Tuesday, March 3, 2009

Are Competitors Stakeholders?

Traditionally, the definition of a company's stakeholder is something like: "Individuals, groups, or organizations that are affected by or can affect the company's performance." The usual suspects are customers, special interest groups, regulators, the media, suppliers, bankers, distributors.

I like to add competitors to that list, because they can be directly affected by a company's performance and, in turn, directly affect their competitors' performance. For example, Nortel's competitors are specifically targeting its customers while the company is in Chapter 11 bankruptcy reorganization, according to BusinessWeek. Doesn't that make Nortel's competitors its stakeholders?

Another example: Volkswagen is a key stakeholder of its auto rivals, and the reverse is also true. Quoting from MotorAuthority: "VW hasn't been shy about proclaiming its intentions - in 2007 it said that Toyota was its only real competitor on the world stage, and later that year set a goal of catching Toyota in terms of overall sales and financial success within a decade."

One last point: The traditional definition assumes that a company should consider how its decisions and actions will affect stakeholders. Of course, competitors are legally forbidden to discuss and coordinate pricing plans and activities (at least in the U.S. and Europe). But that doesn't mean a company can't target a rival's customers or set a goal of dethroning the market leader. Both situations would certainly have an effect on the performance of the company and its rivals. In both situations, competitors would be stakeholders of each other.

Do you agree? See my update on this topic here.

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