Hire a tutor

How do external stakeholders differ from internal ones?

External stakeholders are individuals or groups outside a business who are affected by its decisions, unlike internal stakeholders who are part of the business.

External stakeholders are those who have an interest in a company but are not directly involved in its day-to-day operations or decision-making. These can include customers, suppliers, investors, creditors, the government, the general public, and the media. Their interest in the company can range from its financial performance to its environmental impact. For example, customers are interested in the quality and price of products, while the government is concerned about the company's compliance with laws and regulations.

On the other hand, internal stakeholders are individuals or groups within the organisation. These include employees, managers, and owners. They are directly involved in the company's operations and decision-making processes. Their interests are closely tied to the company's performance and success. For instance, employees are interested in job security and fair wages, while owners are concerned about profitability and business growth.

The key difference between external and internal stakeholders lies in their relationship with the company. External stakeholders do not participate in the company's operations, but their interests can significantly influence the company's strategies and decisions. They can affect the company's reputation and financial stability. For example, negative media coverage can damage a company's reputation, while a decline in customer loyalty can affect its sales.

In contrast, internal stakeholders have a direct impact on the company's operations and strategic direction. They contribute to the company's success through their skills, knowledge, and efforts. Their satisfaction and motivation can affect the company's productivity and competitiveness. For example, motivated employees can enhance the company's performance, while strategic decisions made by managers can shape its future direction.

In conclusion, both external and internal stakeholders play crucial roles in a business. Understanding their different interests and influences is essential for effective stakeholder management, which can contribute to the company's success and sustainability.

Study and Practice for Free

Trusted by 100,000+ Students Worldwide

Achieve Top Grades in your Exams with our Free Resources.

Practice Questions, Study Notes, and Past Exam Papers for all Subjects!

Need help from an expert?

4.92/5 based on480 reviews

The world’s top online tutoring provider trusted by students, parents, and schools globally.

Related Business Management ib Answers

    Read All Answers
    Loading...