Case Assignment: The Corporation and Its StakeholdersIssueThe discussion case “A Brawl in Mickey’s Backyard” centers on a conflict between real estate developer SunCal and The Walt Disney Company.
In 2005, SunCal arranged to purchase 26-acres of land within the Anaheim Resort District. Upon acquiring the site, SunCal intended to develop 1,500 condominiums, 225 of which would be priced below the market rate. Since the Anaheim Resort District is specified for commercial recreation use only, SunCal required permission from Anaheim City Council to proceed with residential development.
Market and Nonmarket StakeholdersBusiness corporations have complex relationships with many individuals and organizations in society. The term stakeholder refers to persons or groups that affect, or are affected by, an organization’s decisions, policies, and operations. Because a business interacts with society in diverse ways, relationships between companies and stakeholders differ.
Market stakeholders engage in economic transactions with the company, while nonmarket stakeholders are affected by the company’s decision without economic exchange. When identifying stakeholders it is crucial to correctly recognize the primary organization. In this case, SunCal is the primary organization because of the decision of whether or not it can proceed with residential development. Since market stakeholders engage in economic transactions with the company, there are no market shareholders in this particular case. Since Disney employees, The Walt Disney Company, Anaheim City Council, and the Anaheim community are not engaged in economic exchanges with SunCal, all organizations are considered nonmarket stakeholders.Interests of Market and Nonmarket StakeholdersEach nonmarket stakeholder has its own interest in the decision of allowing SunCal to develop residential housing within the Anaheim Resort District. Disneyland employees supported the residential development plans, hoping for lower housing costs and timely commutes.
The Walt Disney Company however, opposed the development because of future plans to expand the Disneyland Resort. Anaheim City Council was split on the issue, ultimately reversing an initial decision to allow residential development in a 3-2 vote. As for the community, at the hearing, nine of the 11 people who spoke backed the repeal. Two affordable housing supporters opposed the change.Sources of Power of Relevant StakeholdersRelevant organizations often use resources to force a desired outcome using stakeholder power. Disney employees in this case practiced political power by organizing a protest at Anaheim City Hall in support of residential development.
The Walt Disney Company used legal power by filing suit in court, claiming SunCal’s development was in violation of the Anaheim Resort Identity Program. Anaheim City Council exercised its political power by enforcing city ordinances that designated the Anaheim Resort District as a commercial recreation area only. The eleven concerned community members practiced their political power by speaking their opinion before Anaheim city council members.Stakeholder MapIt is advisable for business organizations such as SunCal develop a stakeholder map to determine stakeholder salience.
A graphical representation of stakeholder salience is insightful when determining whether to continue forward with a planned project. The following figure illustrates a stakeholder map from the perspective of a SunCal executive.A SunCal executive can determine from this illustration that residential development supporters, Disney employees, have lower salience than those in opposition. The Walt Disney Company, Anaheim City Council, and the Anaheim community have higher salience and may possibly increase their salience by working together.Open Dialogue for Creative SolutionsWhen faced with conflict, open dialogue can produce creative solutions that meet multiple stakeholder interests.
In this case, open dialogue between SunCal and The Walt Disney Company, Disney employees, Anaheim City Council and the Anaheim community might produce the following solutions: The Walt Disney Company could purchase SunCal’s development site, since it plans to expand Disneyland in the future. The Anaheim City Council could approve SunCal’s residential development in another area near Disneyland. Or, the Anaheim community could vote on whether or not to allow SunCal to continue residential development in the Anaheim Resort District.
Coming to an agreement would be in SunCal’s best interest to avoid future legal battles that could prove costly to the company. Works CitedLawrence, Anne T., and James Weber. “The Corporation and Its Stakeholders.” Business and Society: Stakeholders, Ethics, Public Policy. Boston: McGraw-Hill Irwin, 2008. 2-23.
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“Nov. 27: Disney-area housing plan dies.” The Orange County Register. N.p., n.d. Web.
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