The Case of Coal Seam Gas Case of Australia - Term Paper Example

Stakeholder Management Student’s Name: Instructor’s Name: Course Code: Date of Submission: Introduction World over, it is emerging that more than ever before, more and more people including institutions, organizations and governments are becoming aware of the need to work towards ensuring sustainability in the environment. It is notable that different activities performed by human beings and that comprise economic and industrialization which have continued to cause immense destruction to the world environment. Some of this are catastrophic and cause very serious damage to the environment. A good example is the latest accident that involved the 2010 BP Deep water Horizon oil spill and the toxic sludge spill in Ajka Hungary. However, this is not the only activity can cause damage to the environment such activities as mining and weapon testing are also very destructive to the environment alongside industrialization activities. With this in mind, the public has continued to increase their voice to various organizations to enact laws and value chain activities that are echo-friendly (Dunphy et al 2007). The purpose of this essay is to present the case of coal seam gas case of Australia which has continued to stir a lot of various stakeholders including the government and the mining industry body on how well the various concerns and interests should be addressed and above ensure high level environmental sustainability activities. a) Concerns and interests of various stakeholders Stakeholder Key concerns and interests environmentalist Despite the need by the government and the gas mining body continued to pile pressure for the local of NSW to accept the project coal seam gas, various organizations and associations have come forward to question the impact the project will have to the people of Australia and the environment in general. Environmentalist groups and associations such as the Friends of the Earth and Lock Gate , the Wollombi Valley Against Gas Extraction (WAGE), Hunter Valley Protection Alliance, the Save Our Recharge Environment and the Barrington-Gloucester-Stroud Perseveration Alliance as well as NSW Farmers Association among the several groups that staged several protests against the proposed project of coal seam gas. The grievances staged by these groups include those that are associated to the spill of harmful gases to the water bodies and the atmosphere. This causes the fear that much of the environment will not be the best to live in. to help address these concerns the gas mining company and the government has to come out clear to tell the environmentalists what will be done to ensure harmful spillover to the waters and the environment are avoided (Sandi 2011). State government The state government is especially concerned with the development of the project as one way of ensuring alternative energy sources are available apart from coal. At the same time the state government is also interested on how the project will impact on its economy in terms of energy production, creation of employment and revenue generation. For example according to Catherine Tanna who is the BG Group’s Australian managing director, and the company that is to take charge of this massive gas exploration project, “use of gas as an energy as opposed to coal, is 40 to 70% echo-friendly.” On the same line, Tanna is arguing that the project has so far employed over 1,356 workers on full-time jobs and has so far spent over $2.3 billion on the project about 75% of which has been spent in Queensland. Further, it is estimated that about 1,500 small businesses that are to offer other services to the project have been registered. With this regard therefore, it is estimated that project will be considered lucrative and viable by the state government after the cost-benefit analysis (Fraser 2011). Consumers The consumers of this project include large fuel consumption companies, small manufacturing companies and individuals who heavily rely on coal as their main source of energy. The concerns of this groups or rather the consumers, is that they will be able to be supplied with relatively cheap source of energy and that is echo-friendly a time when corporate social responsibility (CSR) demand that all organizations be cautious on the effects of their activities to the environment. The interests of the consumer in a nutshell therefore include provision of quality and affordable energy products that are echo-friendly (Paddy 2011). Communities The communities to this project include the people of NSW, the employees, the suppliers, contractors, farmers, traders and energy supplying companies. The local community especially where the project is placed expect that get first consideration in matters related to job vacancies and any business opportunities that may be available. On the other hand, the traders, farmers, contractors and energy supplying companies will not be affected by the project activities. To ensure that all these concerns are addressed effectively, the project handling company must take due consideration to involve the community in important matters such as job creation and their safety so as to do away with unwarranted objections (Paddy 2011). Mining companies The major concern that different mining companies have is about the cost of doing mining, the proposed project prices by the respective state governments and the terms of entering into a contract. For example, according to Gina Rinehart Asia’s richest woman, “high mining costs in Australia may