Financial stakeholders and expectations

January 05, 2020

A stakeholder is a member of groups without whose support the organization would cease to exist (Freeman & Reed, 1983) [1]. Here below an analysis of Umbrella’s key financial stakeholder done using ‘The power matrix’ methodology (Scholes, et al., 1998)[2] together with an explanation of their level of interest and power in the company.

Name Expectations Group
Customers In an industry where competition is very high online players look for fast and reliable first-class service that offers top-notch online products and the best 24 by 7 customer support service. C
Employees Following Maslow’s hierarchy of needs, the employees of a company search for physiological and safety needs, social belonging, self-esteem, self-actualization. This means a work environment where they are treated well, rewarded for their job in a fair manner and where they can express their talents. Thanks to a stock options program, Umbrella employees are also company’s shareholders so their economical interest doesn’t stop to their monthly salary D
Game providers and sports betting services Umbrella, like other gaming operators, offers products built by game providers while odds are provided by sport betting services. These suppliers are key players because they define the operator’s products. Their revenues are proportional to operators’ incomes C
Non-gaming suppliers Unlike game providers Umbrella uses many not key suppliers (eg. internet providers) While they offer the company a standard service, they expect to be paid on time for their services. These shareholders do not see Umbrella a special customer, probably just one of the many A
Gaming authorities Gaming industry rules are different across the globe. A change in the legislation could have a big impact on operators but this doesn’t happen often and when it does it is not a sudden change so affected entities always have also time to be prepared A
Shareholders When a person, company, or institution owns a share of a company’s stock is shareholder or stockholder. Financial profits distributed as dividends or increased stock valuations are the rewards shareholders expect for the money they invest when they buy a company’s part. Small shareholders have not enough power to impact company’s decision while big shareholder can, and they do that, by influencing the board of directors B
Board of directors In every public company shareholders are represented by a group of elected individuals. They are a governing body that meets regularly and sets policies for corporate management. Board members represent both management and shareholder interests. Most of the time they are also shareholders so the success of the company is also their interest. D

Figure 1 below summarizes shareholders’ expectation level detailed in Table 1. In this visualization subjects are grouped in four different type:

  • A. Low power, less interested people (Monitor)
  • B. Low power, highly interested people (Keep Informed)
  • C. High power, less interested people (Keep Satisfied)
  • D. High power, highly interested people (Manage Closely)

Shareholders’ expectation

References

  • [1]: Freeman, R. E. & Reed, D. L., 1983. Stockholders and Stakeholders: A New Perspective on Corporate Governance. California Management Review, 25(3), pp. 88-106.
  • [2]: Scholes, K., Johnson, G. & Whittington, R., 1998. Exploring Corporate Strategy. 8th Edition ed. Upper Saddle River, New Jersey: Prentice Hall.

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Written by Claudio Maccari . Passionate developer and former windsurfer. You can read more about me here