Final answer:
Stakeholders are all parties affected by a company's activities, including shareholders, employees, customers, and the community. Shareholders, a subset of stakeholders, are specifically the individuals or entities that own a company's shares. The distinction is important for understanding a firm's various responsibilities.
Step-by-step explanation:
The individuals or groups who have a claim in some aspect of a company's operations, products, markets, industry, and outcomes are known as stakeholders. This includes a wide variety of parties such as employees, customers, shareholders, local communities, suppliers, and more. Essentially, stakeholders encompass all parties affected by the business's activities, not just those with a financial stake.
By contrast, shareholders or stockholders specifically refer to individuals or entities that own at least some portion of a company's shares. They are a subset of stakeholders, but their involvement is primarily through the financial investment they have made by purchasing stock in the firm. Shareholders gain a return on their investment when the company performs well financially. Large companies, such as IBM or Microsoft, may have millions of shares and shareholders, yet no single person typically holds a majority of a company's stock.
The distinction between shareholders and stakeholders is crucial in understanding a firm's responsibilities and the various interests it must balance in its strategic decision-making processes.