"Shareholders and stakeholders are both associated with a corporation, but their interests in the organization differ." Explain with reference to stakeholder theory.

A shareholder is a person or entity that owns shares in the company. A shareholder is entitled to vote in general meetings, receive dividends from the company, transfer the shares etc. and include equity shareholders and preference shareholders of the company. Stakeholders represent a substantially broad group, because they include anyone having an interest in the success or failure of a business. A company's stakeholders are "those groups without whose support the organization would cease to exist." This group include shareholders, but goes well beyond shareholders to also include creditors, customers, employees, investors, suppliers, the local community, government agencies and many others who have a 'stake' or claim in some aspect of the company's products, operations, markets, industry and outcomes. Thus, shareholders are a subset of the larger group of stakeholders. Traditionally, shareholders have been considered more important than all other stakeholders in a business, since they own the entity and have rights to receive its cash flows under certain circumstances. However, the stakeholder theory suggests that the purpose of a business is to create as much value as possible for stakeholders. It creates an ecosystem of related groups, all of whom need to be considered and satisfied to keep the company healthy and successful in the long term. In order to succeed and be sustainable over time, executives must keep the interests of customers, suppliers, employees, communities and shareholders aligned and going in the same direction.