Which option correctly classifies stakeholders into internal and external groups?

Which option correctly classifies stakeholders into internal and external groups?

• A. Internal stakeholders: Suppliers and Government; External: Employees and Managers.
• B. Internal stakeholders: Employees and Managers; External stakeholders: Customers and Government.
• C. Internal stakeholders: Customers and Suppliers; External: Employees and Managers.
• D. Internal stakeholders: Local Community and Lenders; External: Employees and Managers.

Answer: (B)

Classifying stakeholders as internal and external helps a business see who is inside the organisation and who is outside but still affected by what it does. Internal stakeholders are people within the business who are involved in its activities and decisions, such as employees and managers. External stakeholders are people or groups outside the business who have a stake in its success or impact, such as customers and the government. The option that assigns internal to employees and managers and external to customers and government matches this distinction. The other options mix groups that are inside with those outside—for example, placing suppliers or government as internal, or listing employees and managers as external—so they don’t fit the classification.

Classifying stakeholders as internal and external helps a business see who is inside the organisation and who is outside but still affected by what it does. Internal stakeholders are people within the business who are involved in its activities and decisions, such as employees and managers. External stakeholders are people or groups outside the business who have a stake in its success or impact, such as customers and the government. The option that assigns internal to employees and managers and external to customers and government matches this distinction. The other options mix groups that are inside with those outside—for example, placing suppliers or government as internal, or listing employees and managers as external—so they don’t fit the classification.