Which one of the following is considered to be a nonmarket stakeholder of business?

Stakeholders are people who have an interest in the success and potential failure of a company. The interest may be internal by owners, management and investors. It can also be external with political and community interests. Stakeholders operate in either the market or non-market environment, meaning an internal stakeholder operates as an internal component of the company and non-market stakeholders operate in an external capacity.

Stakeholder Definition

Stakeholders are individuals, groups, communities or other businesses that have an interest in a company. The interest may be cooperative or adversarial. Usually, those with financial interests are cooperative, working with company leaders to ensure the profitability, growth and overall success of the company.

When a company doesn't do well, internal stakeholders experience financial loss, either on paper or in actuality. Adversarial stakeholders often oppose some initiative the company has and makes its voice heard. While external, non-market stakeholders are not always adversarial, they are usually the group that internal stakeholders need to romance to help facilitate growth in the external marketplace.

Market and Non-Market Activities Difference

The difference between market activities and non-market activities revolves around a financial stake in the company. The internal, market stakeholders are owners, partners, investors and shareholders. They also include employees. This group of internal shareholders has a vested financial interest in the successful implementation of business goals. Lenders and creditors are also considered market stakeholders. All activities are designed to create an economic exchange between the company and consumers.

The non-market stakeholders are based outside of the organization and have no vested financial interest in the company. These stakeholders may be affected by the economic impact of the company's success or failure. These stakeholders include political groups, media outlets, the general public and other businesses. All activities are designed to provide input, facilitate or block the economic exchange between companies and consumers.

Market Activities Example

An example of market activities is when a company opens a new store in a new community. The goal of every internal stakeholder is to build the economic exchange - the sale of goods in the new location. This includes the media campaign and marketing, hiring the right people to manage and work in the location and operations to fulfill merchandise needs. Everyone's role internally is to drive business in, make more sales and increase revenues to make the new location profitable.

When looking at market activities for stakeholders, the driving force is revenue generation. Everything internal stakeholders should focus on is building stronger avenues for more sales or higher dollars per sale. This could be raising pricing, cross and upsells or even cost cutting measures to improve profit margins.

Non-Market Activities Example

Using the non-market example of the company opening a new location in a new community, we can look at the potential activities of external stakeholders. If the store is a tattoo parlor that is located near an elementary school, the non-market stakeholders may be divided in interests. There may be community leaders in business development seeking to diversify the community business model with new types of businesses.

A backlash may happen by the school parents and leaders who are concerned with the proximity and exposure to potentially bad characters. If the community's voice is loud enough in protest and petition, building and business permits may not be issued, preventing the opening of the location. No business wants to face these problems.

Every business leader must balance the needs and desires of market stakeholders with those of non-market stakeholders. Without community support, the ability of internal stakeholders to garner community support becomes difficult. This has a negative effect on economic exchange and company growth.

What Is a Stakeholder?

A stakeholder is a party that has an interest in a company and can either affect or be affected by the business. The primary stakeholders in a typical corporation are its investors, employees, customers, and suppliers.

However, with the increasing attention on corporate social responsibility, the concept has been extended to include communities, governments, and trade associations.

Key Takeaways:

• A stakeholder has a vested interest in a company and can either affect or be affected by a business' operations and performance.
• Typical stakeholders are investors, employees, customers, suppliers, communities, governments, or trade associations.
• An entity's stakeholders can be both internal or external to the organization.
• Shareholders are only one type of stakeholder that firms need to be cognizant of.
• The public may also be construed as a stakeholder in some cases.

Stakeholder

Understanding Stakeholders

Stakeholders can be internal or external to an organization. Internal stakeholders are people whose interest in a company comes through a direct relationship, such as employment, ownership, or investment.

External stakeholders are those who do not directly work with a company but are affected somehow by the actions and outcomes of the business. Suppliers, creditors, and public groups are all considered external stakeholders.

Stakeholder capitalism is a system in which corporations are oriented to serve the interests of all of their stakeholders.

Example of an Internal Stakeholder

Investors are internal stakeholders who are significantly impacted by the associated concern and its performance. If, for example, a venture capital firm decides to invest $5 million in a technology startup in return for 10% equity and significant influence, the firm becomes an internal stakeholder of the startup.

