Stakeholders and Shareholders
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Institution
Stakeholders and Shareholders
As highlighted in the article by Investor Guide CITATION Inv18 n t l 1033 (2018), the terms stakeholder and shareholder are usually considered to mean the same thing while they have different meanings. Although the term shareholder falls within the definition of stakeholder, the latter is not always the owner of a company’s shares. A company can not exist without its proprietors, as well as other key stakeholders whose interests are served by the company. It is, therefore, essential to understand the meaning of the two words and to determine the degree of importance of these groups to ascertain the extent of effort exerted in serving their interests.
A shareholder is the owner of shares of a company. Their concern is the financial well-being of the company. On the other hand, a stakeholder is any party that directly or indirectly affects or is affected by the activities of an organization. They are usually categorized as either external stakeholders, who are parties outside the organization, and include the local community, government, and competitors, or internal stakeholders, who are parties inside the organization. Internal stakeholders include customers, suppliers, creditors, employees, and shareholders, too, since their financial interest affects the decisions of the company CITATION Lan19 l 1033 (Landau, 2019). Both the shareholders and internal stakeholders are essential to the business in the sense without capital, a company does not exist, and without a workforce, demand, raw materials, and access to credit during financial crises, a company cannot operate.
However, there is a case where the shareholder’s interest becomes more important than any interest of internal stakeholders. For example, a concern is owned by one person who funds the business using personal savings and runs the business on their own. The proprietor also does not make production and has a monopoly in the provision of their services.
References
BIBLIOGRAPHY Investorguide. (2018). Investorguide. Retrieved from investorguide.com: http://www.investorguide.com/article/15947/stakeholder-vs-shareholder-wfu/
Landau, P. (2019). ProjectManager. Retrieved from http://www.projectmanager.com/blog/stakeholder-vs-shareholder
