What is a stakeholder and enumerate at least 5 examples of stakeholders?

Definition of Stakeholder

A stakeholder is an individual or an organization that has an interest in a Company or a business. The following provides various examples of stakeholders that have an interest in the business of the Company and its financial position.

Examples of Stakeholder

The following examples of Stakeholders are as follows:

1. Investors

Investors are the owners of the Company. They are first and the key stakeholders of the Company as they have invested in the Company and would like to get good returns on their investment. If the investors feel they have better return opportunities elsewhere they will pull out of the Company and thereby reducing the share price of the Company. Investors should be always updated with the financials of the Company.

2. Creditors

Creditors can be traditional banks or financial institutions who have to lend money to the Company. Creditors can include the retail investors who have purchased the commercial papers and debt securities of the Company. Suppliers of goods can also be the creditors as the Company might owe them the cost of the material. These all interest parties are stakeholders of the Company as they have an interest in the financial position of the Company. If the Company by any chance goes for bankruptcy the creditors may find it difficult and time-consuming to get their money back. Although, they have the first right after the Company winds out, however, usually they take a big haircut in the process.

3. Employees

The Employees of the Company are other key stakeholders of the business. They are the ones who take decisions and run the operations of the Company. They invest their time, knowledge and experience to run the business for which they are paid salaries. Employees include the senior managers, mid-level management and entry-level employees who are responsible for the day to day operations of the Company. Even the interns and part-time employees hired by the Company are stakeholders in the Company as their work does impact the Company at some point in time.

4. Customers

Customers provide business to the Company hence an important stakeholder for the Company. Businesses tend to find opportunities and analyze the demand for products. They build and manufacture products which the customers need and can solve their day to day problems. Customers buy the Company’s products by which revenue and profit are generated.

5. Trade Unions

A trade union is an association of the workers employed by the Company who work in the manufacturing units. These unions are basically created so that the labor laws are maintained and the management does not take undue advantage of their position. The workers of the Company work at extreme conditions in the case of manufacturing companies and are the key persons involved in the production of goods. Thus, the workers and their association i.e. the trade unions are the key stakeholders of the Company.

6. Government and Taxation Department

Government agencies like the taxation department, excise, and customs duty agencies would like the economic activity of the Company to go on without any concern. They get taxes from these Companies which is used for building roads, railways, and other infrastructure of the nation. Thus, these government agencies are also a stakeholder of the Company.

7. Suppliers

Suppliers of raw materials provide initial goods that are used to manufacture a finished product. Hence, they are also a stakeholder in the business of a Company as without the raw material the Company may not produce its finished product which it has to sell to the customers.

8. Community

Businesses affect the community and the environment at large. The people living around the major manufacturing units of the Company are affected and hence they also become a stakeholder of the Company. The Company takes initiatives so that it does not harm the peaceful living of the community and saves the surrounding environment from any harm. Further, due to economic activity in the region, the community gains from job opportunities and other trade-related opportunities.

Conclusion – Stakeholders Example

Stakeholders are the ones which are impacted by the Company, its business performance, and financial health. The above examples provide the role of the stakeholders and how they are impacted by the Company.

Recommended Articles

This has been a guide to Stakeholder’ examples. Here we have discussed the top 8 examples of Stakeholders along with a detailed explanation. You can also go through our other suggested articles to learn more –

Imagine you’re Charlie in Willy Wonka and the Chocolate Factory.

This whole business is all yours! Run around it, eat all the free snacks, enjoy all of the delicious, owning-your-own-business feelings. And then get into work the next day and realize…

Who actually does all of the stuff here? Who’s actually running this place?

Well you, of course. But not just you. Many people have personal and financial interests in your business, and those people are called stakeholders.

What types of stakeholders do you need in business? In this post you get to learn:

• The 10 types of stakeholders you meet in business
• Stakeholder vs. shareholder – have you been referencing the wrong one?

What types of stakeholders are there?

