In business studies, the terms "shareholder" and "stakeholder" are used to describe individuals or groups who have an interest or involvement in a company. However, there is a difference between these two terms:
1. Shareholder: A shareholder is an individual or entity that owns shares or stock in a company. This means they have invested their money in the company and, in return, they receive ownership rights and a share in the company's profits. Shareholders are typically concerned with maximizing their return on investment and increasing the value of their shares. They have the right to vote on major decisions, such as the election of the board of directors or approving mergers or acquisitions.
2. Stakeholder: A stakeholder is a broader term that refers to any individual or group that can affect, or is affected by, the actions of a company. This includes not only shareholders but also employees, customers, suppliers, local communities, government agencies, and non-governmental organizations. Stakeholders have a vested interest in the company's performance and can influence its success or failure. Their interests may extend beyond financial gains to include considerations such as ethical responsibility, sustainability, and social impact.
The main difference between shareholders and stakeholders lies in their primary focus. Shareholders primarily focus on the financial return on their investment, whereas stakeholders have a broader focus that includes the overall impact of the company on various parties. While shareholders seek profit maximization, stakeholders take into account the well-being of all parties involved and the long-term sustainability of the company.
Difference between a shareholder and a stakeholder in business studies
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