scare aware potential iron-ore and gas mining companies in Australia.” This is after it had emerged that Australia was becoming very expensive and uncompetitive to do any export-oriented business. In other this means, that for the mining companies to consider taking this project price will be their great concern. To meet this requirement, then the government is expected to enact policy that will ensure price of the project is favorable and attractive to the mining companies (Sean 2011). Farmers/landowners The farmers in this case are people whom own lands and on them are conducting various farming activities. The fear this people have is that they will be displaced and their farming activities disrupted. To address the concerns of the farmers, full compensation of any loss to be incurred has to be made (Scott 2012). Farmers associations On the hand, farmers associations, refer to those organizations that are formed by farmers with the aim championing and financing their farming activities. Since these associations are likely to collapse, then compensation for any damage or expense incurred as a process of dissolution has to be done (SEAN 2012). Mining industry body The mining industry is the body that is in charge of all activities related to mining in the country. The concerns and interests of this body are to have a well regulated industry where licensing of mining activities in done professional manner and after meeting a certain criteria. To manage, this interest what is expected is strong legal policy framework that regulates all mining firms in the industry (SEAN 2012). b) Stakeholder management It is understood that in almost every project various people and parties are involved and who have different interests. It is notable however it is the degree of the influence that each stakeholder has that might have influence on the performance of the project that may be used to determine which management approach to use. Stakeholder management is a very important aspect of any project. This is because it determines the end result of the project. (Friedman and Miles 2006), stakeholder literature can be classified into three main branches namely: descriptive, instrumental and normative. The descriptive part of stakeholder theory is aimed at understanding how managers can be in such away so that they are able to deal with different stakeholders and attend to their interests comprehensively. In this case, the project is seen as a constellation of very diverse interests which can be either direction including competitive and cooperative. This is theory is especially important in trying identify ways in which divergent interests of stakeholders can be dealt with. On the other hand, the instrumental approach to stakeholder management theory is concerned with critically analyzing the consequences of taking all the interests of the stakeholders when designing a project strategy. This is especially important in a situation where the organization is trying to determine the relationship that exists between stakeholder interests and achievement of organizational goals. The normative approach to stakeholder management theory is concerned with the existing philosophical guidelines which are linked with management activities in an organization. The combination of these three approaches without getting proper acknowledgement, is considered to be very confusing even though under correct forums can be very fruitful (Flak & Rose 2005). The coal seam gas project in Australia is one such case of a project that seem to have numerous stakeholders and who are expected have influence on the outcome or the success of the project. Among the stakeholders to this project include the environmentalists, state government, consumers, communities, mining companies, farmers and landowners, farmers associations and mining industrial body. While stakeholders can work either way in that working cooperatively or cooperatively, in the case of coal seam gas, the stakeholder relationship is very competitive as almost all stakeholder have very different interests and whose level of impact varies greatly (Dimovski & Skerlavaj 2004). This therefore, raises the question, on which is the best approach to stakeholder management can be used to ensure successful execution of the project. This is because every action the mining company is likely to take, is likely to impact on the stakeholders and the project progress. To effective forge the way forward with regard to managing the stakeholders is to seek to get approval and apply the three the approaches to stakeholders’ management which include descriptive, instrumental and normative approach (Friedman and Miles 2006). With the descriptive approach also referred to as stakeholder management, the gas drilling company will be forced to first give an ear to the interests of the different stakeholders and settle on the best way to tackle them. This approach lead to what is referred to as “stakeholder analysis” which is intended at identifying various stakeholders and who are key to the project and whose win over could be very instrumental in project performance. This approach is characterized with four main benefits which are: 1) It is possible to use the ideas and opinions of very key and powerful stakeholders to shaping the project at each and every stage. This not only important that they can support the project, but will also help improve on the quality of the project (Friedman and Miles 2001). 