Question

200 words about

What are the key differences between a stakeholder assessment and a stockholder assessment?

Answer 1

The terms stakeholder and shareholder are often used interchangeably in business. This is not true. Stated below is brief description of the two –

Shareholder – A shareholder is a entity/person who owns equity stake in the company. Generally profitability in terms of capital appreciation is the driver/motivation for shareholder. Shareholders would want the company to take decisions that increase the profitability of equity holders.

Stakeholder – A stakeholder in a company, could be any entity/ person, who has got interest in the company’s growth (success or failure) and does get affected y the way a company is run. Capital appreciation could be a part of this. A stakeholder in a company could be internal or external. Internal stakeholders generally have a direct relationship with the company and could even be its employees and managers. Whereas external stakeholders could be people getting affected by company’s performance and not be a part of the company. For example, debtors and creditors. Now-a-days, companies have realised that environment is also a key stakeholder and they give back to environment through Corporate Social Responsibility activities.

Thus, the key difference in shareholder and stake holder is their expectation from the company. The shareholders would want to look at profitability on investment made, whereas stakeholders would expect return on resources provided, salaries for employees, timely payments for suppliers, etc., which are generally aligned with the longevity of the company.