Follow
The term “stakeholder” is one you can often hear on the evening news, at financial websites, and within talk among business people all around. So, what exactly does this more and more common term refer to? Here is the basic definition of the term as well as some prime examples of its actual occurrence found in everyday life.
Holding Stake
Courtesy of the official Merriam-Webster Dictionary, a stakeholder is defined as “a person entrusted with stakes, one that has a stake in an enterprise, or one who is involved in or affected by a course of action.” In other words, anyone that has an investment in an enterprise or is affected directly by the actions of that business falls into this classification as a holder of stakes. There are many types of holders of stake, but the three, primary types are stock holders, investment holders, and those directly affected by business activities in some way. More details on these three, main holders of stake are as follows.
Stocks
Quite possibly the largest segment of population that holds stake in an enterprise does so via stock holdings. Stocks are portions, or shares of a business that are publicly bought, sold, and traded. When a company performs well or grows, the value of that company’s stocks increases, thus rewarding the stock holder. If the company does not do so well, the opposite is true, and stock shares can lose value.
Financial or Asset Investments
Behind stocks, people hold stakes in certain enterprises by way of financial and asset investments quite popularly. Asset investments are investments that have been offered to a company by way of products, goods, or even services. These investments do hold a verifiable value but are not actually money and are thus not considered financial investments.
Related resource: Top 20 Affordable Online MBA Programs 2014
Financial investments, on the other hand, are directly money-based investments. Perhaps someone provided loan monies to a company for help at startup. They could have also helped make a purchase for the company or provided some other backing via actual money. This is stake-holding in the form of financial investment.
Others Directly Affected
Finally, the third type of holder of stakes is unique and different from the above two types in that this holder may not have actually invested via stocks, assets, or money. They are, however, invested to some degree by which they are completely affected by the company’s successes or failures. In essence, a regular client or customer is a holder of stock in this sort of figurative way.
A cancer patient holds much stock in the companies that search for a cure. The pizza business holds great stakes in cheese and dough industries as its success depends on the success of these other, outside industries. We all depend very much on pharmaceutical and agricultural company successes also. Therefore, we all commonly hold great stake in the successes of these industries. These example affected parties hold stake, or interest in another’s success due to its effects on their own without necessarily having invested assets or money of any kind.
The holding of stakes is nothing new, and has actually existed for centuries in some form or another. The above-mentioned forms of such holdings are the most commonly seen examples, though. Now you know; these are the basics of what the term “stakeholder” actually means.
