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Do Large Companies Abuse Their Power Over Stakeholders?

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The term ‘stakeholder’ has many meanings and is a term that can be used to describe virtually any group of people related to an organisation. Large Companies, like many other companies, aim to make profit and so the main stakeholders would be the owners and shareholders, but according to Freeman (1951) this is not the case and large companies are supposed to consider other groups of shareholders such as employees and suppliers.

I believe that many large companies take advantage of stakeholders and abuse their power to exert force and make the outcome more positive for themselves. An example of this is in the energy market. The UK energy market could be considered as a natural monopoly, but recent articles suggest that tacit collusion has occurred with convenient changes in price at the same time by all the market players to ensure that “barriers to effective competition” are put in place (BBC News, 2014).

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Large companies do this in order to maintain their high levels of market share and it can be used to ensure that contestability is low and so the firms are at very little risk. This provides security for internal stakeholders such as employees, but has a larger, and far more significant negative impact on external stakeholders such as the customers, which in this case is the entire country.

Large companies are able to pick and choose which stakeholders they want to pay most attention to in order to result in the most profitable outcome, completely disregarding the external costs. Contradictory to the fact that Brower and Mahajan (2012) stated that firms need to be aware of all stakeholders and face risk if diversity of needs isn’t considered, large companies still abuse certain groups of stakeholders. For example, Sports Direct see some stakeholders as more equal than others as they focus on their sales, but have a poor attitude to employment and abuse the use of pensions (Financial Times 2017).

A company like sports direct will have seen employment as an area that they are able to abuse and make the overall performance better. This will be done at a corporate level internally using the tool of stakeholder mapping to rank stakeholders based on importance (Ghasemzedah and Molas-Gallart 2009). For Sports direct the employees will be ranked with low power and interest because most of the jobs are very low skilled and basically many people are eligible for that job. Sports Direct can do this because they are that large that they do not really rely on customer service as they can hide behind their massive brand.

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Do Large Companies Abuse Their Power Over Stakeholders? (2022, February 21). Edubirdie. Retrieved December 5, 2022, from https://edubirdie.com/examples/do-large-companies-abuse-their-power-over-stakeholders/
“Do Large Companies Abuse Their Power Over Stakeholders?” Edubirdie, 21 Feb. 2022, edubirdie.com/examples/do-large-companies-abuse-their-power-over-stakeholders/
Do Large Companies Abuse Their Power Over Stakeholders? [online]. Available at: <https://edubirdie.com/examples/do-large-companies-abuse-their-power-over-stakeholders/> [Accessed 5 Dec. 2022].
Do Large Companies Abuse Their Power Over Stakeholders? [Internet] Edubirdie. 2022 Feb 21 [cited 2022 Dec 5]. Available from: https://edubirdie.com/examples/do-large-companies-abuse-their-power-over-stakeholders/
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