How do shareholders differ from other stakeholders?

Shareholders are individuals or entities that own shares in a company, while stakeholders include anyone affected by the company's operations.

Shareholders are a specific group of stakeholders who have invested capital into a company in exchange for ownership and voting rights. They are primarily interested in the company's profitability as this directly impacts the return on their investment. Shareholders typically have the right to vote on major corporate decisions, such as electing the board of directors or approving mergers and acquisitions. Their ultimate goal is to maximise the value of their shares, which can be achieved through increased share prices or dividends.

On the other hand, stakeholders encompass a broader group that includes not only shareholders, but also employees, customers, suppliers, creditors, the local community, and even the government. Stakeholders may not own a part of the company, but they have a vested interest in the company's activities because they can be directly or indirectly affected by its performance. For example, employees are interested in job security and fair wages, customers in the quality and price of products, and the local community in the company's environmental impact.

While shareholders' interests are primarily financial, stakeholders' interests can be diverse and sometimes conflicting. For instance, shareholders might push for cost-cutting measures to increase profits, while employees might oppose such measures if they lead to job losses. Therefore, managing these different interests is a key challenge for businesses.

In summary, while all shareholders are stakeholders, not all stakeholders are shareholders. The main difference lies in their relationship with the company: shareholders own a part of the company and are primarily interested in its financial performance, while stakeholders have various interests and can be affected by the company's activities in many ways.