Association of Chartered Certified Accountants (ACCA) Certification Practice Test

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Which group is considered an external stakeholder?

Managers
Employees
Shareholders
The government

The correct answer is: The government

External stakeholders are individuals or groups that do not belong to the organization but are affected by its actions and decisions. The government is considered an external stakeholder because it imposes regulations and policies that companies must follow. Additionally, the government can influence business operations through taxation, legal requirements, and public policies, impacting various aspects of how a business functions. On the other hand, managers and employees are internal stakeholders, as they are directly involved with the organization and contribute to its operations. Shareholders, while they may seem external since they invest in the company, are typically classified as internal stakeholders because they have a direct financial interest in the company's performance and strategic direction.