When one attempts to define stakeholder as a term, one will almost inevitably encounter the two subsets of stakeholder: external stakeholders and internal stakeholders. To define stakeholder, then, one must define these two subsets.
The first subset, external stakeholders, are those stakeholders who exist outside of the company. External stakeholders are shareholders and stockholders who are involved with the company in no other way than through those shares, the government agencies who might be stakeholders within the company, or even the suppliers and competition of the company.
The second subset, internal stakeholders, are sometimes considered much more integral. It may be possible for an external stakeholder to hold a great deal of power over the company’s actions, but without internal stakeholders the company would cease to function or even exist.
Internal stakeholders are stakeholders within the company, meaning that they are the employees, managers, and trade unions based within the company in question. Internal stakeholders sometimes is extended to cover shareholders as well as shareholders who hold some stake internal to the company according to some perspectives.
Internal stakeholders are still likely interested in what best benefits them, but much more than many of the external stakeholders. Internal stakeholders are likely to believe that what best benefits them is also what best benefits the company due to their status as internal to and tied up in the company.