shareholders versus stakeholders

Shareholders own equity in a limited company, while a stakeholder is anyone with an interest in a business
Internal stakeholder objectives:
Employees – pay, conditions and job satisfaction
Managers – growth, reputation and profits
Owners – profits
External stakeholder objectives:
Shareholders – profit and dividends
Customers – value for money
Society/local community – employment and sustainability
Government – tax revenue and sustainability
Suppliers – growth to sustain continuing demand
Creditors – interest and repayments
There is a major debate as to whether a business should exist solely to gain shareholder returns (share price and dividends) or whether they should consider the impact of their decisions on all stakeholder groups
Shareholder concept – businesses should act solely in interest of shareholders. Shareholders have provided funding and investment for the company – their interests should be considered first and foremost. The primary goal of business is to make profit, which will be in the shareholders interests
Stakeholder concept – views of all stakeholder should be considered, not just shareholders. A more sustainable approach which avoids potential for short termism and pursuit of profits at the expense of all else. In many cases keeping key stakeholders happy will be in the interest of shareholders.

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