2) Gaining the support of very powerful stakeholders can help access more resources that will have direct impact on the project performance. For example, winning the government and environmentalists support towards the coal seam gas project, will be a very important stride in making this project a success. This is because they have a say on the access and consumption of various resources which are instrumental to the project (Friedman and Miles 2006). 3) This approach is important is ensuring early communication with the stakeholders to understand the idea behind the project and the benefits the project will accrue to them (Friedman and Miles 2006). 4) Finally, it is easy to anticipate how the reaction of various stakeholders to the project will look like and put in place appropriate contingency plan to deal with them (Friedman and Miles 2001). While applying this approach to stakeholder management, prioritizing various stakeholders to the project will be very instrumental so as to see how they will be affected by the project and how they will influence on the project performance (Friedman and Miles 2001). This is because there are those stakeholders either to block or enable the project advance as shown in the grid below. This is a power and interest grid of various stakeholders. Since this approach may have some consequences to be involved in managing the various stakeholders such as cost bringing into picture the instrumental approach will also be very constructive. This will help determine the consequences of attending to all stakeholders’ interests and how this will affect the project performance. This is especially important in trying to balance the interests of the shareholders and those of the other stakeholders. Finally, in trying to integrate these two approaches into stakeholder management, normative approach could also be considered as one way of ensuring that managers are adhering to the principle of corporate legitimacy and stakeholder fiduciary principle (Friedman and Miles 2006). As shown in the grid above, the stakeholders can be put into two main categories high and low in terms of interest and power. Those high in power and interested must be fully engaged and all effort put in place to make sure that they are satisfied. On the other hand, high power but less interested stakeholders need to be given attention but as much as they will easily get bored. Further, the low power but interested stakeholders should be adequately informed to ensure that no serious issues are to emerge. This is because they can be very helpful in project detailing. Finally, the lower and less interested stakeholders need to be monitored but keen not to bother them (Chua & Kuechler 2005). Conclusion The purpose of this essay was to respond to case of stakeholder management at coal seam gas project in Australia. In particular, this essay has handled the concerns and the interests and concerns of various stakeholders which include environmentalists, state government, consumers, communities, farmers and landowners, farmers associations and mining industry body. As a matter of fact, various interests do exist and their management is considered very instrumental. Stakeholder management theory provides for three main approaches which include descriptive, instrumental and normative all of which are very important in managing stakeholders’ interests prevailing in this project. References Chua CH & Kuechler, D 2005, The evolution of E-commerce research: A stakeholder perspective. Journal of Electronic Commerce Research, 6(4), p. 262-279. Dimovski V & Skerlavaj M 2004, A stakeholder theory approach to the organisational performance and influence of information-communication technology: Model conceptualisation and testing. Economic and Business Review for Central and South - Eastern Europe, 6(3), p. 245-265. Dunphy, D., Griffiths, A. and Benn, S. 2007, Organisational Change for Corporate Sustainability, 2nd edition, Routledge, London. Flak LS & Rose J 2005, Stakeholder governance: Adapting stakeholder theory to e-government. Communications of the Association for Information Systems, 16(31), p. 1-46. Fraser A 2011, Tanna attacks coal-seam gas critics over inaccurate claims, June 11, 2011 12:00AM, available at: http://www.theaustralian.com.au/business/tanna-attacks-coal-seam-gas-critics-over- inaccurate-claims/story-e6frg8zx-1226073271803 Friedman, A and Miles, S 2001, “Developing a Stakeholder Theory”, Journal of Management and Studies, 39/1: 1:21. Friedman, A and Miles, S 2006, “Stakeholders: Theory and Practice”, Oxford University Press. Sandi K 2011, Criticism is growing over the rush to approve coal seam gas proposals, Coal Seam Gas: is it too late to Lock the Gate? 27 April, 2011 2:44 am, available at: http://www.independentaustralia.net/2011/environment/coal-seam-gas-is-it-too-late-to- lock-the-gate/ Paddy M 2011, Energy analyst turns up heat on new gas project, October 28, 2011, available at: http://www.smh.com.au/environment/water-issues/energy-analyst-turns-up-heat-on-new- gas-projects-20111027-1mm53.html Scott J 2012, Rinehart Decries Australian Costs With Africans Earning $2 a Day Sep 5, 2012 7:14 AM GMT+0300, available at: http://www.bloomberg.com/news/2012-09-05/billionaire-rinehart-attacks-australia-for- high-mining-costs.html SEAN N 2012, Key mines given free rein over aquifers, July 19, 2012 available at: http://m.smh.com.au/environment/key-mines-given-free-rein-over-aquifers-20120718- 22aqi.html Sean N 2011, Coal seam gas industry under the microscope, Date August 6, 2011, available at: http://www.smh.com.au/environment/coal-seam-gas-industry-under-the-microscope- 20110805-1iffm.html Read More