Stakeholder Management

A stakeholder is a person or organization that is impacted by or involved in a project, initiative, policy, or organization. Stakeholders can be internal or external to the organization. In business, a stakeholder is any individual, group, or party that has an interest in an organization and the outcomes of its actions. Common examples of stakeholders include employees, customers, shareholders, suppliers, communities, and governments.

Key Takeaways

• A stakeholder has a vested interest in a company?and can affect or be affected by its operations and performance.
• Stakeholders may include investors, employees, customers, suppliers, communities, governments, and trade associations.
• An entity’s stakeholders may be internal or external to the organization.
• The public may also be construed as a stakeholder in some cases.
• Stakeholders can be internal or external to an organization. Internal stakeholders are people whose interest in a company comes through a direct relationship, such as employment, ownership, or investment.
• External stakeholders do not directly work for or with a company but are affected by the actions and outcomes of the business. Suppliers, creditors, and public interest groups are all considered external stakeholders.

Example of an External Stakeholder

External stakeholders do not have a direct relationship with the company but may be affected by its operations.

When a company goes over the allowable limit of carbon emissions, for example, the town in which it is located is considered an external stakeholder because its residents may be harmed by the increased pollution.

External stakeholders in some cases can have a direct effect on a company. The federal government, for example, is an external stakeholder. A policy change on carbon emissions affects the operations of any business that burns a significant amount of fossil fuel.

Example of an Internal Stakeholder

Investors are internal stakeholders who are significantly affected by a company and its performance. If, for example, a venture capital firm decides to invest $5 million in a technology startup in return for 10% equity and significant influence, the firm becomes an internal stakeholder of the startup.

Different Types of Stakeholders

Examples of important stakeholders for a business include its shareholders, customers, suppliers, and employees.

Some stakeholders, such as shareholders and employees, are internal to the business. Others, such as the business’s customers and suppliers, are external to the business but are nevertheless affected by the business’s actions.

In recent years, it has become common to consider a broader range of external stakeholders, such as the government of the countries in which the business operates or the public at large.