The stake of stakeholders of a business.

The stake of stakeholders of a business.

In our previous edition, as we justified our standpoint on the choice of the name ‘Business Stakeholder’ – any person or entity interested in or affected by a particular business is a stakeholder.

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Stakeholders may be internal or external in nature. Because stakeholders generally have different interests and priorities, a company’s customers may be entitled to fair trading practices but not necessarily to the same consideration as its workers.

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Examples of differing interests include: owners/shareholders – who are out to optimize profits and so are interested in how well their business is functioning; managers and workers – who are interested in their pay package and in keeping their jobs at all costs; creditors/lenders – want the business to fully repay their loans on time; customers – who quest for companies which will produce high-quality products and offer good customer service (before and after sales) at an affordable price; and, the community (where the business is located) – which expects the company to be socially-responsible and environmentally-friendly.

Varying concerns by different stakeholders could possibly conflict, and subsequently be resulting in a positive or negative impact. An example of a helpful impact is when the company makes a profit and therefore returns on investment to the owner(s) increase. While an undesirable effect could come about when in order to cut down cost, a company may lay off some workers, thus negatively affecting the community of workers in the area, hence the local economy.

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Internal Vs. External Stakeholders

Internal stakeholders are directly touched by the activities of the business e.g. employees, owners, managers, etc.; while external stakeholders are those that have an indirect influence in the business, like the customers, suppliers, community, etc.

Different stakeholders have varying considerations, interests, and influences. They can, therefore, affect or be affected by the organization’s actions, objectives, and policies.

Primary Vs. Secondary Stakeholders

Primary stakeholders have the greatest influential voice in the affairs of a company. They have the competence to make decisions on the company’s policies and plans. Thus, businesses consider their primary stakeholders as the most important people to them, in the running of their entities. Primary stakeholders are also the most affected by the outcome of the business, which may be positive, or otherwise. They may vary depending on the size of the entity. In small businesses, primary stakeholders are owners, staff, and customers. In large businesses, primary stakeholders can vote the directors out if they feel the latter are non-performing.

Business stakeholders that are less influential are regarded as secondary. They are individuals, groups, or institutions not directly affected by the outcome of the business, though they still have an interest in it, and often help provide aid to the primary stakeholders. For example, government agencies, moneylending institutions, regulatory agencies, etc.

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NB: Primary stakeholders are sometimes referred to as direct stakeholders, while secondary stakeholders are sometimes referred to as indirect stakeholders

 

George Neba

//Pan-African by birth; accountant and senior agribusiness technician by training; micro-finance expert by experience; and civil society activist by passion --- Founder (www.afrorealinitiative.org); blogger; freelancer; motivational writer and speaker; youth leader; women's rights activist; mentor and coach; life volunteer; philanthropreneur; investor; peace advocate; grassroots-mobilizer; and sustainable development enthusiast.//

2 Comments

Warah Hernadez Youtchou Posted on9:48 am - Jan 26, 2018

I remain incredible to your inspirations.

    afroreal Posted on10:12 am - Jan 26, 2018

    Thanks Warah. You too are an inspiration.

Warah Hernadez Youtchou Posted on9:48 am - Jan 26, 2018

I remain incredible to your inspirations.

    afroreal Posted on10:12 am - Jan 26, 2018

    Thanks Warah. You too are an inspiration.