Association of Chartered Certified Accountants (ACCA) Certification Practice Test

How can stakeholders be categorized in a corporate environment?

1. By financial contribution

2. Internal, connected, and external

3. By employee status

4. As primary and secondary stakeholders

The correct answer is: Internal, connected, and external

Stakeholders in a corporate environment can be categorized based on their relationship and involvement with the organization. The classification into internal, connected, and external stakeholders provides a comprehensive framework for understanding the dynamics at play. Internal stakeholders include employees and managers who are directly involved in the operations of the business. They have a vested interest in the success and functioning of the company because their work affects and is affected by the actions and performance of the organization. Connected stakeholders refer to those who have a direct relationship with the business but are not part of its internal structure. This category often includes suppliers, customers, and investors. These stakeholders have a significant influence on the company’s decisions and can have their interests impacted by the company’s actions. External stakeholders are those who are not directly involved with the company but can affect or be affected by its operations. This includes government agencies, regulatory bodies, and community groups. While they might not have a direct relationship with the organization, their interests and concerns can shape the company's policies and reputation. This categorization allows for a nuanced understanding of stakeholder engagement strategies, responsibilities, and the impact of corporate decisions. Recognizing and properly addressing the varying interests of these stakeholders is key to achieving business objectives and maintaining sustainable operations. Other categorizations, such