Question

In: Finance

Identify a party (other than stockholders) that can be classified as a stakeholder for a corporation....

Identify a party (other than stockholders) that can be classified as a stakeholder for a corporation. What obligation does the corporation have to this party? Describe a situation where stockholder claims on the organization might conflict with the claims of this stakeholder group. If you were CEO, how would you resolve these conflicts?

Solutions

Expert Solution

A party other than stockholders that can be classified as a stakeholders are the Employees for a corporation.
The first and the most important obligation that a corporation has to the Employees is provide them a Secure Job. Keeping them employed and letting them enjoy their salaries is the finest thing a business can do for these stakeholders. A corporation should also provide a Clean, Safe Working Environment which is free from any Discrimination too.

A situation where stockholder claim on the organization might conflict with the claims of this stakeholders could be in case when the stakeholders could be running after their motives of profit maximization in terms of share price maximization or dividend maximization whereas employees could be running after their fruitful thing -" Salaries".
If i were to be the CEO of a corporation where such a conflict of interest was seen, the best thing that could be done would be to align the interests of both the stakeholder groups.
Providing incentives or bonuses to the employees when they were successful in efficiently and effective profit maximization of the company would be the best thing that could be done. So that the employees could work in the best interest of the shareholders and the shareholders could enjoy dividend and share price maximization which were their end term goals.


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