No, that’s not a typo. Each of the types of stakeholders in a business are categorized in 3 ways:

• Internal or external
• Primary or secondary
• Direct or indirect

Internal stakeholders are, as the name suggests, stakeholders that exist inside a business. These are stakeholders who are directly affected by a project, such as employees.

External stakeholders are those who have an interest in the success of a business but do not have a direct affiliation with the projects at an organization. A supplier is an example of an external stakeholder.

Primary stakeholders (also known as key stakeholders) have the highest level of interest in the outcome of a project because they are directly affected by the outcome. They actively contribute to a project. These types of stakeholders include customers and team leaders.

Secondary stakeholders also help to complete projects, but on a lower, general level. These types of stakeholders help with administrative processes, financial, and legal matters.

Direct stakeholders are involved with the day-to-day activities with a project. Employees can be considered direct stakeholders as their daily tasks revolve around projects at a business.

Indirect stakeholders pay attention to the finished project outcome rather than the process of completing it. Indirect stakeholders concern themselves with things like pricing, packaging, and availability. Customers are a type of indirect stakeholder.

The 10 different types of stakeholders:

1. Suppliers
2. Owners
3. Investors
4. Creditors
5. Communities
6. Trade unions
7. Employees
8. Government agencies
9. Customers
10. Media

1. Suppliers

Suppliers are people or businesses who sell goods to your business and rely on you for revenue from the sale of those goods.

In addition to looking out for their own revenue-generation, suppliers are also often concerned with safety, since their products can directly impact your business’ operations.

Is a supplier…

• An internal or external stakeholder? External.
• A primary or secondary stakeholder? Secondary.
• A direct or indirect stakeholder? Indirect.

2. Owners

Owner stakeholders are the owners of an organization. They supply capital or equity to the business and have a say in how everything runs. There can be multiple owners at a business, and each owner would have equity in the business.

Is an owner…

• An internal or external stakeholder? Internal.
• A primary or secondary stakeholder? Primary.
• A direct or indirect stakeholder? Direct.

3. Investors

Investors can include owners but they can also be outside vendors who typically have a right to accurate and timely information such as regular financial statements. Investors may also have the right to approve or reject major decisions like mergers and acquisitions.

An investor does more than just bring you funding to pursue projects that help your business grow. They also can:

• Contribute ideas and give you advice
• Bring connections
• Motivate you
• Help promote and improve your business image

Is an investor…

• An internal or external stakeholder? External.
• A primary or secondary stakeholder? Primary.
• A direct or indirect stakeholder? Direct.

4. Creditors

Creditors lend money to businesses, and they couls also have a secured interest in the company’s worth. Creditors get paid back from the sale of products or services at your business. In the event of a business shutdown, creditors get paid before stockholders.

Creditors can include banks, suppliers, and bondholders.

Is a creditor…

• An internal or external stakeholder? External.
• A primary or secondary stakeholder? Secondary.
• A direct or indirect stakeholder? Indirect.

5. Communities

The community in which a business functions can be considered as another set of stakeholders. Good businesses are considered an asset to any community.

Communities are major stakeholders in businesses because each party (your business and the community) are mutually beneficial in different ways than, say, a supplier and your business.

Communities are impacted by things like

• Job creation
• Safety
• Economic development
• Health (from environmental development)

Is a community…

• An internal or external stakeholder? External.
• A primary or secondary stakeholder? Secondary.
• A direct or indirect stakeholder? Indirect.

6. Trade unions

A trade union (also called labor union) is an organization of workers in a particular industry that exists to secure good improvements in pay, benefits, safe working conditions, or social and political status through collective bargaining.

Every business generally has a relationship with a trade union to keep the interests of other stakeholders, like employees, in mind. Trade unions may be informed and consulted about things like worker safety.

Is a trade union…

• An Internal or external stakeholder? External.
• A primary or secondary stakeholder? Secondary.
• A direct or indirect stakeholder? Indirect.

7. Employees

Employees have a direct stake in the company. They interact directly with customers, earn money to support themselves, and give support to the business operations as well.

