In any one strategic decision, the interests of one stakeholder group can conflict with those of another. For example, a business firm’s decision to use only recycled materials in its manufacturing process may have a positive effect on environmental groups but a negative effect on shareholder dividends. In another example, Maytag Corporation’s top management decided to move refrigerator production from Galesburg, Illinois, to a lower-wage location in Mexico. On the one hand, shareholders were generally pleased with the decision because it would lower costs. On the other hand, officials and local union people were very unhappy at the loss of jobs when the Galesburg plant closed. Which group’s interests should have priority?
In order to answer this question, the corporation may need to craft an enterprise strategy—an overarching strategy that explicitly articulates the firm’s ethical relationship with its stakeholders. This requires not only that management clearly state the firm’s key ethical values, but also that it understands the firm’s societal context, and undertakes stakeholder analysis to identify the concerns and abilities of each stakeholder.