What distinguishes external stakeholders from internal stakeholders?

The distinction between external stakeholders and internal stakeholders is primarily based on their relationship and interaction with the organization. External stakeholders are individuals or groups who exist outside the organization yet are affected by its actions and decisions. This includes customers, suppliers, investors, and the community at large. They often have vested interests in the organization's performance, as it can impact their own interests, such as product quality, service levels, or financial returns.

On the other hand, internal stakeholders are the individuals who are directly involved in the organization's operations. This group typically includes employees, managers, and owners. Internal stakeholders are integral to the daily functioning of the organization, as they participate in the decision-making processes and contribute to achieving the organization's goals.

This clear categorization highlights the different roles and interests held by these two groups. External stakeholders tend to focus on outcomes resulting from the organization's performance, while internal stakeholders have a direct influence on how those outcomes are achieved.