Employees can carry out managerial, supervisory or other functions. They typically expect benefits like incentives, career growth and job satisfaction.

Is an employee…

• An internal or external stakeholder? Internal.
• A primary or secondary stakeholder? Primary.
• A direct or indirect stakeholder? Direct.

8. Government agencies

Government agencies can also be thought of as a major stakeholder in a business. They collect taxes from the company, its employees, and from other spending the company does.

Is a government agency…

• An internal or external stakeholder? External.
• A primary or secondary stakeholder? Secondary.
• A direct or indirect stakeholder? Indirect.

9. Customers

Customers are the people who buy business products. Customers expect to buy the best quality from that business but at a fair price.

A business doesn’t exist without customers. Customers get products from businesses, and because of that, they are interested in how a business performs. In turn, businesses need to make conscious efforts to relate to customers and meet their needs.

Customers expect the business to provide efficient and high-quality products and services. In general, meeting the customers’ needs is an extremely important area of concern for ensuring the success of any business.

Customers are directly impacted by the product quality a business gives.

Are customers…

• An internal or external stakeholder? External.
• A primary or secondary stakeholder? Primary.
• A direct or indirect stakeholder? Direct.

10. Media

Every business needs media publication relationships to spread the word about their brand. Businesses often need to interact with press to make an important announcement or advertise their product.

Is the media…

• An internal or external stakeholder? External.
• A primary or secondary stakeholder? Secondary.
• A direct or indirect stakeholder? Indirect.

A quick note on stakeholder management

Understanding the ten types of key stakeholders is only helpful if we put it into action.

How? Stakeholder management.

All of the analysis you’ve done can now be used to gain support and get buy-in for your project.

The key in stakeholder management is to make sure that every stakeholder is heard, without manipulating the process.

Stakeholders vs shareholders: is there a difference?

You might have heard these terms used interchangeably in the past, and we are here to tell you that you shouldn’t.

Yes. and here’s the difference:

• A stakeholder has a vested interest in your business or a project. This type of stakeholder does not typically have a financial stake in your business.
• A shareholder has a financial interest in a business or project. Often a shareholder is a partial owner.

Does it still sound the same to you? That’s ok, because even though they have differences, they are technically still different types of stakeholders.

Shareholdersare a subcategory of stakeholders because shareholders invest money in the business, and so are automatically stakeholders.

However, since groups like employees and local communities do not necessarily invest in the business, they are stakeholders but not shareholders.

This is an important distinction to make because it tells you how best to prioritize your stakeholders when you make decisions that impact each one.

Who is the most important stakeholder of all?

The customer is the https://www.destination-innovation.com/who-are-a-companys-most-important-stakeholders/most important stakeholder of all.

Why?

What’s a business without customers? Peter Drucker makes this point in his book, The Practice of Management.

Peter Drucker says the purpose of a company is to create customers.

Without paying customers, each stakeholder in your business is impacted one-by-one, like a trail of falling dominos. A customer can always choose to walk his business over to a competitor. To avoid that, you need to be innovative and offer good products.

“A business enterprise has two basic functions: marketing and innovation.
If we want to know what a business is, we have to start with its purpose. And the purpose must lie outside the business itself. In fact, it must lie in society, since a business enterprise is an organ of society. There is only one valid definition of business purpose: to create a customer.

The customer is a foundation of a business and keeps it in existence. The customer alone gives employment. And it is to supply the customer that society entrusts wealth-producing resources to the business enterprise.

Because it is the purpose to create a customer, any business enterprise has two – and only two – basic functions: marketing and innovation. These are the entrepreneurial functions. Marketing is the distinguishing, the unique function of the business.

ACTION POINT: Find out what needs your customers want fulfilled today. Determine how well your products are meeting the needs of your customers. That is the purpose of business.” – Peter F. Drucker

You can’t please every single type of stakeholder involved in your business – and you won’t grow your business by trying to. But if there’s one stakeholder who deserves the most attention, it’s your customers.

Every stakeholder’s primary interest in your business should be the customer. After all, they are the source of your success.