CIPS Exam L5M4 Topic 3 Question 2 Discussion

Part 1: Three Categories of Stakeholders

Stakeholders are individuals or groups impacted by or influencing an organization. Below are three categories, explained step-by-step:

Internal Stakeholders

Step 1: Define the Category

Individuals or groups within the organization, such as employees, managers, or owners.

Step 2: Examples

Staff involved in procurement or executives setting strategic goals.

Outcome:

Directly engaged in operations and decision-making.

External Stakeholders

Step 1: Define the Category

Entities outside the organization affected by its actions, such as customers, suppliers, or regulators.

Step 2: Examples

Suppliers providing materials or government bodies enforcing compliance.

Outcome:

Influence or are influenced externally by the organization.

Connected Stakeholders

Step 1: Define the Category

Groups with a contractual or financial link, such as shareholders, lenders, or partners.

Step 2: Examples

Investors expecting returns or banks providing loans.

Outcome:

Have a vested interest tied to organizational performance.

Part 2: Method for Mapping Stakeholders

Step 1: Choose a Framework

Use the Power-Interest Matrix to map stakeholders based on their influence (power) and concern (interest) in the organization.

Step 2: Application

Plot stakeholders on a 2x2 grid:

High Power, High Interest: Manage closely (e.g., executives).

High Power, Low Interest: Keep satisfied (e.g., regulators).

Low Power, High Interest: Keep informed (e.g., employees).

Low Power, Low Interest: Monitor (e.g., minor suppliers).

Assess each stakeholder's position using data (e.g., influence on decisions, dependency on outcomes).

Step 3: Outcome

Prioritizes engagement efforts based on stakeholder impact and needs.

Exact Extract Explanation:

The CIPS L5M4 Study Guide covers stakeholder categories and mapping:

Categories: 'Stakeholders include internal (e.g., employees), external (e.g., suppliers), and connected (e.g., shareholders) groups' (CIPS L5M4 Study Guide, Chapter 1, Section 1.7).

Mapping: 'The Power-Interest Matrix maps stakeholders by their influence and interest, aiding prioritization in contract and financial management' (CIPS L5M4 Study Guide, Chapter 1, Section 1.7).

This supports effective stakeholder management in procurement. Reference: CIPS L5M4 Study Guide, Chapter 1: Organizational Objectives and Financial Management.