Categorising stakeholders

Stakeholder is any group or individual who can affect or be affected by the achievement of an organisation's objectives (by Freeman). CIMA official terminology defines stakeholder as those persons and organisations that have an interest in the strategy of an organisation. We can categorise stakeholders into eight types:

1. Internal or external - internal stakeholders are normally inside organisation and external stakeholders are outside the organisation. However, we have some stakeholders who have internal and external membership (connected), for example shareholders, customers, trade unions and so on.

2. Primary or secondary - company needs primary stakeholders to be going concern and the existence of secondary stakeholders is not a matter to going concern.

3. Narrow or wide - narrow stakeholders are most affected by organisation's policy and wide stakeholders are less affected by organisation's policy.

4. Active or passive - there are active stakeholders who actively participate in organisation's activity and passive stakeholders do not.

5. Voluntary or involuntary - voluntary stakeholders are those who engage with the organisation voluntarily and involuntary stakeholders get involved without choice.

6. Legitimate or illegitimate - legitimate stakeholders' claims are valid (normally those having economic relationship with the organisation) and illegitimate stakeholders' claims are not valid (eg. terrorists).

7. Recognised or unrecognised - this relates to the legitimacy of stakeholders' claims, if the claim is considered legitimate, then the stakeholder is recognised, otherwise not.

8. Known or unknown - examples of unknown stakeholders are undiscovered species and nameless sea creatures, they can be affected by, for example oil spill. The main difficulty lies on whether the claims of unknown stakeholders are legitimate or not. Normally stakeholders are known.

The above are relevant to P1 and it is important to remember them, subject of stakeholders featured in several areas of P1 syllabus.