"That guy on the other side of town," as you call him, has a funny way of lowering prices right after you do. He also raises them in tandem with yours. Now you have a surprise for him that you're keeping under wraps: a new product line that promises to open up a new market niche for your business and – you're certain – engender a response from that pesky guy across town.

As that new product line forces you to revisit your marketing plan, you can't help but wonder whether you may have overlooked something fundamental. You addressed your competition in business in your marketing plan, but should you now take the extra step of identifying "that guy" as a stakeholder? Do competitors' influence on a business qualify them as stakeholders? From all appearances, the answer is a resounding "yes."

Internal Stakeholders Hold a Bigger Stake

You wouldn't be the first small-business owner to view the role of outsiders in your business with skepticism. You know that stakeholders are usually defined as people or groups that have a vested interest in an organization.

They can affect – or be affected by – an organization's decisions, policies, actions and inactions. Put another way, stakeholders can take either an active or passive role in an organization.

This distinction should make it easier to delineate internal from external stakeholders. Organizational stakeholders include owners, managers and employees; they have more on the line.

As a small-business owner, you already know that there can be huge deviations in the behavior of this group alone – the difference, say, between your right-hand people who work plenty of long hours at your side and the dutiful but slightly indifferent employees who put in their 40 hours and not a minute more.

External Stakeholders Run a Gamut

Stakeholders are not created equal, and so the deviations are even more evident among external stakeholders. This group includes people you know and also, quite possibly, some you've never met.

Customers, community residents, government officials, business groups and associations, creditors, suppliers, members of the media, local political parties and lobbying groups are all external stakeholders.

Sometimes, they are referred to as secondary stakeholders because their interest in an organization, while legitimate, is not nearly as pronounced as that of internal stakeholders.

By Definition, Competitors in Business Qualify

Against this backdrop and compared with other external stakeholders, you may wonder what stake a competitor might have in your business. Upcounsel responds by underscoring the traditional role of competitors in business:

  • "The competitor has a stake in the knowledge of the business to improve and adjust their own business strategy."

In other words, "that guy on the other side of town" who watches and sometimes mimics your moves is a genuine stakeholder.

The fact that you hope to surprise (or disrupt) him with a new product line seals the deal.

Because competition between companies cuts both ways, you are a stakeholder in his business, too.

As long as someone has an interest in or influence on a competitor, he qualifies as a stakeholder.

Subject Competitors to a Test

The answers to five questions from the Harvard Business Review may crystallize the role of competitors in your business:

  • Does the stakeholder affect your organization's performance?
  • Can you specify what you want from the stakeholder?
  • Do you want the relationship to change or grow?
  • Can you live without or easily replace the stakeholder?
  • Has the stakeholder assumed another role in your organization?

If you answered yes to the first three questions and no to the last two, chances are you've identified a key stakeholder in your business – someone like "that guy on the other side of town" who keeps you on your toes by exerting a quiet but perceptible influence on your business.