Question

1. Explain the and give examples of the term “stakeholder” (5pts)  (must include primary and secondary examples) (5pts)

Answer 1

A stakeholder can be defined or said to be that party that has an interest in the company. This interest can be in the form of either internal manifestation or external manifestation. The stakeholders are in a position to affect the business of the company. In cases when the stakeholders do not affect the business of the company then they should get themselves affected by the business of the company.

The primary stakeholders in a company are its investors and shareholders, employees, customers, and suppliers. Employees are internal stakeholders while investors, customers, suppliers, vendors etc. are external stakeholders. All of them are primary stakeholders because of the direct relationship between them and the company. For example the business prospects of the company directly impact the valuation of holdings of shareholders. In turn the company depends on the investors to raise funding.

The secondary stakeholders in a company will consist of entities like trade associations, communities, and government bodies that regulate and govern the company’s operations and business. For example suppose that a manufacturing company has a plant close to a residential neighborhood. The plant is disposing its waste liquids in the local waterway. Here the residents of the neighborhood will be the secondary stakeholders as they are living close to the plant and are being impacted by the water pollution that is being caused by the plant.