The return on the venture capitalist firm's investment hinges on the startup's success or failure, meaning that the firm has a vested interest.

Example of an External Stakeholder

External stakeholders, unlike internal stakeholders, do not have a direct relationship with the company. Instead, an external stakeholder is normally a person or organization affected by the operations of the business. When a company goes over the allowable limit of carbon emissions, for example, the town in which the company is located is considered an external stakeholder because it is affected by the increased pollution.

Conversely, external stakeholders may also sometimes have a direct effect on a company without a clear link to it. The government, for example, is an external stakeholder. When the government initiates policy changes on carbon emissions, the decision affects the business operations of any entity with increased levels of carbon.

Issues Concerning Stakeholders

A common problem that arises for companies with numerous stakeholders is that the various stakeholder interests may not align. In fact, the interests may be in direct conflict. For example, the primary goal of a corporation, from the perspective of its shareholders, is often thought to be to maximize profits and enhance shareholder value.

Since labor costs are unavoidable for most companies, a company may seek to keep these costs under tight control. This is likely to upset another group of stakeholders, its employees. The most efficient companies successfully manage the interests and expectations of all their stakeholders.

It is a widely-held myth that public corporations have a legal mandate to maximize shareholder wealth. In fact, there have been several legal rulings, including by the Supreme Court, brought on by other stakeholders, clearly stating that U.S. companies need not adhere to shareholder value maximization.

Stakeholders vs. Shareholders

Shareholders are only one type of stakeholder. All stakeholders are bound to a company by some type of vested interest, usually for the long term and for reasons of need. A shareholder has a financial interest, but a shareholder can also sell their stock in the company; they do not necessarily have a long-term need for the company and can usually get out at any time.

For example, if a company is performing poorly financially, the vendors in that company's supply chain might suffer if the company limits production and no longer uses its services. Similarly, employees of the company might lose their jobs. However, shareholders of the company can sell their stock and limit their losses.

What Are the Different Types of Stakeholders?

Examples of important stakeholders for a business include its shareholders, customers, suppliers, and employees. Some of these stakeholders, such as the shareholders and the employees, are internal to the business. Others, such as the business’s customers and suppliers, are external to the business but are nevertheless affected by the business’s actions. These days, it has become more common to talk about a broader range of external stakeholders, such as the government of the countries in which the business operates, or even the public at large.

What Is an Example of a Stakeholder?

In the event that a business fails and goes bankrupt, there is a pecking order among various stakeholders in who gets repaid on their capital investment. Secured creditors are first in line, followed by unsecured creditors, preferred shareholders, and finally owners of common stock (who may receive pennies on the dollar, if anything at all). This example illustrates that not all stakeholders have the same status or privileges. For instance, workers in the bankrupt company may be laid off without any severance.

What Are the Stakeholders in a Business?

Stakeholders in a business include any entity that is directly or indirectly related to how a company operates, whether it succeeds, or if it fails. First the owners of the business. These can include actively-involved owners as well investors who have passive ownership. If the business has loans or debts outstanding, then creditors (e.g., banks or bondholders) will be the second set of stakeholders in the business. The employees of the company are a third set of stakeholders, along with the suppliers who rely on the business for its own income. Customers, too, are stakeholders who purchase and use the goods or services the business provides.

Why Are Stakeholders Important?

Stakeholders are important for a number of reasons. For internal stakeholders, they are important because the business’s operations rely on their ability to work together toward the business’s goals. External stakeholders on the other hand can affect the business indirectly.

For instance, customers can change their buying habits, suppliers can change their manufacturing and distribution practices, and governments can modify laws and regulations. Ultimately, managing relationships with internal and external stakeholders is key to a business’s long-term success.

Are Stakeholders and Shareholders the Same?

Although shareholders are an important type of stakeholder, they are not the only stakeholders. Examples of other stakeholders include employees, customers, suppliers, governments, and the public at large. In recent years, there has been a trend toward thinking more broadly about who constitutes the stakeholders of a business.

What are nonmarket stakeholders?

Which of the following is considered a business stakeholder?

Which of the following would least be considered a stakeholder?

Which of the following is true of the stakeholders of a company?