Primary and Secondary Stakeholders

Stakeholder is the individual, entity, or group of people whose interest can be affected by the business or they have the power to give impact to business benefit. Stakeholders include both internal and external people of the company. Internal stakeholders are the people who have direct relationships within the company such as employees, management teams, shareholders. External stakeholders are those who not in the company but have impact to the company outcome. They include suppliers, customers, creditors, government, and community.

Primary Stakeholders

Primary Stakeholders are those who have direct financial impact on the entity. They can be the employee who are working for the company. The shareholders who growth their money by investing in the company. The supplier who are selling products to the company. They also include the consumers who use company product and so on.

This group of people will have a direct impact due to the company’s performance. If the company is not doing good, Shareholders will get impact in terms of dividend, share price drop or lose their investment. The employees will lose their full or some part of their performance bonus, overtime work, and pay raise. Moreover, suppliers’ sale will decrease as the company reduce the order.

On the other hand, this group of people is able to impact the company performance as well. Shareholders are the owner of the company, so they can make a decision on the strategic level which can lead to success or failure of the company. If the employees are not doing their jobs well, for sure it will impact the company’s performance. The company will be in trouble if the customers are not happy with products or services.

Secondary Stakeholders

Secondary Stakeholders are the stakeholder who does not have any interest in the company, however, they have indirect influence over the company. They include competitors, trade unions, media groups, government, community, and other pressure groups. These people do not have any financial interest in the company. Whether the company doing good or bad, there is no financial impact to them.

However, they have enough power to influence over company benefit. For example, competitors can take our market share by produce better quality products at a cheaper price. Trade unions can put pressure on the company regarding the working conditions. The government or regulator can close down the company if we do not comply with the law and regulation. Media groups can destroy the company name as well as the products’ name if there are any rumors in the community.

Difference Between Primary and Secondary Stakeholders

Primary Stakeholder Secondary Stakeholder
They can impact the company’s financial interest. They also can be impacted by the company Company’s performance dose not impact their interest. But they can influence indirectly on the company’s financial interest.
Company must keep these groups of people happy otherwise they will make a direct impact on the company. Even they do not have any interest in the company, we should keep them satisfied as they also have influence.
It is easy to identify these stakeholders as they have a financial interest in the company. It is hard to identify all the stakeholders, especially in the internet era. Almost every piece of content can go viral and impact company’s reputation.