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If you have ever run a business or company and had to make a choice between stakeholders vs shareholders you might instantly know which group you prefer working with. For many companies and businesses stakeholders are individuals, corporations, organizations or governments who have a direct vested interest in the success of a business or its products and services. The most common stakeholders are managers, executives, or owners and their immediate families or partners. Stakeholders typically demand what's best for the organization.

The problem with stakeholders vs shareholders is that the two groups often fail to see eye to eye when it comes to how to run a business or to better serve their needs. Stakeholders generally want a return on their investments from a corporation. Therefore, they want the company to make money so that they can have their return. They may also be concerned about the environment and do not want to see a corporation that does business in harmful ways. However, in most cases, a good stakeholder will support a worthy company that makes use of sustainable resources and promotes good health and environmental quality.

Although most stakeholders are actively involved in a corporation, there are some who are passive stakeholders without active involvement or control. Examples include long-term investors such as institutional investors, pension funds, insurance companies, and insurance companies that rely on the health of a corporation to provide them with a return. A passive shareholder is not actively involved or knowledgeable about the activities of the corporation.

One major difference between stakeholders vs shareholders is that stakeholders are the ones who provide start-up capital. They also have the power to change management and the direction that the company takes. As a consequence, if a business is slow to generate profit, its suppliers will suffer if the business fails to make profits. Suppliers often have stakeholder relationships and may not be able to get their investments back. If the business is sold to a new supplier, the new supplier will want to know how the business was previously treated. To this end, some suppliers will sue a business that has engaged in practices that destroy their relationship with suppliers.

On the other hand, stakeholders are those who can change the way a company operates and benefit from doing so. Some examples of stakeholders include customers, suppliers, financial institutions, government entities, and regulators. These groups typically have relationships with the companies that they purchase products and services from. When a business sells or transfers ownership to another investor, it becomes a stakeholder, which means it is an external entity that can potentially sue the business if it behaves in a way that damages its relationship with the stakeholders.

There are four main components of stakeholder management. These include identifying potential stakeholders, identifying the interests of these stakeholders, communicating to these stakeholders, and monitoring and measuring stakeholder performance. Identifying potential stakeholders requires establishing both an inter-organizational and intra-organizational level awareness. Internal meetings are usually used to communicate important stakeholder needs to individual key stakeholders.

Identifying the interests of stakeholders includes communicating with them, ensuring their productivity, and providing compensation to them if they are productive. Compensation for stakeholders can take the form of dividends or equity awards or can be based on their sales or market value. Many businesses also provide their employees with stock options that allow them to invest in the enterprise. Monitoring and measuring stakeholder performance involve creating metrics that track the corporation's performance against specific objectives. These objectives can range from customer satisfaction to the number of years the business has been in existence.

The third component, stakeholder relations, is the most challenging for a company to manage, because not all stakeholders share the same financial interest in the success of the business. Some stakeholders are focused on generating profits from the corporation's assets, while others are motivated by a commitment to the overall success of the business. These two types of stakeholder will often have different perspectives on how to best achieve these goals and will often work against and in favor of the corporation. The management must therefore have an understanding of these conflicting stakeholder expectations and how to balance them in the best possible way.

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