Share holder vs Stake holder vs Creating Shared value

Shareholder
A shareholder is a person or company that owns at least one share of a company's  stock or in a
mutual fund. Shareholders are the owner of the company, which gives them certain rights. This type
of ownership allows them to get the benefits of a business's advance. These rewards often come in
the form of increased stock valuations or dividends. Conversely, when a company loses money, the
share price invariably drops and due to which shareholders loses their money.

Stakeholder
A stakeholder is either an individual, group or organization that’s impacted by the outcome of a project
or a business venture. Stakeholders have an interest in the success of the project and can be within
or outside the organization that’s sponsoring the project. Stakeholders are important because they
can have a positive or negative influence on the project with their decisions. Stakeholders are critical
to the organizations as their support is needed for the important projects.

Difference between shareholder and stakeholder

Shareholders and stakeholders have very different priorities. Shareholders have a financial interest in
your company because they want to get the best return on their investment, usually in the form of
stock and dividends. Their main priority is stock prices and total revenue generated. On the other
hand, stakeholders are focused on much more on the overall performance of the company. Internal
stakeholders want their projects to succeed so the company can do well overall—also they want
promotion in their roles. External stakeholders want to benefit from the project. That can mean
different things, like receiving a great product, good customer service, or participating in a mutually
beneficial partnership.

Conflict between Shareholder and Stakeholder

Conflicts often arise because stakeholders have different and often conflicting interests. It often
makes companies face a conundrum while making critical decisions. They must prioritize and make
choices which cannot satisfy all the stakeholders. Also refer some examples of such conflicts

Higher wages vs. Higher dividends.

Shareholders generally want the company’s profits to increase because it affects the dividends and
capital gains. So, they are reluctant to see businesses pay high wages to employees.

Higher short-term earnings vs. Business expansion.

The expansion increases the business size and scale of the company’s operations. It creates new
jobs, and of course, the local community and government love it. However, the expansion brings
lower short-term profits, and shareholders with a short-term investment horizon may not like it.
Companies must spend more to buy capital goods such as machinery and equipment or build new
factories. It all results in less profit and, therefore, lower dividends.

Efficiency vs. Loss of a job.

In difficult times such as a recession, companies must be more frugal and take efficiency measures.
Thus, they can still operate healthily. One option is to reduce layoffs of staff. However, that may be an
option preferred by shareholders and management but not by staff.

Quality and cheap products vs. Less profit.

Customers want higher quality but cheaper products. But, it means higher costs and lower profits for
the company, an option that shareholders and management do not want.

How we can create a shared value:

It is a clear trend that in next upcoming years landscape of the world corporation will change as more
and more people are become aware about environmental and sustainability issues. Corporations
across the globe are realizing that they need to follow greener, environmentally friendly and
sustainable approach to speed up their corporation strategies. They need to create strategy which
involves all the stakeholders.

Shareholder value has really become “stakeholder” value as companies adopt the triple bottom line to
deliver profit with purpose. Let’s assume stakeholders include shareholders, customers, employees,
partners, and the communities in which your business operates. Focusing on just shareholders means
that you are paying attention only to one small part of your company’s ecosystem and that you are
missing out on other parts that can drive value and, ultimately, profit.

To create a shared value, we need to refer mission and vision of the company. On that basic we can
answer basic question regarding shareholder, company, employee, partner and customer. Next, turn
stakeholder needs into stakeholder value. That sounds simple, but it is a lot of work. We have found
that the easiest way to define stakeholder value is to back up all the way to your business model. This
means looking at customer segmentation, value proposition, activities, and everything else with all five
stakeholder groups in mind.

By refining your business model, and by rethinking your products and markets, you can redefine
productivity in the value chain and maybe even help build supportive clusters. As a result, your
revised business model and strategy will support strategic and social investments that drive value.