement systems may
help deal with the complex uncertainty that exists with
respect to stakeholder and public expectations.
However, while financial measures are well developed,
non-financial measures such as those of assessing and
balancing stakeholder expectations are less refined.

Tony Proctor, Public Sector Marketing, 1st Edition © Pearson Education Limited 2007
Slide 2.10

Best value policy concept

• arose as a response to perceived problems of variable

quality; lack of clarity in direction; and a lack of
coherence and cohesion in service delivery
• was intended to give back responsibility for service
provision to local government and to ensure local
government's responsiveness to the local community
• provided encouragement for authorities to employ a
more strategic view of service provision
• called for the systematic review of service activities, to
encourage performance planning and to facilitate
continuous improvement

Tony Proctor, Public Sector Marketing, 1st Edition © Pearson Education Limited 2007