Internal vs External Stakeholders
Stakeholders refer to individuals, groups, or organizations that are concerned with the performance of a business. Stakeholders are concerned with business activities because they will be directly or indirectly affected by performance of the business. Stakeholders can be divided into two categories; internal stakeholders and external stakeholders. Stakeholders use a variety of information for decision making purposes, and the information that is available to stakeholders will depend on whether the stakeholder is an internal or external stakeholder. The article examines each type of stakeholder in greater depth and shows the similarities and differences between internal and external stakeholders.
Internal Stakeholders
Internal stakeholders are those that are directly affected by the business’s performance. Internal stakeholders such as owners, shareholders, creditors, managers, customers, employees, business partners, and suppliers are directly involved with the operations of the business. Internal stakeholders are also known as primary stakeholders.
Internal stakeholders generally have a large influence on how the company is run. For example, the company’s owners will take part in important business decisions. Customers are also internal stakeholders that are extremely important to a business as the extent to which their needs are met will influence the company’s sales. Company’s managers and workers also influence the company’s day to day operations by the various business decisions that they make.
External Stakeholders
External stakeholders are individuals, groups, and organizations that are not directly affected by the business’s performance. These parties are not directly involved in decision making and other business affairs and, therefore, may or may not be affected by the company’s decisions or operations. External stakeholders include government entities, the general public, community businessmen, politicians, analysts, stock brokers, potential investors, etc.
External stakeholders will use the company’s financial information and other publicly available information for a number of purposes. Government entities such as Internal Revenue will use this information for assessing tax payments, potential investors will use the information to make investment choices, media will use them for public awareness purposes, and analysts and stock brokers will use them to advise clients or potential investors.
What is the difference between Internal and External Stakeholders?
Stakeholders are the groups, individuals, and organizations that are interested in a business’s activities, operations, performance, and success. These individuals may be directly or indirectly affected by the business’s successes or failures, which is the reason behind such an interest. There are two types of stakeholders; internal stakeholders and external stakeholders. Internal stakeholders are directly involved in the business operations, and some also have the influence to make important business decisions. External stakeholders may or may not be directly affected by the business’s operations but utilize any publicly available information for various purposes.
Summary:
Internal vs External Stakeholders
• Stakeholders refer to individuals, groups, or organizations that are concerned with the performance of a business.
• Internal stakeholders are those that are directly affected by the business’s performance. Internal stakeholders such as owners, shareholders, creditors, managers, customers, employees, business partners and suppliers are directly involved with the operations of the business.
• External stakeholders are individuals, groups, and organizations that are not directly affected by the business’s performance such as government entities, the general public, community businessmen, politicians, analysts, stock brokers etc., but utilize any publicly available information of the business for various purposes.