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Shareholder Value (SHV) = Total Value of the Company Total Value of Debts
5
(1)
The total value of a company considers the results of the operating free cash flow calculation
(OFCF), forecasting horizon calculation, residual value calculation (RWU), and the weighted
average cost of capital (WACC). The SHV can ultimately be calculated with the following
formula:
6
(2)
SHV:
Shareholder Value
OFCF:
Operating Free Cash-Flow
WACC:
Weighted Average Cost of Capital
MV des FK: Total Value of debts
7
In addition, there are alternative shareholder oriented steering instruments based on the return
on capital employed (ROCE) method, economic value added (EVA) and market value added
(MVA) calculation, cash flow return on investment (CFROI) and cash value added (CVA)
calculation.
8
The shareholder value approach is furthermore a dedicated mathematical and sophisticated
calculation characterized by formulas and concepts.
1.1.2
The Stakeholder-Value-Approach
The stakeholder value approach is an analysis concept of the strategic management of a com-
pany. This approach takes into account that, in comparison to the first half of the 20
th
century,
most companies are public institutions. Such companies are more conflict affine and have to
handle complementary and contradictory interests from different internal and external par-
ties.
9
Clarkson's understanding of a company is "a system of stakeholder groups, a complex set of
relationships between and among interest groups with different rights, objectives, expecta-
5
Rf.: Poeschl, H. (2013), p. 85
6
Rf.: ibid, p. 86 - 100
7
Rf.: ibid, p. 100
8
Rf.: ibid, p. 101 - 111
9
Rf.: Figge, F., Schaltegger, S. (1999), p. 11
2
tions and responsibilities"
10
and he postulates the meaning that "a corporations survival and
continuing success depend upon the ability of its managers to create sufficient wealth, value
or satisfaction for those who belong to each stakeholder group, so that each group continues
apart of the corporation's stakeholder system. Failure to retain the participation of a [...] stake-
holder group will result in the failure of that corporate system"
11
Jones confirms this view when he discovered that "obligation to constituent groups in society
other than stockholders and beyond that is prescribed by law or union contract, indicating that
a stake my go beyond mere ownership."
12
According to Donaldson and Peterson as well as Evan and Freeman, there is a positive corre-
lation between the satisfaction of a stakeholders interests and the achievement of company's
targets.
13
Ulrich distinguishes two fundamentally different stakeholder value approaches:
The first is the strategic-stakeholder-concept; here the selection of important stakeholders is
done by the assessment of their power of their requirements with regards to the impact on the
future of the company. In this approach, stakeholders are defined as groups which have actual
or latent potential to influence the organization. Hence, the management will consider the
interests and requirements of the stakeholder if they help to maintain the corporation of all
involved parties or improve the reputation and acceptance.
14
The second is the normative-critical-stakeholder-concept; here all persons, groups or institu-
tions, independent from their power to influence or position of power, are considered as a
stakeholder. The relevant criterion is not the power but the ethical legitimacy of the require-
ments, independently from their strategic benefit to the organization.
15
Freeman lists the following groups as major stakeholders for companies:
x Management
x Employees
x Company owners
x Customers
10
Rf.: Clarkson, M. (1995), p. 107
11
Rf.: Clarkson, M. (1995), p. 107
12
Jones, T. (1990), p. 59f
13
Rf.: Poeschl, H. (2013), p. 131
14
ibid, p. 135 - 136
15
ibid, p. 136
3
x Vendors and suppliers
x Shareholder
x Competitors
x State, government and public service institutions
x Unions, organizations, special interest groups, media, NGO`s
16
The different stakeholders have contradictory requirements and it is the objective of the
stakeholder management, to integrate and bring them into a cohesive whole. Cornell and
Shapiro distinguish between explicit and implicit requirements. Explicit requirements are
based on regulations, law, rights, ownership, contracts or market relationships. Such contrac-
tually demands are distinct, identifiable and normally object of a company's strategic man-
agement. Implicit requirements, in contrast, are not legally binding and are not based on con-
tracts between a company and stakeholder.
17
They are based on ethic and morally commit-
ments. Due to this difference the instruments to enforce these requirements are also different.
As the implicit requirements are founded on moral, they are object to the normative critical
stakeholder approach.
18
1.2
Interests of different Stakeholder Groups
This section shades lights on the different requirements from the stakeholder groups and espe-
cially confines between share and stakeholder interests. A challenge in connection with the
identification of this requirements is, that some explicit and implicit requirements are not ex-
plicit formulated. Additionally it can be assumed, that one stakeholder group has beside ex-
plicit also implicit requirements and also different configurations of this requirements which
are changing in its kind over time and consequently can´t be considered statically. To tackle
these challenges, a company must continuously screen and analyse objectives, values and
environmental factors and motivations.
19
To reduce complexity, different authors defined typ-
ical generic requirements for the different stakeholder groups. Table 7 below shows these
insights.
