XAT Decision Making Tips – Identifying key stakeholders and their interests

Thursday, December 24th, 2020

XAT Decision Making Tips - Identifying key stakeholders and their interests

An MBA or PGDM or the likes in India equip one with the technical expertise and frameworks to be successful leaders and managers. Yet the number of exams in which a person’s sanity in terms of decision making skills or prudence is baked into the initial screening test itself is miniscule – XAT being the prominent one. It dedicates a separate Decision Making section that comprises of small case studies or situations, which seem almost certain to happen to you or someone you know.

However, given a finite narrative and then, having to choose the best possible course of action can’t possibly emulate the real mess. What helps us in life is the freedom or the ability to ask questions to assimilate new facts, send the acquired information to the mind’s feedback mechanism and reassess the position at hand. Theoretically, we would want every possible intelligence we can gather to assist our brain.

Another key difference between a real life problem and a XAT Decision Making question is our assumptions are based on the world we perceive, which may be different from the truth. For a question at hand, one can safely assume the statements to be completely objectively correct, leaving less room for subjectivity (which is probably why, there IS a correct answer after all).

They may seem obvious but it is important to be cognizant to these key differences as they help us structure our thought process into clusters – clusters of stakeholders. Equipped with LIMITED but ABSOLUTELY CORRECT information at hand, it is also important to be wary of jumping to conclusions. It is always advised to read the context mindfully. That’s when one starts to notice the incentives involved – incentives which may be driving each character’s behaviour.

All parties or persons which can be potentially affected (either positively or negatively) by an action can be assumed to be one of the stakeholders involved in a situation. It may not be necessary to exhaustively list out all possible stakeholders, but doing just that opens up the mind to possibilities and groups we might have otherwise ignored. The time limit for the exam may also not allow for such indulgences, but it is one of those skills that once internalized will swiftly kick in automatically for a long time in future. Often times, we miss out on perspectives that deem important only in hindsight and being able to acknowledge someone’s piece in the pie can save us from being blindsided.

A few questions to ask for identifying the impacted groups or persons are:

1)      Who are likely to face monetary loss or make financial gains in the process?

2)      Is there a particular societal sect that may be directly involved/impacted? For example – a racial group

3)      Who are the parties that hold influence over the decision in question? Does the government directly or through any of its subsidiary hold a position of power or influence?

4)      Is there some specific profession that is getting materially impacted?

5)      Is the geographical region the epicentre of a rather pervasive issue or does it largely involve only a particular location?

6)      Are there any NGOs/activists that might get something to say about the impending decision?

7)      Are there people that are at risk of losing their jobs, livelihood, homes, etc. in the wake of the change?

8)      Will media or the general public which may consume the developments/news be affected?

9)      Are there competitors or other closely related organisations involved?

10)  Are there academicians or researchers that may be studying the phenomenon?


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    Identifying drivers or interests

    Half the battle is won if you have listed most of the key stakeholders since what is left then is to humanize each individual component and partake in imagining each stakeholder’s risks and rewards. It will also be worthwhile to ponder upon each group’s strengths and weaknesses that might help to comprehend their interests progressively. It is often easier to deduce each group’s monetary incentives first and then turn to other areas of impact, which can be quite diverse. Some of the common ones are listed below:

    1)      Political – building of a new dam in an area may conflict with different political parties’ vote bank agenda

    2)      Economic – declaration of an area as a SEZ will help unemployed youth in the region

    3)      Social – a law that reiterates women safety will help the shift the equilibrium of the society to more balanced one

    4)      Technological – mass accessibility of Payment Bank accounts may force traditional banks to lure their current customers with richer offerings

    5)      Environmental – a decision between raising the cost of production by switching to an expensive but eco-friendly substitute of a harmful chemical may improve the air quality for the residents in the vicinity of the plant

    6)      Legal – regulations tightening in a region for immigrant workers may force skilled and talented expats to look for opportunities in another region

    The below examples should help in identifying the stakeholders and their tacit interests:

    Example #1:

    Let’s assume, there’s a new drug that is in its nascent stage and is claimed to be effective in curing a deadly disease. It is also extremely risky and may lead to loss of life sooner than the disease’ natural course. In devising an experiment to test its effectiveness, the researcher risks possible lives. Even though it turns out to be better than the currently available avenues doctors have for mitigating the symptoms, there will be patients who are being treated with a less effective medicine (for the sake of experimentation). So, for every week the experiment continues, more and more lives are getting lost. An early stopping may wrongly declare a winner even though the experiment was not strongly conclusive. Also, if a patient is informed about the experiment, the placebo effect might kick in.

    For the above situation, possible stakeholders can be:

    • Researcher(s) – Trying to make the world a better place and patent a path-breaking research/drug, thereby, may be subconsciously biased towards concluding the drug effectiveness
    • Patients involved in the experiment and their families– They just want to be healthy as soon as possible with the least risk involved and less expenses. They might get infuriated if transparency is not maintained while communicating about their respective cases
    • Hospitals – They would want to educate their doctors about the development to stay up to date with the market trends
    • Pharmaceutical companies – They would also be on their toes to replicate the drug or fuel their own research labs
    • Research funding organizations – They would be excited to showcase the talent they are funding and garner support for further funding
    • Governments in the area as well as across the globe who may be fighting the disease
    • Suppliers and producers for the ingredients of the drug – They would be ready to cash in on the opportunity
    • Suppliers and producers for the ingredients of the medicine the experiment is rendering obsolete

    Once the stakeholders and their interests are identified, it helps in recognizing potential conflicts of interests as well as possible scope of collaborations across the table.

    Example #2:

    Suppose a leading security software company has noticed a malicious file that renders the OS susceptible to attacks by hackers. It quickly sends the software update to its customers quarantining the file from the OS that was the root cause of the bug. Only the file the update deemed corrupt was actually a necessary file for stable working of the OS. It led to widespread criticism and many customers had their systems on a reboot loop. This has lead to brand dissolution and lost trust among its customers. The company’s high authorities are contemplating their PR strategy in order to contain the negative outcry.

    Some of the key stakeholders would be:

    • The customers using the software – both free and paid customers
    • The employees, especially those who are directly involved with fixing the issue on priority basis
    • The company top leaders
    • The competitors who may be looking to entice the frustrated customers into using their product
    • The victim OS and its competitors as well
    • Governments or organisations with highly sensitive data who might have partnered and bought their systems with the OS in discussion

    This actually happened in 2010 with AVG anti-virus for Windows 7 OS.

    Hopefully, this post will help you identify key stakeholders in XAT Decision Making questions. Remember, it would be in your interest to identify their interest and score more in the exam.

    Other posts related to Decision Making

    Making sense of the XAT Decision Making Ability section
    XAT Decision Making Section – Golden Principles for tackling questions related to Management Issues
    How to use Analytical Reasoning to score more in XAT Decision Making
    XAT Study Plan – Decision Making Preparation in Three Weeks

    Do you want to prepare for XAT Decision Making online if yes then you are at the right place: Decision Making for XAT 2021 online course

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