Who are classified as external stakeholders?

External stakeholders are individuals or groups that do not belong to the immediate organization but have an interest or investment in its operations and decisions. They can influence or be influenced by the organization's actions, policies, and performance.

Government regulators play a crucial role as external stakeholders because they establish guidelines and laws that organizations must adhere to, impacting their operational strategies. Local community residents also qualify as external stakeholders, as their livelihoods and well-being can be significantly affected by the company's activities—such as environmental practices, social initiatives, and employment opportunities.

In contrast, employees and management, investors and shareholders, as well as the board and business divisions, are considered internal stakeholders. They are directly involved or have a vested interest within the organization itself, fundamentally shaping its direction and operations. Thus, the distinction lies in the degree of involvement and the nature of the relationship with the organization, making the classification of government/regulators and local community residents as external stakeholders accurate.