What Is a Stakeholder?
“Any person interested in your company or project is known to be a stakeholder. They can make decisions that will have an impact on your business. These decisions could be related to the operations and finances of a company.”
They can impact the value of the product. Nevertheless, this could also be an individual affected by the outcome. The impact could be of two types – direct or indirect.
Stakeholders vs. Shareholders
Don’t confuse the role of stakeholders with that of shareholders. They are two distinct roles, although with some similarities.
They are the people who are invested in a project. They can be the owners or the shareholders of a company. However, you can also call employees, vendors, customers, suppliers, and others as stakeholders.
Someone who has invested in a company is called a Shareholder. The shareholder is a stakeholder when they become a part of the projects that the company initiates.
When a shareholder purchases stocks, they become a part of the public company. On the other hand, a stakeholder’s interest lies only in the company’s overall performance, not in stocks.
A stakeholder is only sometimes a shareholder. But, a shareholder is a stakeholder.
Why is a Stakeholder Important?
Now lets shed some light on the importance
- Their role in any business is to provide practical and finance-related support to the organization.
- They will guide you and your team throughout the process. Hence, you won’t feel alone.
- They have a team of their own. Here they can decide about new ideas, ways to expand the business, and many more positive discussions.
- They help you, and your team put the energy on the right track.
What Is the Role of Stakeholders?
Part of BoD
These people can direct the teams in an organization since they are regularly in touch with the board of directors. They can easily handle teams such as HR and development.
Product management software like Chisel assists you in team alignment by providing several tools that ensure every team member is on the same page.
These personals are the most prominent investors who can find and even take out the money. They make this decision of funding based on companies’ performance, financially and otherwise.
Sometimes they can add or subtract the investment they’ve made in the company, affecting the share pricing in the market, therefore, turning the cards on their side.
Makes Informed Decisions
Since stakeholders are part of the BoD, they also make significant business decisions. They also make decisions such as implementing a new idea, liquidations, and acquisition decisions.
They can also misuse their power by pressurizing the teams and business owners to obey their decisions.
Monitor Laws and Regulations
These are the ones who are the part of the company will monitor all the activities in the business. They can also help the company make better choices by abiding by environmental and human rights laws.
They can also help the business grow. They can share ways to find new markets for the products, ways to make sales, new ideas, and so on. They can also bring the other stakeholders in the market to the team.
What Are the Stakeholders’ Examples?
We cannot discuss their examples without including the most important people. Customers are the bread and butter of the companies.
Business owners consider their users to be loyal and critical stakeholders of the business. The revenue and profit they generate only come in when customers buy products from the company.
Now you see as discussed earlier Chisel has an exclusive user research pillar offering various ways to collect and manage customer feedback which is crucial for your product and company’s success.
The Suppliers and Vendors
It is also the well known fact that suppliers and vendors are externally a part of the company. But they, too, are given due importance because of how the company greatly benefits from their services.
A company’s ability to interact with customers will increase when they take insights from suppliers and vendors.
Also, the main ingredients of any product are materials and resources, which come directly from them.
The Investors, Shareholders, and Stockholders
Investors are the ones who let the company begin in the forest place. They put their money only when they saw the potential in the product.
Hence, they are also important stakeholders. It is necessary to keep them well informed about the company’s business from time to time.
The shareholders and stockholders also provide funds to run the company.
What Are Primary and Secondary Stakeholders?
The primary stakeholders invest the money directly in the company.
Since the companies are financially dependent on the primary ones, they can’t function without them. They are crucial for the organization’s eventual success.
You can easily trace a company’s primary stakeholders since they significantly influence the business.
Some of their examples are customers, vendors and suppliers, and employees.
Secondary stakeholders don’t have a direct connection to the business. But they do have a significant influence on the company’s success. Companies do not rely entirely on them.
Secondary stakeholders are not readily visible in the company since their influence is lesser than primary ones.
Some secondary stakeholders are trade unions, competitors, media persons, and governments.
Becoming a secondary stakeholder is more accessible than being a primary stakeholder.
In short, the primary ones directly benefit and get affected by all the actions taken by organizations. Be it negative or positive.
The secondary ones do get affected by the organization’s steps but indirectly.
What Are the Types of Stakeholders?
You can categorize them into two types – upstream and downstream.
Upstream stakeholder(s) is a person or group associated with launching the product in the market.
On the other hand, downstream stakeholders(s) are a person or group who provide support to the product.
Downstream ones are often product sellers and consumers.
It is crucial to be mindful of both of these types.
The term ‘Stakeholder’ has its roots in gambling. It comes from placing a stake, or a marker, in the ground to signify ownership or interest. Don’t get this wrong. The meaning of the term changes when applied to the stakeholder in a company.
It can apply to any situation involving multiple parties. A stakeholder is defined as someone who has an interest or concern in an organization or project, typically because they are directly affected by it or have invested resources.
Key stakeholders are those individuals or groups significantly impacted by an organization or project.
Examples of key stakeholders include customers, employees, shareholders, suppliers, regulators, community members, and partners. Identifying and engaging with them is important for decision-making.
Stakeholder lists will give you a broad category of stakeholders that you can cross-check when you begin a project in your company.
Stakeholders in software development are involved in the whole process. These software stakeholders need the final product and will guide the company in suggesting features and issues that should be addressed.
A stakeholder in software development can also create workflows and use case diagrams for the teams.