16
Rf.: Freeman, R.E. (1984), p. 8ff
17
Rf.: Comell, B. und Shapiro, A. (1987), p. 5f
18
Rf.: Poeschl, H. (2013), p. 148
19
ibid
4
Stakeholder
Typical Requirement
Shareholder / Owner
Increase of company value
Dividend and power
Market profit
Board of directors
Lead of the company
Control
Securing shareholders-, employees- and outside creditors interests
Management
Professional perspectives
High and save income
Recognition and success
Power, social status and prestige
Influence, contribution and self-actualization
Employees
Job safety and safety at the workplace
Good working conditions
Social security
Earning a living
Professional- and self-fulfilment
Work-life balance and living quality
Training and education
Employees participation, responsibility and autonomy
Trade Unions
Workers satisfaction
Job engineering and union participation
Job safety and safety at the workplace
Securing and increasing the income of the represented employees
Survival of the company
Compliance to law and regulations
Customers
Satisfaction of needs and demands
Market performance, which fulfils the promised performance re-
garding, kind, mass, security, quality and price
Truthful information about the performance and property
Service and after sales performance
Additional benefit out of image of the product or the company
Suppliers
Secure the existence and development
Safety and independency
Stabile delivery conditions
Faire building of prices
Low power of demand
Outside creditors
Adequate interest rate of capital
Security of the capital
Power and control
State
Stability and growing economy
5
Equity / distributive justice
Interdependency
Distribution of power
Sustainability
Taxes and fees
Compliance to laws, norms and regulations
Prosperity of the private economy
Communities
Economic, social and environmental friendly development
Local employment
Environmental protection
Measures to secure social security
Taxes and fees
Relief from tasks
Compliance to laws, norms and regulations
Prosperity of local private economy
Public
Transparency, information and control economic operations
Social justice
Promotion of the public welfare
Measures to protect the environment
Compliance of corporate values and morale
Donations and foundations
Media
Information about activities of the company
Information to the public about the activities of companies and
their impact to the society, economy and environment
Provide information via direct and indirect communication chan-
nels
Corporations
Representation of in-
terests, lobby's and
unions
Utilisation of information and consultancy
Supply of information via direct and indirect communication
channels
Corporation
NGO`s
Monitoring and control of companies activities
Supply of information via direct and indirect communication
channels
Corporation and participation
Compliance of corporate values and morale
Protection of the public
Table 1: Stakeholder and their typical requirements
20
20
Rf.: Poeschl, H. (2013), p. 149 -151
6
As the table above is implying, shareholders may be the main and most important stakehold-
ers, because shareholders are impacted in a straight line by a company's performance, it has
become more usual for additional groups to be considered stakeholders, too.
21
Consequently,
the shareholders' interests are more financial and performance focused whereupon stakehold-
ers interests can have several and wide spread drivers.
1.3 Assessment of Stakeholders
After the identification of the stakeholder groups and its interests, it is important to assess
their power and the impact of their interests as well as defining how to interact with them.
1.3.1
The Stakeholder-Relevant-Matrix
For that reason, Müller-Stewens/Lechner defined the Steakholder-Relevant-Matrix, which
considers the assumption that not all stakeholders are equal in their importance for the com-
pany, and that according to their influence and the interference of these stakeholders the com-
pany leaders set their priories of dealing with them. The graph below is showing the principle
of the matrix and also indicates the generic response actions.
Influance of Stakeholder
Interference
of
S
takeholder
Background
actors
(inform regulary)
Playmaker
(grant hight
priorities)
Joker
(improve their
influance)
Ruels
(Professional handling at
reasonable effort)
Figure 1: Stakeholder Relevance Matrix
22
21
Rf.: DSS (2015)
22
Rf.: Müller-Stewens/Lechner (2005), p. 179
7
Clustered according to influence and interference there are four typical types of stakeholders:
x "Playmaker": As this stakeholder has a big influence and can be influenced easily it
defines the strategic management of the company to a large extend. To develop and
maintain the quality of the relationship a company can establish dedicated regulations,
fundamentals and strategies, such as permanent communication channels or a direct
vocal point, for this stakeholder.
23
x "Joker": This type has a big influence on the company but can´t be influenced easily.
Hence, the power is at the stakeholder, which courses, that the company will try to en-
hance their interference.
x "Ruels": They have a low influencing potential but are dependent from the company.
The management of this stakeholder group is characterised by the ethic and morally
principals of the firm.
x "Background figures": As there is no intensive resource dependency, this group takes
a meaningless and short time role in the stakeholder management of a company. This
group will be informed but there will be no much efforts therewith.
24
1.3.2
The Stakeholder Power Matrix
Another approach is to identify relevant stakeholder groups and the influence of these stake-
holders to the company leadership processes. Mitchell, Agle and Wood wrote: "To evaluate
stakeholder-manager relationships systematically, both actual and potential, in terms of their
relative absence or presence of all or some of the attributes: power, legitimacy, and/or urgen-
cy."
25
According to Winstanley, power can have two different forms:
x "Criteria Power": Is the power to define values and objectives
x "Operational Power": Is the power to influence the organization during the execution
of tasks.
26
Figure 3 shows Winstanleys Stakeholder Power Matrix. This matrix distinguishes between:
x ,,Arm`s Length Power", here the stakeholders have no direct power to make decision
to the working process, but have significant indirect influence to the fundamental val-
ues and objectives of the company.
23
Rf.: Müller-Stewens/Lechner (2005), p. 179
24
Rf.: Müller-Stewens/Lechner (2005), p. 180
25
Mitchell/Agle/Wood (1997), p. 867
26
Rf.: Winstanley/SorabjilDawson (1995), p. 19ff
8
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- , 2016, Stakeholders and their influence on managerial decisions, Hamburg, Bedey Media GmbH, https://www.anchor-publishing.com/document/317305
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