Know Your Stakeholders - Mendelow's Matrix

Mendelow's Matrix is one of the most frequently used matrices in the business world. The only purpose of using Mendelow's Matrix is to evaluate the stakeholders of a business. More specifically, what stakeholders have more or less power to influence the business and what stakeholders have more or less interest in the business and any combinations of the two. 

Following is the Mendelow's Matrix.

As the diagram above displays, there are basically four types of stakeholders that a business has to be aware of. 

01) High Power & High Interest stakeholders

This is shown at the top, right hand corner square of the matrix. These stakeholders have a high influence over the business and also they are very much concerned about the business and it's activities. 

The business should pay a very close attention to the needs of these stakeholders because their withdrawal from the business could mean trouble. 

High Power & High Interest stakeholders are usually main shareholders of the company, main investors of the company, government environmental authorities etc. 

NOTE:

The examples for stakeholders for each category will vary vastly depending on the type of business you are in. For a business that deals with chemicals, environmental authorities will be a high power-high interest stakeholder. For a company dealing with medicine, health authorities will be a high power-high interest stakeholder. 

02) High Power & Low Interest stakeholders

These stakeholders possess a high power to influence the business but are not much interested to do so. They will involve only when they need to. They are not much worried about the sustenance of the business. The Government towards a normal business organization may have this kind of relationship. A government will only meddle with the business activities only when necessary. 

03) Low Power & High Interest stakeholders

Employees of an organization can be fit into this description. Employees will be constantly worried about their job security, their pay, promotions etc. So that means they have a high interest towards the business. But being employees, they possess low power to influence any business activity of the organization. 

04) Low Power & Low Interest stakeholders

For most general organizations, customers can be identified as low power, low interest stakeholders. Customers anyway have a low power against a company, unless and otherwise they are organized against the company. Also customers will be rather less interested in the activities of the company as long as they receive their good or service from the company. 

As I have mentioned above the role each stakeholder performs will vastly depend on the type of the organization. So there are no standards set in stone that this stakeholder should possess this much power and interest. It will vary from one business to another, even in the same industry. So you will have to identify the type of business the organization does and think on that who and who will be more or less interested in the activities of the business and who and who will or will not possess a high or a low influence on the activities of the business. 

What is TOPCIMA?

TOPCIMA (code name T4) stands for 'Test Of Professional Competence In Management Accounting'. This is the fifth and the final stage of the CIMA professional qualification offered by CIMA UK. 

To reach the TOPCIMA stage one had to come through four other stages, namely, Foundation Level, Operational Level, Managerial Level and Strategic Level. 

The Pre-seen 

TOPCIMA consists of one paper based on a pre-seen and an unseen case scenario. The pre-seen will be issued a few months before the standard exam dates (May and November). The pre-seen will consist of a fabricated business scenario, developed through real world and real business implications and situations. Usually the pre-seen will cover a wide array of the business and the industry in which the business operates. 

The pre-seen will start from usually the incorporation of the business or at least will give a few details about the incorporation, if the focus is on other aspects. Then the pre-seen will provide the background to some specific areas of the business, of which the unseen issues can be developed later. Such areas are, 

1. Issues with the incorporation
2. Issues with the management/BOD
3. Issues with the business performance
4. Issues with the business financials
5. Issues in relation to HR of the business
6. Issues in relation to technology of the business
7. Issues in relation to competition of the business
8. Issues in relation to new investments/divestment
9. Issues in relation to undertaking new projects
10. Issues in relation to expansion of the business
11. Issues in relation to business takeovers, partnerships, mergers and acquisitions
12. Issues in relation to opportunities and threats of the external environment
13. Issues in relation to business closure/liquidation.

Only a basic background story for such issues will be given in the pre-seen. Mostly they do provide some financial information relating to the current/past/future years in preparation to the unseen issues they will raise.

So it is highly advised that a student facing for the TOPCIMA exam has a thorough understanding of the operational, strategic and financial situation of the specific business and the industry given in the unseen. It will help to remember some critical information out of the pre-seen so that the student does not have to refer to the pre-seen again and again and waste time at the exam. 

The Unseen 

The unseen will be given at the exam and will have specific issues that have developed within the time. Usually 5 issues under five different topics/segments will be given in the unseen and they will not necessarily appear in any order of significance. 

The student is expected to prioritize (order the issues in a logical basis) the issues when they are presented in the report. Unlike Strategic level case study, TOPCIMA case study will require a great degree of integration between the pre-seen and the unseen. The student should be able to draw out information form the pre-seen to support the issues/recommendations for issues given in the unseen.

A 20 minute time slot will be allocated for reading the unseen and another 3 hours to write the full report. 

The unseen will usually focus on a maximum of three calculation based issues and an ethical issue. The financial analysis based issues should be supported by proper calculations shown in the separate booklet give, named 'Supplementary Booklet'. 

Balanced Scorecard: A Balanced Approach to Business Analysis

Balanced Scorecard is a modern business analysis model that provides a quite balanced or 'holistic' analysis of the business. This means that Balanced Scorecard does not mrerly focus on one aspect of business such as financial preformance, but rather focuses on the improvement of the business aspects all around.

Balanced Scorecard focuses on four main aspects as depicted by the diagram below.

Dimensions of Balanced Scorecard

01) Financial Perspective

Financial perspective focuses on the achievement of the financial objectives of the organization. Pretty much most of the objectives of a general business organization tend to financial in nature, such as, achieving a certain level of profits, reaching a specific revenue target, reducing costs etc. These are all important and relevant objectives for a business, but the Balance Scorecard shows that merely financial objectives are not enough for a successful enterprise.

02) Customer Perspective

This is where a business has to be concerned, in almost all the ways, about the customer. 'Customer is the King , so needs to be treated as such. Customer feedback on satisfaction level, required additional products or services, customers' expectations etc are variables of this dimension. Always the focus will be on providing a 'better' service to the customer so that the customer will retain and hopefully bring in more customers in the long term.

03) Internal Business Process Perspective

This aspect mainly focuses on the improvement of the process of the business. Aspects such as improving the efficiency, productivity, success of the internal controls, systems and processes etc are the variables of thsi dimension.

04) Learning and Growth Perspective

This says that an organization always has to be positive about 'learning and growing'. Or simply put, the organization has to continuously be improving and keeping up with the changing environment. Employee and management training and development, improving technologies used in organization, focus on expansions and growth are a few variables of this dimension.

Balances Scorecard is a relatively modern business analysis tool and is being recognized as a valuable tool for measuring business performance. An overall idea of the concept is critical for the successful management of the modern business organizations.